The guiding principle of democracy in civilization is essentially—on the basis of an egalitarian political principle of recognizing all as free and equal—about civilizing the power of the stronger and about procedures of self-legislation, i.e., a radical socialization of rule. Capitalism, on the other hand, is essentially based on the principle of the power of the strongest.
The tactic of concealment
In capitalism, creating the illusion of democracy serves as a cost-effective way of preventing revolution. Exclusive excerpt from “Hubris and Nemesis.”
Elite rule is the art of keeping a majority under control as a minority. To do this, the latter must be persuaded to accept their own disenfranchisement, at least passively. This is no easy task, but it is a solvable one, as history has shown. Since elites have no desire to limit their privileges but fear violent upheaval, the art lies in manipulating the consciousness of the ruled in such a way that the desire for liberation cannot arise in them in the first place. Better than a revolution that is crushed by those in power is no revolution at all. To achieve this, the illusion of participation must be created without citizens actually having any significant influence on political events. The term most popular with the people is often used as a label for this clever form of rule. At the moment, this is “democracy.” In his power-critical book “Hubris and Nemesis,” Rainer Mausfeld builds on his earlier publications on “Fear and Power” and “Why Do the Lambs Remain Silent?” in a rhetorically dense form.
by Rainer Mausfeld
[This article posted on 11/24/2025 is translated from the German on the Internet, http://www.manova.news.]
The creators of the American Constitution were anti-democratic in their outlook, but even they recognized the great fascination that words such as “popular sovereignty” and “democracy” could evoke in the population. In their efforts to establish a “capitalist constitution” whose goal was to make America safe for capital investment (56), they did not want to forego the seductive word “democracy.”
They therefore concealed their anti-democratic objectives behind this word in order to gain the broadest possible support for their form of elite oligarchy. This reinterpretation was nothing more than a targeted attack on human consciousness, fueled by the need for power. It took less than two hundred years for this reinterpretation of core political concepts to develop into a sophisticated technique of domination. From an economic point of view, the propagandistic creation of an illusion of democracy offers a decisive advantage over other techniques of domination.
As political scientist and propaganda theorist Harold D. Lasswell noted in 1934, propaganda is less expensive than violence, bribery, or any other technique of control (57). In capitalism in particular, those in power want to use the word “democracy” and the advantages of a suitably designed “democracy” for their own purposes, because it is a particularly effective and comparatively inexpensive form of revolution prevention.
So, as Daron Acemoğlu and James A. Robinson point out in their comparative empirical study, “when the costs of repression are too high and the promises of concessions are not credible, elites may be forced to create democracy.” With the development of industrial capitalism, it became “more likely that the potential costs of repression would be higher than those of democracy; elites then prefer to give democracy to dissatisfied citizens rather than use force against them” (58).
However, the beneficiaries of the status quo are only willing to make concessions to the losers of the status quo when they fear for their status.
The “democracy” preserved for these economic reasons cannot, of course, be an egalitarian democracy in the original sense of the word, because this would fundamentally challenge the rule of power elites. In capitalism, therefore, it must be a form of “democracy” that allows the fundamental incompatibility of democracy and capitalism to be obscured.
Democracy and capitalism are incompatible
In 1776, the year of the American Declaration of Independence, the Scottish moral philosopher (and founder of classical economics) Adam Smith noted in his magnum opus The Wealth of Nations:
“Where there is great property, there is great inequality. For every very rich man, there must be at least five hundred poor, and the wealth of the few presupposes the poverty of the many. The abundance of the rich arouses the indignation of the poor, who are often driven by both necessity and envy to invade his property. Only under the protection of the judge can the owner of a valuable possession, acquired through the labor of many years or perhaps several generations, sleep safely for a single night. (…)
The civil government, insofar as it is employed to secure property, is in reality employed to defend the rich against the poor, or those who have some property against those who have none” (59) .
This task of protecting property, as Madison, Hamilton, and Smith correctly recognized, is incompatible with democracy. As already mentioned in Chapter 3, this was already noted by Aristotle, who rejected democracy because it contained the possibility that the poor, being in the majority, would divide the wealth of the rich among themselves—which Aristotle considered unjust.
Democracy and capitalism are fundamentally incompatible in their essence and in their functional logic. To clarify a common misunderstanding: wage labor, money, and markets have probably existed at all times (apart from archaic societies), but capitalist economic practices alone do not constitute capitalism.
