The idea of democracy, like the idea of capitalism, promises much, though the reality always falls short. The promise is of wide participation in government, free and open competition among diverse groups, self-determination. Democracy offers the vision of individuals working together to achieve their own particular goals, using similar means to accomplish collectively individual wealth and freedom. History offers few examples of really successful democracies, success being defined as actual structures of government and society that make concrete the image that the word democracy conjures up. Democracy, like liberty, freedom, equality, is elusive, visualized in the mind and a part of one’s dreams yet never quite fulfilled. That these concepts, democracy, liberty, freedom, equality, are linked to capitalism implies that capitalism itself is more image than reality.

            The word “democracy” is a combination of two classical Greek words from the fifth century BCE. The Greek deme was a tribe in ancient Athens; there were ten such tribes (demes) that comprised the city-state, or polis, of Athens. The demos was therefore the people of the ten tribes. The Greek word kratos implies power, strength, control–the attributes of government. Demos joined with kratos means to give the people the power, hence the English word democracy, the “rule of the people.”

            Around 500 BC, Athens had experienced centuries of government by kings (monarchy, rule by one), by the aristocracy (rule of the best men), and by tyrants (Greek tyrannos), which came to mean oppressive rule. But under the leadership of Cleisthenes the Greeks adopted a form of government that developed from the interchange of goods and ideas at the marketplace, the agora. Here the citizens of Athens met in assembly to vote on proposals offered by speakers at the rostrum. The Council of 500, composed of fifty citizens selected by lot from each of the ten demes, typically set the agenda for the assembly. The assembly of citizens passed legislation by acclamation, in time by secret ballot. Athenian citizenship was restricted to adult men; women had little power in Athenian society. Slavery was practiced at Athens as well. Hence the majority of people living at Athens did not exercise power–they were disenfranchised. However, it was remarkable that among the male citizens there was no property qualification for voting, nor even for addressing the assembly.

            The relationship of democracy and capitalism, seen in ancient Athens, is also exemplified in the Later Middle Ages and early Renaissance in European history. Medieval feudalism was the antithesis of democratic society and government. The Medieval manor, in which serfs worked the land of an aristocrat and warrior, the Lord, who was the sole authority and judge, was a closed system of few rights, fewer opportunities, and no government participation on the part of the landed serfs. As long as the Medieval economy was primitive, relying on agriculture and barter, lacking widespread surpluses, having few of the components and resources for trade, serfs had no outlet, no way to change their condition. A thousand years ago, various technological improvements in agriculture led to increasing surpluses, which generated wealth, trade, markets, and eventually market centers–villages, then small cities. This generation of a very limited capitalism provided the serf with the alternative to lifelong service on the Medieval manor. Market centers were places of diversity and transiency, where one could blend in, be anonymous, and start a new life. Trade has always raised the potential for newness, growth, and opportunity.

            The Commercial Revolution after 1100 AD continuing into the early Modern period represented the replacement of feudal with urban structures. The organic, static, unequal, monarchal, aristocratic Feudal society gave way to the independent, free and equal, republican and democratic European towns and cities. These towns were incorporated, that is, the residents joined together into a common self-governing cause where each person had certain rights and responsibilities incumbent upon citizenship. Such an open environment encouraged the self-made man and woman, who in turn knew that without towns, their freedoms, open markets, and mobility, such opportunity for personal success would be limited.

            Most of the Founders of the American Republic, it is true, were less supportive of democracy, fearing the disorder and possible anarchy of a people who exercised influence over the government without control. This was the theme of James Madison’s famous Federalist Paper #10, in which he argued against democracy, which would yield a tyranny of the majority. Madison supported instead a republican government of important, if controlled, freedoms. Madison, who wrote the draft of the Constitution, was joined by Alexander Hamilton in rejecting the first government of the United States, the Articles of Confederation, which allowed too many freedoms to states, localities, and individuals–for example freedom to determine the rules of interstate and international commerce. Under the Constitution, Congress has the power to regulate interstate and international commerce, which to some was an undue restriction imposed on the capitalistic inclinations of early Americans.

