Democracy for sale as capitalism comes under fresh scrutiny

Yanis Varoufakis, a former Greek Finance Minister, delivered a controversial yet profound critique of capitalism in a recent interview on Nigeria Info FM. According to him, “Capitalism is a catastrophe for humanity. And it’s a double catastrophe for a continent like Africa.” While not everyone may agree with him, capitalism undeniably has its shortcomings, many of which put it at loggerheads with democracy. Varoufakis captures this tension succinctly: “Capitalism and democracy are at war.”

“Their public endorsement, even of an incomplete and controversial project, reflects how capitalism often aligns itself with political power, regardless of public accountability or democratic scrutiny.”

While democracy promises people equality and prosperity, the tragedy is that capitalism, though it has created wealth over the years, has undeniably been a source of inequality, dead-end jobs, and macroeconomic instability according to Martin Wolf, Chief Economics Commentator at the Financial Times, in his book ‘The Crisis of Democratic Capitalism’.

The rise of capitalism: A history of innovation and inequality

If there were no capitalism, only God knows what the world might look like. The impetus that propels capitalism is incentives, which serve as the driving force behind innovation, new technology, and the creative destruction we observe in the world today.

Consider the historical trajectory of England, as narrated by Daron Acemoglu and James Robinson in their book Why Nations Fail. At the beginning of the seventeenth century, “neither slavery nor the severe economic restrictions of the feudal medieval period, such as serfdom, existed in England,” they wrote. However, there were many restrictions on the economic activities people could engage in. Both the domestic and international economy were choked by monopolies, granted by the King or Queen to their cronies.

The state engaged in arbitrary taxation and manipulated the legal system. Parliament fought the monarch for years and, in the end, limited the power of the king and the executive during the Glorious Revolution of 1688. After this revolution, “the government adopted a set of economic institutions that provided incentives for investment, trade, and innovation. It steadfastly enforced property rights, including patents… and protected law and order.” Arbitrary taxation ceased, and monopolies were almost entirely abolished. These foundations, they argue, “decisively changed incentives for people and impelled the engines of prosperity, paving the way for the Industrial Revolution.”

The power of invention and the logic of the market
What changed the course of production was the technological breakthrough resulting from the Industrial Revolution, which began in England. It is no coincidence that this followed the Glorious Revolution by only a few decades. Great inventors such as James Watt (perfecter of the steam engine), Richard Trevithick (builder of the first steam locomotive), Richard Arkwright (inventor of the spinning frame), and Isambard Kingdom Brunel (creator of revolutionary steamships) took up the economic opportunities generated by their ideas. They were confident that their property rights would be respected and had access to markets where their innovations could be profitably sold and used.

This is what capitalism is all about—an economic system characterised by private ownership of the means of production. Cornelius Vanderbilt, through the forces of capitalism, built a vast railroad empire that not only connected key U.S. cities but also generated immense personal wealth and cemented his legacy as one of America’s richest industrialists, often called one of “The Men That Built America.”

As documented in the series The Men Who Built America (also known as The Innovators), the focus was on industrial giants like Vanderbilt (rail), John D. Rockefeller (oil), Andrew Carnegie (steel), J. P. Morgan (finance and power), and Henry Ford (automobile). Their business empires revolutionised modern society: long-distance travel became shorter, America was lit up with oil, personal vehicles became common, and high-rise buildings rose due to mass steel production.

The cost of unchecked wealth
The fact that American society at the time encouraged initiative and rewarded productivity helped these men to innovate. For instance, Rockefeller didn’t just sell crude oil like his competitors—he refined it into kerosene, putting him ahead. Again, when Vanderbilt and Tom Scott, former rail allies, attempted to increase freight charges for Rockefeller’s oil from Cleveland, he built pipelines to boycott them. This innovation not only increased his profitability but also shut the railroads out of the oil business.

But this development came with significant challenges. Inequality kept rising as these men amassed vast wealth. To increase profits, they inflicted misery on their workers, cutting down staff numbers, increasing working hours, and reducing wages. The situation sparked protests. Workers were dying. Eventually, the government had to intervene.

These capitalists also sponsored political candidates. William McKinley (1843–1901), the 25th President of the United States, was a beneficiary of capitalist lobbying. Rockefeller, Carnegie, and Morgan jointly sponsored his first election and re-election, despite their rivalries.

