Difference Between Capitalism and Democracy

The Terms “Capitalism” and “Democracy” are very different. Capitalism is an economic system where Capital resources are owned by private individuals, and not by the government.

Democracy, on the other hand, is a type of governance where the citizens of a country elect their representative to work as their leader.

Capitalism vs Democracy

The main difference between capitalism and democracy is that capitalism is a system of the economy whereas; democracy is a form of government. So, there can be a capitalist economy in a democratic country.

Capitalism vs Democracy

Capitalism is an economic system where businesses and industries are owned and run by private individuals. In this type of economy, the government has no role in the fixing of prices of the products and services.

And their entire profits and losses are acquired by the private owners themselves. Democracy is a kind of government system where the common public has the power to choose their leaders among themselves.

The public also has the power to remove these leaders from their position if they do not work towards the development and growth of the citizens.

Comparison Table Between Capitalism and Democracy

Parameters of ComparisonCapitalismDemocracy
MeaningIt is an economic system where capital resources, businesses, and industries are owned and executed by private individuals.It is a system where the government of the country is elected by the citizens of the country.
All-round PurposeIndividual’s profitSocial welfare
Growth ParameterConcentrates only on the individual’s growthAll-round social and country’s growth is looked upon
Division of ClassesCapitalism divides society into poor and rich.Democracy focuses on equality; thus, it does not divide society into classes

What is Capitalism?

Capitalism is referred to an economic system where the factors of production that are the capital resources, natural resources, and entrepreneurship are owned and managed by private individuals. The prices and production of goods and services are dependent on the market forces, i.e., demand and supply of the economy.

  1. The driving force of a capitalist economy is profit earning. All the industries and individuals work for their profit.
  2. In this system, every individual i.e., consumers as well as producers have the right to make their own economic decisions without any interference.
  3. Social welfare is many times overlooked in a capitalist economy, as the producers work for their profit. But overall growth is good in such type of economy as everyone works towards profit maximization and earnings.
  4. There is no interference of the government in the market, and hence the economy under capitalism is also known as a free-market economy.
  5. Capitalism originated in 18th century England during the Industrial Revolution.
  6. Some examples of countries having capitalist economies are:- Hong Kong, United Arab Emirates, Singapore, New Zealand, Australia, Canada, Switzerland, United Kingdom, United States, and Ireland.

What is Democracy?

Democracy is a type of government where people have the right and power to decide the legislation or choose the officials and leaders to do it. It is also said to be the government of the people, by the people, and for the people.

  1. There are 2 types of democracies:- • Direct Democracy • Representative Democracy
  2. The driving force of a democracy is social and economic development of all the sections of the society.
  3. In a democratic country free and fair elections are held periodically for all the roles in a government. The elections act as a voice of the public, and the primary way by which they control and make changes in the government.
  4. Transparency and impartiality are the main rules of an election. All the adult citizens, regardless of their caste, creed, status, gender, or sexuality have the righty to vote.
  5. One of the prominent features of democracy is that it gives equal citizenship rights to each and every citizen of the country, irrespective of whether they are from a minority group or oppressed class. The legal authorities should assist them in retaining an equal lifestyle as any other citizen of the country.
  6. Democracy promotes the exercise of sovereignty.

Main Difference Between Capitalism and Democracy

The main difference between Capitalism and democracy is that capitalism is a system of the economy or a form of governance where all the capital resources and factors of production are owned by private individuals. Whereas, Democracy is a type of government or a political system where the power or the control of the country is equally held by all the citizens of the country.

  1. Capitalism is an economic concept, while democracy is a political concept.
  2. One significant difference between capitalism and democracy is that capitalism promotes private benefit whereas, democracy promotes social welfare.
  3. Capitalism creates extremely unequal societies and amplifies the gap between rich and poor; Democracy endeavors at creating equal, just and free societies.
  4. In a capitalist system there is no intervention of the government in the economy, meanwhile, in a democracy the government has a say in the economic sector and it protects the rights of the workers.
  5. Capitalism is circles mainly around the rich individuals who own the industries. On the other hand, the Democracy includes all the individuals and citizens of the country.
Difference Between Capitalism and Democracy


While people may confuse these two terms Capitalism and Democracy are very wide and distinct terms. The main difference between capitalism and democracy is that while capitalism relates to the economy of the state, democracy refers to politics.

Capitalism focuses on a person or group’s profit maximization, and democracy focuses on social welfare, and the growth and economic development of the entire state or country. There also can be capitalism in a democratic country.

This concept is known as democratic capitalism, some examples of countries having democratic capitalism are the USA, South Africa, and India. While the two have their advantages and disadvantages, both of them can be used for the benefit of all.


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