Basic Concepts of
Democracy
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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
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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
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FOUNDATIONS
EQUALITY OF ALL PERSONS
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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
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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
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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
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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
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FOUNDATIONS
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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)
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Compromise is a process to achieve
majority agreement
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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
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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
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DEMOCRACY & FREE
ENTERPRISE
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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
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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.
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DEMOCRACY & FREE
ENTERPRISE
THE INVISIBLE HAND
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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.
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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
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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
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