1. Basic Concepts of Democracy

2. 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
Capitalism also linked to non-democratic regimes (e.g. China).

3. 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

4. FOUNDATIONS EQUALITY OF ALL PERSONS
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

5. 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

6. 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

7. 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

8. FOUNDATIONS 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)
Compromise is a process to achieve majority agreement

9. 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

10. 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

11. DEMOCRACY & FREE ENTERPRISE
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

12. 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.

13. DEMOCRACY & FREE ENTERPRISE
THE INVISIBLE HAND
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.

14. 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

15. 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