Capitalism vs. Democratic Socialism

by | Mar 3, 2019 | POLITICS

Indeed, democracy and freedom are frequently heralded as being synonyms. An important question, however, is, What do these concepts mean, and are they in fact synonymous?

Warnings are frequently heard nowadays that democracy is currently under threat. And with a demise of democracy will come a loss of liberty. Indeed, democracy and freedom are frequently heralded as being synonyms. An important question, however, is, What do these concepts mean, and are they in fact synonymous?

A useful place to start is with a famous lecture delivered in Paris nearly 200 years ago in 1819 by the French classical liberal Benjamin Constant (1767–1830), titled “The Liberty of the Ancients Compared With That of the Moderns.” Constant’s purpose was to distinguish the meanings of freedom and democracy in ancient Athens in comparison to his own time in the early 19th century. It highlighted the difference between the freedom of the individual and the freedom of the political collective.

The Democratic Tyranny of the Ancient Greek World

Constant argued that among the ancient Greeks liberty meant the right of the free citizens of the city-state to equally and actively participate in the political deliberations concerning the policies and actions of their government. The individual could freely speak, debate with his fellow citizens, and cast his vote for the policies he considered best for his city-state to follow. But once any such decisions had been collectively voted on and approved by the majority, the individual was a slave to that majority’s will. Or as Constant expressed it:

[The liberty of the ancients] consisted in exercising collectively, but directly, several parts of the complete sovereignty; in deliberating in the public square, over war and peace, in forming alliances with foreign governments; in voting laws, in pronouncing judgments; in examining the accounts, the acts, the stewardship of the magistrates; in calling them to appear in front of the assembled people; in accusing, condemning or absolving them.

But if this is what the ancients called liberty, they admitted as compatible with this collective freedom the complete subjection of the individual to the authority of the community.… All private actions were submitted to a severe surveillance. No importance was given to individual independence, neither in relation to opinions, nor labor, nor, above all, to religion.…

Thus, among the ancients the individual, almost always sovereign in public affairs, was a slave in all his private relations. As a citizen, he decided on war and peace; as a private individual, he was constrained, watched and repressed in all his movements; as a member of the collective body, he interrogated, dismissed, condemned, beggared, exiled or sentenced to death his magistrates and superiors; as a subject of the collective body he could himself be deprived of his status, stripped of his privileges, banished, or put to death, by the discretionary will of the whole to which he belonged.

The ancient Greek political system, as interpreted by Constant, can easily be defined as a form of democratic totalitarianism. The political philosopher Jacob L. Talmon once defined totalitarian democracy as recognizing “ultimately only one plane of existence, the political. It widens the scope of politics to embrace the whole of human existence. It treats all human thought and action as having social significance, and therefore as falling within the orbit of political action.” Democratic politics, in other words, envelops all of human existence because social participation is the defining characteristic of every human life.

Benjamin Constant’s “Modern” Meaning of Individual Liberty

This is in contrast to what Benjamin Constant, in his 1819 lecture, explained was the alternative conception of liberty, what he referred to as the “modern” one, by which he meant the idea of liberty in the then-new classical liberal ideal. The modern notion of liberty, Constant argued, emphasized the independence of individuals to peacefully live their lives as they chose and found to be best, whether or not others in the society agree with them or dislike the courses of action they have decided to follow. Said Constant:

First ask yourselves, Gentlemen, what an Englishman, a Frenchman or a citizen of the United States of America understand today by the word “liberty”. For each of them it is the right to be subjected only to the laws, and to be neither arrested, detained, put to death or maltreated in any way by the arbitrary will of one or more individuals. It is the right of everyone to express their opinion, choose a profession and practice it, to dispose of property, and even to abuse it; to come and go without permission, and without having to account for their motives or undertakings. It is everyone’s right to associate with other individuals, either to discuss their interests, or to profess their religion which they and their associates prefer, or even simply to occupy their days or hours in a way which is most compatible with their inclinations and whims.…

Free men must exercise all professions; provide for the needs of society.… Commerce inspires in men vivid love of individual independence. Commerce supplies all their needs, satisfies their desires, without the interventions of the authorities. This intervention is almost always — and I do not know why I say almost — this intervention is indeed always a trouble and embarrassment. Every time collective power wishes to meddle with private speculations, it harasses the speculators. Every time governments pretend to do our own business, they do it more incompetently and expensively than we do.