            Thomas Jefferson, the gifted tragic Virginian who was one of great liberal intellectuals of the eighteenth century yet was imprisoned to the system of slavery in the American South, was one of the strongest advocates of free trade in the early republic. Jefferson was heavily influenced by the thinking of John Locke, the English philosopher who argued that humans are naturally good, free, and equal; that government is not a requirement, rather a choice; that humans choose to join together into voluntary association, giving up some of their rights and freedoms for the overall goal of mutual survival and prosperity. Jefferson once told his friend John Adams, when both were in retirement reflecting upon the past, that the American Revolution was unfinished, and would continue uncompleted for generations to come, only reaching finality when freedom became “intuitive,” and Americans could exercise true self-government. Jefferson’s image of a pure democracy existing in the future depended in part on free trade.

            Free trade has been throughout American history the perceived foundation of American, and world, democracy. Free trade means trade without restrictions, without the encumbrances of tariffs, quotas, embargo, and other means to hamper trade. The principle of free trade eschews using trade as a means of political policy, or using trade as an incentive in diplomacy. The foundations of the ideology of free trade emerged during the eighteenth-century Enlightenment. Adam Smith, for example, in The Wealth of Nations (1776) argued against the control of trade as practiced by the British imperial system of mercantilism. Smith applied liberal ideas to the economy. He argued that self-interest drives the economy and society. Benevolent altruism is not the stuff of capitalism, or of democracy.

The American experience of having trade controlled by the Navigation Acts and other forms of British mercantilism spurred American thinkers such as Jefferson to develop similar principles of American free trade. Jefferson believed that free trade would be an agent of the spread of the American system of self-government throughout a world that engaged in constant aggression and warfare, the origins of which often occurred because of trade restrictions. Free trade was the principle of the open mind and open society informed by reason and liberty rather than the narrow-minded, closed system of trade restrictions.

            During the whole of American history, even up to the present, free trade has been considered the agent of democracy. Free trade has been one of the primary cornerstones of American diplomacy. Right from the beginning, presidents have generally refused to engage in trade wars and restrictions. Americans responded to the wars between England and France of the late eighteenth and early nineteen centuries with proclamations of neutrality and free trade. Jefferson’s embargo of 1808 was an exception, and a failure–it completely contradicted Jefferson’s own principles of free trade. The Monroe Doctrine of 1823 was issued in part to promote free trade throughout the Western Hemisphere. Free Trade was the cornerstone of Woodrow Wilson’s post World War I plans and Franklin Roosevelt’s post World War II plans. Recently, American political leaders have supported such free trade programs as NAFTA (North American Free Trade Agreement).

            Alexis de Tocqueville in Democracy in America observed, respecting nineteenth-century American society, that the typical American, without pretense to birth or social rank, engaged in lifelong entrepreneurship. The American commoner was restless, hardworking, always seeking something, especially a satisfactory amount of wealth, which was always just out of reach. Such characteristics formed the backbone not only of American capitalism but of American democracy as well. The aggressiveness of the American in business spilled over to local assemblies, state legislatures, and courthouses. Ideas of American justice, morality, and law had a pragmatic, business-like approach. The American democracy, like American business, involved controversy rather than conciliation, anger and argument rather than acceptance and apathy. Even in the twentieth century, in the wake of World War I and World War II, when traditional values were being challenged everywhere, and democracy was under attack from the left and the right, it was diversity rather than sameness, relativism rather than absolutism, that strengthened American democracy.

            After centuries of development, democracy is still the rule of the people. The people, however, rarely act in unison, rarely agree, but it is in disagreement and disunity that democracy thrives. American democracy is based on pluralism. If America ever becomes uniform, predictable, and at one with itself, it might still be an American society, but it will not be American democracy.