Capitalism means the rule of capital (60). And this has an identifiable beginning, about 500 years ago. It has taken very different forms in different historical periods and in different places. One of the characteristics of such a rule of capital is that it seeks to permeate the whole of society beyond the sphere of economic life and to treat all social wealth as commodities. So this is not about capitalist economic systems, but about capitalism as a social order.
The guiding principle of democracy in civilization is essentially—on the basis of an egalitarian political principle of recognizing all as free and equal—about civilizing the power of the stronger and about procedures of self-legislation, i.e., a radical socialization of rule.
Capitalism, on the other hand, is essentially based on the principle of the power of the strongest.
In capitalist states—i.e., states in which the centralized power of the state serves private appropriation, in particular the legal protection of private appropriation—property is the foundation of power relations. The capitalist property order obliges all those who do not have their own capital to work for others, thus transforming work into wage labor.
Work in capitalism essentially means submission to the power relations exercised by a small minority of owners over a majority of non-owners. This is one of the most powerful forms of foreign rule, because the basis of survival for the non-owners depends on the successful sale of their own labor to the owners (61).
Within capitalism, therefore, liberation from foreign rule is not possible. Capitalism and democracy are thus incompatible for the same reason that racism and democracy are incompatible. By assigning greater political power to individual groups on the basis of wealth or ancestry, capitalism and racism are diametrically opposed to the fundamental democratic principle of political equality. This incompatibility is so fundamental and so profound that it cannot be overcome by any form of superficial adjustments.
In capitalism, greed and the parasitic desire to have more, which the ancient Greeks called pleonexia and considered destructive to society, take the form of “greed for enrichment” resulting from the monetary economy (62). This is the form of pleonexia appropriate to capitalism. The purpose of capitalist processes of production and accumulation is by no means consumption or an increase in prosperity. The purpose is capital valorization, in which money is transformed into capital and capital is turned into more capital.
The associated greed for enrichment is the driving force behind capitalism. Thus, it is part of the functional logic of capitalism that it must rigorously protect the minority of property owners from the majority’s desire for change. Capitalism is dependent on the authoritarian protection of its property order and can therefore never achieve democratic legitimacy on its own.
Capitalism inevitably creates extremely asymmetrical power and property relations and thus extreme social inequality and the resulting social tensions.
Capital power determines opportunities for access to the public debate arena, success in elections, the weight of votes in political decisions, and even the process of law-making itself.
This inequality is to be legitimized by the ideology of property. However, this ideology of property and attempts to justify it on the basis of natural or rational law are incompatible with the egalitarian concept of democracy developed during the Enlightenment.
The “sacralization of private property” (63) that dominates Western political thought is diametrically opposed to the civilizing guiding principle of democracy. Since, in capitalism, state protection of all forms of private property is a prerequisite for production and reproduction, it must ensure that the minority of property owners is strictly protected from the majority’s desire for change. Therefore, it can never gain democratic legitimacy on its own. It relies on suitable instruments of ideological power to manipulate the majority into accepting the capitalist power of a minority.
Capitalist-organized areas are characterized by the fact that they are based on principles of utility and profit maximization. In societies where the economy is embedded in society and thus, in principle, still accessible to democratic shaping and control, central social areas such as education, health care, social welfare, old-age provision, and environmental protection are removed from capitalist market forces and are subject to criteria that cannot be reduced to competition and material profit.
However, since capitalism has a tendency to economize all human relationships, it threatens to destroy its own social and ecological foundations if it is not socially constrained.
The economic historian Karl Polanyi pointed out this destructive effect of a “transformation of the natural and human substance of society into commodities” in his classic work The Great Transformation (64). If the economy is no longer embedded in society, but society as a whole is embedded in the economic system, and if “the market mechanism is allowed to be the sole driver of the fate of people and their natural environment, or even just the use and extent of purchasing power, then this would lead to the destruction of society” (65).
Capitalism as a form of society therefore carries within it the seeds of its own destruction and the destruction of society (66). The guiding principle of democracy, on the other hand, arose precisely from the desire to protect society from the destructive dynamics that accompany the emergence of power and property elites.
Despite intensive indoctrination efforts, the incompatibility of democracy and the capitalist social order seems to be sensed, at least intuitively, by a majority of citizens. According to an international survey conducted in 2023, only 54 percent of citizens in the US consider their country to be democratic, compared to 62 percent in Germany.