Constant, it should be added, did not consider political liberty, in the sense of free participation in democratic deliberation concerning governmental affairs, to be unimportant. Very much to the contrary, in his view. But democratic politics was narrowed to those matters involving the effective securing and protecting of the rights of every individual to life, liberty, and honestly acquired property. As such, political democracy was of secondary importance because the vast majority of issues affecting people were in the private domain of individual choice and voluntary association through the institutions of civil society, including the marketplace of buying and selling at mutually agreed-upon terms.

Again, as Jacob Talmon expressed it in his study The Origins of Totalitarian Democracy (1952), (classical) liberal democracy sees the “essence of freedom in spontaneity and the absence of coercion.… It recognizes a variety of levels of personal and collective endeavor that are altogether outside of the sphere of politics.”

The recent renewed call for “social democracy” or “democratic socialism” is really a call for a return to the political liberty of “the ancients,” as explained by Benjamin Constant. It is a desire for a far greater “socialization” of everyday life in the arenas of economic production and distribution. Before pursuing this, let us remind ourselves of how liberty operates in Constant’s sense of “the moderns.”

The Liberty of Consumer Choices in the Market

As consumers, each of us makes our own personal and individual decisions. A useful imagery is when any one of us goes shopping in the supermarket. Each of us rolls our own shopping cart down the store’s aisles, and picks and chooses the particular items we wish to buy and take home.

Some of us will select products that others have not chosen at all. Even when there are similarities in our choice of items that we put in our respective carts, the relative amounts often vary, reflecting our likes and dislikes and the particular uses for them on a regular or occasional basis. We each decide on our own planned budget for buying food out of our earned income, with some spending a lot more on groceries and related items than others do.

In addition, we are free to change our minds whenever we like and are willing to incur any costs connected with the change in our consumer preferences. That I bought breakfast cereal yesterday does not preclude me from buying ham and eggs for my morning meal next time I do my food shopping. If I’m tired or disappointed with the car I’ve been driving, I might have to wait to save for the down payment needed for a new or used car, or wait for the expiration on a leased car; but, again, I do not have to purchase the same make and model when I am in the market for a new vehicle and finally decide which one I would like to have.

We each individually decide where we wish to live and work. We do our own personal searches for employment opportunities guided by our own values, preferences, and interests. What job we take out of any that may be available is our own choice. Likewise, we decide as individuals what geographical location we live in and whether we live in an urban area or rural, a house or apartment, an owned or rented space.

Of course, our work opportunities are not totally unconstrained. They depend upon prospective employers finding our education, skills, and experience to be those they are looking for in needed employees at a given moment in time. Our ability to negotiate the salary we would like to have is also constrained by how much possible employers consider our labor services to be worth in their enterprises, in relation to what others in the labor market might be willing to accept, given their desire for gainful employment as well.

But just as there is usually more than one supermarket or grocery store vying for our consumer business, there is usually more than one employment opportunity available to us, though not necessarily for the job we might most desire, or in the more preferred location, or at the salary we wish someone would be willing to pay us. There is normally more than one game in town, so over time we each have degrees of ability to pick and choose more to our liking than if there was none, or only one.

Liberty of Producer Choices in the Market

On the supply side of a free market, anyone with a bit of drive and determination and some start-up capital they have saved or borrowed from someone is able to try starting their own business or pursuing a particular occupation. The fact that consumers are not locked into having to do business with and buy from any one producer or seller means each producer and seller can attempt to offer a better and less expensive product than any of their rivals who are competing for the same consumer business.

What product to produce and with what features and characteristics are greatly within the discretion of individual private enterprisers. They can experiment with differentiating their product, with trying to devise better and less expensive ways of producing and marketing it than their rivals.

Freedom of Choice in the Civil Society of Peaceful Association

In such a free society we are at liberty to form associations, clubs, and groups for virtually any purpose and interest we might share with others. This includes professional associations, sports clubs, religious congregations, or philanthropic and charitable endeavors to assist those individuals or advance those causes we consider worthy of our support. If we need a facility to house such an organization, we can either rent an existing location from its owner with whom we reach mutually agreeable terms, or we can purchase or hire the land, labor, and materials to build the facility we want.

The “Democratic Pluralism” of Market Liberty

We could say Constant’s “modern” conception of liberty represents a form of “democratic pluralism.” The patterns of market and social outcomes reflect the preferences and active choices of all the members of society, as all members have been free to make their own decisions without the consent of a majority of others.

These social outcomes are a pluralistic representation of “the will of the people,” in that a diverse set of desires, wants, and values simultaneously are fulfilled. The fact that, say, Cheerios and Wheaties are demanded by a significant majority of the consuming public does not preclude a minority from satisfying their desire for ham and eggs in the morning, or for a bowl of hot cereal with a side dish of grits, instead.

