The simultaneous explosion of economic growth in still-authoritarian China and economic collapse in increasingly democratic Russia rekindles an old debate concerning the relationship between democracy, capitalism, free markets, and economic development. There can be little doubt that the economy and the polity interact with each other, but the nature of that interaction is elusive.
We begin with the conventional, conservative formulation. Crudely stated, it goes something like this. Market capitalism is the greatest engine for economic development the world has ever seen, what Peter Berger calls a "horn of plenty that heaped...immense material wealth and an entrepreneurial class, on the countries in which it originated." By creating a thrusting entrepreneurial class, impatient with government restrictions on its adventures, and a middle class clamoring for consumer goods, education and choice, capitalism creates counterpoises to government authority, eventually forcing the acceptance of democratic institutions. In short, by producing economic wealth and an entrepreneurial class, capitalism inevitably produces democracy. And since democracies don't start wars or have expansionist proclivities--forget, for the moment, Theodore Roosevelt and imperialist Britain--capitalist-democratic development contributes to security and to world peace.