In both countries, the greatest threats to democracy are seen in economic factors, namely corruption (US 75 percent, Germany 49 percent), social inequality (US 69 percent, Germany 54 percent), the influence of large international corporations on politics (US 72 percent, Germany 57 percent), and the influence of Big Tech, i.e., leading technology companies (US 65 percent, Germany 48 percent) (67). Despite efforts by the mass media to obscure these connections, economic factors are thus perceived by citizens as by far the greatest threats to democracy, which is entirely consistent with sociological analyses.
Since capitalism and democracy are inherently incompatible, if the concept of democracy was to be used manipulatively to gain the population’s consent to the rule of the few over the many, it had to be stripped of its original meaning and redefined in such a way that it de facto meant an electoral oligarchy of capitalist elites (68). The term “representative democracy” served this purpose.
The term “liberal democracy,” which essentially coincides with that of “capitalist democracy,” is also a term of concealment. The rhetorical combination of ‘liberal’ and “democracy” was created with the intention of changing the meaning of the term democracy in such a way that its new meaning is compatible with capitalism, which is essentially authoritarian in nature (see Chapter 6).
In order to conceal the incompatibility of democracy and capitalism by reversing their meanings, a suitable ideology is needed to justify the rule of the few over the many, even without the traditional reference to ancestry, wealth, or social status.
To justify the idea that “democracy” in today’s highly developed societies must inevitably mean “rule by the elite,” various ideological frameworks have been developed to conceal the irreconcilable contradictions between the power and property elites and those subject to their power. In these ideological frameworks, the juxtaposition of a ruling class that sees itself as an “elite” and a class that is understood as the ‘people’ or “masses” plays a special role.
The categorical distinction between “elite” and “people” is made either by declaring the natural superiority of the members of the elite or by asserting that in modern, highly complex societies, the complexity is so great that it can only be handled rationally by suitable functional elites. Since the exercise of social power in modern societies depends on a high degree of rationality and efficiency, political decision-making power must also be reserved for these functional elites. Ordinary citizens are not sufficiently equipped to make decisions that affect the welfare of their community, so a class of elites is needed to guide the fortunes of the people on their behalf.
Sources and notes:
(56) Holton (2018, p. 36).
(57) Lasswell (1934, p. 524); for background and Lasswell’s influence on American political science, see Oren (2003).
(58) Acemoğlu & Robinson (2005, p. 293).
(59) Adam Smith, Wealth of Nations, Book V, Chapter I, Part II Of the Expense of Justice.
(60) On the nature and functional logic of capitalism, see, for example, Jessop (1990), Hirsch (2005), Kocka (2013), Wood (2010, 2015), Hodgson (2015).
(61) Ellen Meiksins Wood describes a central feature of capitalism as follows: “The social functions of production and distribution, surplus value extraction and appropriation, and the social allocation of labor are, so to speak, privatized and carried out by non-authoritarian, non-political means. In other words, the social allocation of resources and labor does not take place through political leadership, communal deliberation, inherited duty, custom, or religious obligation, but rather through the mechanisms of commodity exchange. The power of surplus value appropriation and exploitation is not based directly on legal and political relationships of dependency, but rather on a contract-like relationship between the ‘free’ producer — legally free and free from means of production — and the appropriator who enjoys unrestricted ownership of the means of production.” (Wood, 2010, p. 29).
(62) Karl Marx, 1857, Grundrisse der Kritik der politischen Ökonomie; quoted from Marx & Engels (1983, p. 149).
(63) Piketty (2020b, p. 168).
(64) Polanyi (1944/1973, p. 70).
(65) Ibid., p. 108.
(66) See, for example, Streeck (2015b), Fraser (2023)
(67) http://www.allianceofdemocracies.org/initiatives/the-copenhagen-democracy-summit/dpi-2023/, accessed on August 1, 2023.
(68) Even republicanism (see Chapter 4), which is mostly based on a mixture of elements of elite rule and democracy, and its modern forms are incompatible with capitalism. See, for example, White (2011) and O’Shea (2020)
Rainer Mausfeld, born in 1949, studied psychology, mathematics, and philosophy in Bonn. He is a professor at Christian Albrecht University in Kiel and held the chair of perception and cognition research until his retirement. His most recent publications are “Why Are the Lambs Silent?” and “Fear and Power.”