As long as a minority of consumers has enough dollar “votes” to make it profitable for some producer(s) to see an opportunity from serving smaller or niche demands for various goods and services, they will be fulfilled. The development and application of new technologies that have enabled video and audio streaming and the production and marketing of e-books have dramatically widened the number of wants and likes that can be simultaneously catered to, regardless of how small that minority might be or how large and perhaps disapproving and noticeable the majority can be.

Personal Choices Constrained by Democratic Socialism

But what if we returned to something more on the lines of the ancients’ notion of liberty, as explained by Benjamin Constant? I would argue that this is, in fact, what the call for democratic socialism or social democracy actually entails. Private property in production, marketing, and sales would be, if not abolished and transferred to the state, then at least heavily hampered and regulated by the state.

Not the individual private enterpriser, but the voting majorities of the citizenry through their government representatives would determine and decide what goods would be produced, to whom the output would be distributed, and at what nominal prices (if any). If the majority deemed the eating of meat to be animal genocide by human beings, the individuals who did not share this view and desired to continue eating meat products would find themselves unable to do so, since the means of production through which one product or another can be produced would be owned or controlled by the citizens of the society as a collective whole.

If you were to think cancer research is more important than additional wildlife areas or homes for the elderly, your income and wealth would be allocated and used not according to your own values and desires, but as the majority has deliberated and decided. Housing would no longer be fully privately owned and sold on the market based on competitive supply and demand. Instead, where you lived, with how many rooms and accompanying amenities, and at what rent (if any) would be decided by the majority of your fellow citizens as manifested by the authorities acting on behalf of “the people.”

If the majority of voters were persuaded that Harper Lee’s posthumous work, Go Set a Watchman (2016), was sufficiently racist in its undercurrent that it threw into doubt the reputation of its author, then a majority might consider any further printing and sale of her earlier book, To Kill a Mockingbird (1960), to be hurtful to those negatively portrayed in the later novel.

If it were countered that a social democracy would be dedicated to respecting the civil liberty of freedom of the press and ideas, the book need not be banned; but given the heavy competing demands for the resources out of which books are manufactured, the government’s allocation of resources simply might be curtailed enough such that the de facto result would be the same as a publishing ban.

As we saw, in the freedom of the marketplace, individuals are free to change their minds about what to buy, how to live, and where and for whom to work with relatively wide latitude of discretion, given the general constraint that they live in a world of other people.

Under Democratic Socialism, Individuals Controlled by Majorities

Under a regime of democratic socialism, for an individual to have the opportunity for any such changes in many aspects of life, it would be necessary for him to change enough other minds that the next time voting is held on these issues, new decisions would be made about these everyday matters.

But what if the individual were not able to successfully change others’ minds in sufficient numbers? Then many individuals on the minority side of the debates, decisions, and voting would be compelled to live according to the desires of the unchanged majority. Then any new attempt to change government policies must wait until the next round of voting, usually years away.

In the real world of even the most sincere democratic socialists, the will of the people that add up to a majority of voters would, like now, be composed of minority interest groups who form coalitions with each other to have the greatest combined votes on election day, so their respective wants and desires would be served at others’ expense who are not fortunate to have the needed numbers in the voting booth.

If current politics under “democratic” crony capitalism seems corrupt, with favoritism and redistributive benefit for floating majorities who use the system for their own advantage at the expense of consumers and taxpayers, this would be multiplied many times over when virtually nothing could be done in society without voter consensus and approval, with the outcomes determining the place, position, and status of everyone in the society.

Beware Those in Politics Who Wish to Take Care of You

We will have returned to the political liberty of the ancients where democratic majorities tyrannize over personal liberty. As Benjamin Constant warned:

The danger of ancient liberty was that men, exclusively concerned with securing their share of social power, might attach too little value to individual rights and enjoyments.… The holders of authority … are ready to spare us all sort of troubles, except those of obeying and paying!

They will say to us: what, in the end, is the aim of your efforts, the motive of your labors, the object of your desires? Is it not happiness? Well, leave this happiness to us and we shall give it to you. No, Sirs, we must not leave it to them. No matter how touching such a tender commitment may be, let us ask the authorities to keep within their limits. Let them confine themselves to being just [in the enforcement of impartial rule of law]. We shall assume the responsibility of being happy for ourselves.

Benjamin Constant’s warning against democratic collectivism and defense of individual liberty and competitive market pluralism — what he called the benefits of “commerce” — remains as true today as when he delivered that lecture to an audience in Paris 200 years ago in 1819.

Made available by the American Institute for Economic Research. Visit their website at

Dr. Richard M. Ebeling is the recently appointed BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He was formerly professor of Economics at Northwood University, president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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