The relationship between capitalism as an economic system and democracy as a political structure is complex and variable. The original emergence of a capitalist economy encountered three basic problems: (1) overcoming absolute monarchy, a regime which often violated capitalist contracts and sometimes expropriate capitalist wealth; (2) eliminating control over productive resources by the land holding or aristocratic class, a class not committed to steady work or economic growth; and (3) liberating labor from feudal servitude so workers could toil within capitalist enterprises. Addressing these three problems sometimes rendered capitalist elites relatively sympathetic to political democracy.
Two basic patterns emerged, each based upon different class alliances. The liberal revolutionary route to mature capitalism occurred in England, France and the United States (among other places). Here, the capitalist class made common cause with free labor to defeat the aristocracy, abolish or limit monarchy, and emancipate labor from serfdom. The liberal revolutionary route to mature capitalism usually induced partially democratic political structures.
The compromising conservative path to mature capitalism unfolded in Germany and Japan. Here the capitalist class compromised with the landed aristocracy, so that capitalists controlled the economy while aristocrats controlled the state. This conservative route to mature capitalism was not hospitable to democracy. On the contrary, it generated societies prone to fascism, because unresolved class conflicts fostered aggressive militarist expansion. Barrington Moore's "Social Origins of Dictatorship and Democracy" (1966) brilliantly analyzes this early relationship between capitalism and democracy.
Under mature capitalism (e.g. 20th century Western Europe and North America) capitalist elites are wary of and sometimes exceedingly hostile to political democracy. Although they crave state protection from recurrent economic crises, modern capitalists realize that a democratic state can strengthen the working class, regulate capitalist enterprise, and impose progressive taxation on capitalist income to fund comprehensive social welfare.
In recent decades, the American capitalist class has bifurcated regarding state power and democracy. One part, consisting largely of publicly traded corporations engaged in production (rather than finance), supports a strong state and is relatively tolerant of moderate electoral democracy. Entrepreneurs from the military-industrial complex typically adhere to this sector of the capitalist class.
The other main sector of the capitalist class is hostile to state power and deeply antagonistic to political democracy. Adherents view democracy as a license to steal property and an illegitimate yoke upon talented entrepreneurs. This segment of the capitalist class — anchored in finance and in large, privately held enterprises — subscribes to an extreme version of anti-statist neoliberalism. Its members oppose public education, social security, unemployment insurance, public health programs and virtually any social movement. An excellent description of these so called "libertarian" capitalists is given by Nancy MacLean in her book "Democracy in Chains" (2017). Their thinking is revealed by Republican Speaker of the House Paul Ryan, who told an audience that the nation's school lunch program left poor children with "a full stomach — and an empty soul."
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