The relationship between democracy and capitalism is complex and has been analyzed by many political economists and theorists. C.B. Macpherson argued democracy should mean the equal self-development of each societal member, which he saw as fundamentally incompatible with capitalism's market exploitation of workers. Karl Marx similarly believed capitalism's inherent inequalities would inevitably destabilize democracy and lead to its downfall.
In contrast, thinkers like John Locke viewed democracy as a system of majority rule that citizens consent to, which some argue can coexist with capitalism's private property rights. Sheldon Wolin warned, however, that modern corporate capitalism endangers democracy's public deliberation ideals.
John Dryzek highlighted key frictions - capitalism requires environmentally-damaging growth that often disregards the public good, it discounts the future with high interest rates, and its profit-driven actors are indifferent to negative externalities impacting society. He saw democracy as allowing a range of perspectives to improve decision-making.
Economists have weighed in as well. John Maynard Keynes advocated for government intervention to correct capitalism's periodic instability and market failures. Milton Friedman and F.A. Hayek contended the state cannot efficiently allocate resources better than free markets.
Some perspectives align democracy and capitalism as complementary forces promoting individual liberty - democracy through political rights and capitalism through economic rights. Under this view, both rely on the freedom of individual choice by citizens/consumers to function properly.
Critics argue this misses how capitalism concentrates economic power and political influence among a wealthy elite in ways antithetical to democracy's egalitarian principles. As C.B. Macpherson stated, unchecked capitalism fundamentally subverts self-governance and equal rights.
Those seeking balance note how democratic institutions can regulate capitalism's excesses through policies expanding competition, workers' rights, economic mobility and redistribution. When structured appropriately, democracy's diffusion of power across citizens and branches of government can counteract capitalism's tendencies toward wealth consolidation in the hands of the few.
Ultimately, while Adam Smith's "invisible hand" metaphor highlighted capitalism's theoretical self-correcting mechanisms, theorists across the political spectrum have long debated government's appropriate role in curbing capitalism's flaws and aligning it with democracy's egalitarian ideals in reality. Managing this tension remains an ongoing challenge.
