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5 - The market

from Part II - Explaining democracy: Causal debates

Published online by Cambridge University Press:  15 April 2026

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Summary

A market system is conducive to democratic politics for two predominant reasons: a well-functioning market requires a certain scope for the free activity of individuals within a framework of stable and predictable laws. The causal link between the market and democratic government is relatively forceful to the extent that 'democracy' is understood as the establishment and protection of private property rights. The assertion that a strong market prevents the concentration of political power is hardly a novel observation; it was the theme throughout most of Friedrich Hayek's works. The perception of a close relationship between democracy and state autonomy is becoming increasingly common: intriguingly, Jean-Marie Guéhenno's French publication The End of Democracy was translated into English as The End of the Nation State. A domestic marketplace independent of state control is conducive to the establishment of democracy, because it diffuses power away from the state.

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