"Now some scholars argue that a free market can actually undermine democracy. "Capitalism doesn't necessarily lead towards democracy at all," Scott said. "The one thing that you can say is that capitalism is going to relentlessly produce inequality of income, and eventually that is going to become incompatible with democracy."
More worrisome is that the widespread assumption that capitalism and democracy are closely linked can backfire, argues Lord Ralf Dahrendorf, a research professor at the Social Science Centre Berlin. In a recent discussion on democracy and capitalism sponsored by the Hansard Society, a nonpartisan charity in London that promotes parliamentary democracy, he argues that when democracy fails to deliver the economic goods, people begin to doubt its value. "Few things seem more difficult and yet few things are more important for sustainable liberty than to separate capitalism and democracy in people's minds," he writes." (thanks Yasmine)