Reference no: EM132112827

It can be argued that democracy and capitalism are concepts that are fundamentally incompatible with each other. Democracy is built on the principle of equality-one person, one vote-regardless of the individual's intelligence, wealth, work ethic, or any other features that may distinguish one individual from another. Capitalism, on the other hand, fosters inequality. It uses incentive structures to encourage hard work and wise investment to realize differences in economic returns. Because future income from investments (in human or physical assets) depends on current income, wealth tends to generate wealth, and poverty tends to constrain the individual's economic growth. The cycle is self-reinforcing: success breeds success, and failure compounds failure. "The economically fit are expected to drive the economically unfit out of existence. Thus, there are no equalizing feedback mechanisms in capitalism" (Thurow 1997). What are some of the remedies capitalistic countries have introduced to mitigate such inequality? Would globalization compound this condition in a capitalistic and democratic country? Why, or why not?