Keywords: Capitalist Systems; Equity; Justice; Inequality; Political Economy.
Rising inequality constitutes a threat to democracy. It is beyond the role of economic theory itself to encompass this, as damage done to democracy by capitalist behaviour may seem to be an externality for economic theory, but it threatens to internalize itself in important ways. The relationship between capitalism and democracy is delicate and complex, and the former faces problems if its own behaviour threatens the latter. This happens because economic wealth can be converted into political power, and vice versa, leading to a self-reinforcing spiral of increasing economic and political inequality. First, the formal equality of universal suffrage is compromised when there is gross inequality in informal political lobbying. Second, the diversity of points of power necessary to pluralism is weakened when a small number of wealthy interests have influence over a wide range of issues.