On Democracy and Capitalism: Reflections on Gerhard Wegner’s Historical Analysis

Gerhard Wegner has shown that capitalism and democracy may not be mutually supporting, and political liberty may not lead to economic liberty. Personal and economic liberty once established may fall away more easily than scholars such as North, Wallis, and Weingast (2009) and Acemoglu and Robinson (2012) maintain. I bolster Wegner's nuanced view with evidence of the early effects of the Industrial Revolution on worker wealth and welfare. Workers benefited immediately, and Britain's greatest increases in economic and political liberty came only after this increase in wealth. These historical facts suggest the need for a theory of institutional evolution in which wealth enables social movements that often engender increased political and economic liberty. Political and economic institutions cannot in general be designed and imposed. But when the people are enriched by technological change or earlier increases in liberty, then institutional changes promoting greater liberty may well emerge from the struggles of social movements.