Basic Concepts of Democracy

FOUNDATIONS American concept of democracy rests on 5 basic notions Recognition of the fundamental worth of every person Respect for equality of all persons Faith in majority rule and insistence of minority rights Acceptance of necessity of compromise Insistence upon widest degree of individual freedom Capitalism also linked to non-democratic regimes (e.g. China).

FOUNDATIONS WORTH OF THE INDIVIDUAL Each individual is a separate and distinct being Democratic society serves many who, as individuals, make up that society Does not adhere to mass of people who simply outnumber the few

FOUNDATIONS EQUALITY OF ALL PERSONS Democracy holds that “all men are created equal” Does not claim that all are born with same mental or physical abilities Democracy insists that are all entitled to 1) equality of opportunity and 2) equality before the law No one should be held back based on race, color, religion, or gender Equality is an ongoing challenge; tremendous progress in last 150 years

FOUNDATIONS MAJORITY RULE, MINORITY RIGHTS Democracy argues that a majority of the people will be right more often than they will be wrong Democracy does not say that the majority will always arrive at the best decisions on public matters The democratic process searches for satisfactory solutions to public problems

FOUNDATIONS Democracy cannot work without the principle of majority rule Democracy insists upon majority rule restrained by minority rights Majority must always be willing to listen to a minority’s argument, to hear its objections, to bear its criticisms and to welcome its suggestions

FOUNDATIONS NECESSITY OF COMPROMISE In democracy public decision making must be largely a matter of give-and-take among competing interests Compromise – process of blending and adjusting competing views and interests

FOUNDATIONS Compromise essential for two reasons - Individual comes first, in a democratic society there are many individuals and groups with different opinions and interests Few public questions have only two answers (street paving example) Compromise is a process to achieve majority agreement

FOUNDATIONS INDIVIDUAL FREEDOM Absolute freedom cannot exist—only in a state of anarchy Democratic government must work constantly to strike the proper balance between liberty and authority Democracy insists that the individual must be as free to do as he or she pleases as far as the freedom of all will allow

DEMOCRACY & FREE ENTERPRISE Free enterprise system – characterized by the private ownership of capital good Investments made by private decision, not by government directive and success or failure determined by competition in the marketplace

DEMOCRACY & FREE ENTERPRISE Free enterprise- based on four fundamental factors Private ownership Individual initiative Profit Competition Often called Capitalism Production decided by the market through the law of supply and demand Supplies increase, price tends to drop- supplies decrease prices tend to raise

DEMOCRACY & FREE ENTERPRISE ADAM SMITH Intellectual Father of Capitalism who said: Humans motivated by self interest. Should be free to pursue profits. Result: “The Invisible Hand.” Efficient economic system; all will benefit because goods will be produced and sold cheaply.

DEMOCRACY & FREE ENTERPRISE THE INVISIBLE HAND the natural force that guides free market Market capitalism through competition for scarce resources. Acoording to Adam Smith, in a free market each participant will try to maximize self-interest, and the interaction of market participants, leading to exchange of goods and services enables each participant to be better off than when simply producing for himself/herself.

DEMOCRACY & FREE ENTERPRISE He further said that in a free market, no regulation of any type would be needed to ensure that the mutually beneficial exchange of goods and services took place, since this "invisible hand" would guide market participants to trade in the most mutually beneficial manner. Conclusioin??? Government regulation not needed in free market capitalism

DEMOCRACY & FREE ENTERPRISE GOVERNMENT AND THE FREE ENTERPRISE SYSTEM Mixed Economy – private enterprise exists in combination with a considerable amount of government regulation and promotion Government’s role ?? – protect the public and preserve private enterprise