This merger of wealth and political influence reflects what Yanis Varoufakis warned about when he said, “There’s no such thing as democratic capitalism… Capitalism and democracy are at war.”

While democracy promises political equality, capitalism rewards financial power. In many societies, the ultra-rich can tilt elections, policies, and institutions in their favour, turning politics into an extension of market interests.

As Mohammed Yaru (PhD), Reader of Public Finance at the University of Ilorin, puts it: “If making a profit will continue to shift the economy away from the equilibrium (stability), the capitalists would continue to do so.”

Even rational markets produce irrational outcomes
Yet, this is not always about deliberate manipulation. As Martin Wolf notes in The Crisis of Democratic Capitalism, this tension also reflects “the growing complexity of economic life and the pervasiveness of what economists call ‘market imperfections’—situations in which market incentives may lead to socially or economically damaging results.”

In other words, even when capitalists follow market logic, the outcomes can still erode democratic stability. Wolf continues, “We are no longer able to combine the operations of the market economy with stable liberal democracy.” He argues that today’s capitalism fails to deliver economic security to the majority, leading to political disillusionment, populism, and the breakdown of democratic trust.

From Nigeria to America: Elite power still challenges public interest
Take, for instance, Nigeria. The current administration of President Bola Tinubu recently commissioned a half-cooked, economically questionable project—the Lagos-Calabar Coastal Road. What was commissioned represents barely 4 percent of the entire stretch, with little transparency around the bidding process.

Yet, some of Nigeria’s top business moguls—Aliko Dangote (manufacturing), Tony Elumelu (banking), and Abdulsamad Rabiu (manufacturing)—joyfully graced the occasion. As Elumelu posted on Twitter: “With @AlikoDangote and Abdulsamad Rabiu at the commissioning of the Lagos-Calabar Coastal Road, today.”

Their public endorsement, even of an incomplete and controversial project, reflects how capitalism often aligns itself with political power, regardless of public accountability or democratic scrutiny.

Read also: Reinventing democracy in Nigeria

Even in mature democracies like the United States, the tension between capitalism and democracy remains evident. A recent public fallout between billionaire entrepreneur Elon Musk and President Donald Trump reveals how elite interests continue to shape the boundaries of governance—often at the expense of democratic transparency.

The conflict erupted when Trump introduced a signature policy initiative known as the One Big Beautiful Bill Act, which includes the removal of government subsidies, such as electric vehicle tax credits—benefits that Tesla, Musk’s company, has long depended on. Musk, in reaction, fiercely criticised the bill, calling it “a disgusting abomination,” and accused Trump of pushing legislation that adds trillions to the deficit without proper scrutiny.

In retaliation, Trump labelled Musk ungrateful and threatened to cut federal contracts for companies like Tesla and SpaceX—contracts largely funded by taxpayers. Musk then escalated the clash by supporting calls for Trump’s impeachment and linking him to the Epstein scandal.

Beyond the personal drama, this feud reveals something deeper: a modern capitalist is not merely lobbying for favourable policy; he’s battling head-to-head with a head of state over legislation.

This scenario reflects what Martin Wolf describes as the breakdown of the balance between market economies and democratic governance. When policy becomes a tug-of-war between billionaires and politicians, democracy is sidelined, and capitalism becomes the dominant referee.

Soviet lessons: Why growth without innovation was not enough
The difference is clear: countries that did not follow the capitalist route eventually collapsed, even after years of growth, as seen in the case of the Soviet Union, according to Acemoglu and Robinson. Despite its reputation for rapid economic expansion between 1928 and 1960, it faltered in the 1970s under the weight of an extractive system largely driven by the government, with low incentives for the people. They only managed to sustain innovation in military and aerospace technology. “They also left the world the AK-47 as one of their legacies.”

Other comparisons, as Wolf highlighted, include the stark contrast between West (capitalist) and East (socialist) Germany, North (socialist) and South (capitalist) Korea, Western (capitalist) and Eastern (socialist) Europe, and Taiwan (capitalist) and Maoist China (socialist)—all of which proved decisive in showing how inclusive capitalism outperforms command economies in the long run.

The marriage must be managed
As Wolf pointedly said, “Capitalism cannot survive in the long run without a democratic polity, and democracy cannot survive in the long run without a market economy.” This reinforces that for this marriage to endure, governments must build strong institutions that can checkmate capitalists, without falling victim to regulatory capture.

Only then can both prosperity and political freedom be preserved in tandem.