sor10_ Pascal Le SegretainSygma via Getty Images_wto protest Pascal Le Segretain/Sygma via Getty Images

Capitalism versus Democracy

To commemorate its founding 25 years ago, PS will be republishing over the coming months a selection of commentaries written since 1994. In the following commentary from 2000, George Soros warns against the then-popular assumption that the spread of capitalism would also augur the spread of democracy around the world. In the face of oligarchy and cronyism, open societies cannot be taken for granted. 

WARSAW – Around the world, democracy is on the march. Totalitarian and authoritarian regimes have been swept away. Popular resentment against the remaining ones is growing. But it is too early to declare victory. For although capitalism is triumphant, we cannot speak of the triumph of democracy.

The connection between capitalism and democracy is far from automatic. Repressive regimes do not willingly abdicate power and are often abetted by business interests, both foreign and domestic, particularly in countries where resources such as oil and diamonds are at stake. Perhaps today’s greatest threat to freedom comes from an unholy alliance between government and business, such as in Peru under President Alberto Fujimori, Zimbabwe under President Robert Mugabe, Malaysia under Prime Minister Mahathir bin Mohamad, and Russia under the oligarchs. In these cases, the appearances of a democratic process are often observed, but state powers are diverted to benefit private interests.

Capitalism creates wealth but cannot be relied upon to assure freedom, democracy, and the rule of law. Business is motivated by profit; it is not designed to safeguard universal principles. Even the preservation of the market itself requires more than self-interest: market participants compete to win, and if they could, they would eliminate competition. So, freedom, democracy, and the rule of law cannot be left to the care of market forces; we need institutional safeguards.