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Free keywords:
Capitalism, democracry, political economy, fiscal crisis, financial crisis
Abstract:
The “financial crisis” and its sequel, the current sovereign debt crisis, appear to be the latest
permutations of an old conflict between capitalism and democracy that forcefully reasserted itself after
the end of the postwar growth period. Present calamities were preceded by high inflation in the late
1960s and 1970s, rising public deficits in the 1980s, and growing private indebtedness in the 1990s
and 2000s. In each case, governments were faced with popular demands for prosperity and security
that were incompatible with an allocation of life chances by free markets alone. Rather than the result
of faulty economic management, inflation, deficits and financial under-regulation must be understood
as temporary stopgaps to satisfy democratic-political claims for “social justice” alongside economiccapitalist
requirements of profitability and distribution by marginal productivity. The risks associated
with the inherent contradictions of democratic capitalism may have increased in recent years, with
potentially disruptive consequences for the social integration of democratic polities as well as for the
system integration of advanced market economies.
