Democratic capitalism

Democratic capitalism (market democracy) is a political and economic system that combines capitalism and a strong welfare state curbing the excesses of individual freedom. It integrates resource allocation by marginal productivity (synonymous with free-market capitalism), with policies of resource allocation by social entitlement. The policies which characterise the system are enacted by democratic governments.

Democratic capitalism was implemented widely in the 20th century, particularly in Europe and the Western world after the Second World War. The coexistence of capitalism and democracy, particularly in Europe, was supported by the creation of the modern welfare state in the post-war period. The implementation of democratic capitalism typically involves the enactment of policies expanding the welfare state, strengthening the collective bargaining rights of employees, or strengthening competition laws. These policies are enacted in a capitalist economy characterised by the right to private ownership of productive property.

Catholic social teaching offers support for a communitarian form of democratic capitalism with an emphasis on the preservation of human dignity.

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