Capitalism, Pluralism & Democracy: Definitions & Differences

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  • 0:01 Business Environment
  • 0:38 Capitalism
  • 1:17 Pluralism
  • 3:41 Democracy
  • 5:06 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Businesses live in a multi-framework environment consisting of capitalism, pluralism and democracy. In this lesson, you will learn about each framework and how their differences present a unique challenge for a company's survival.

Business Environment

Corporations are saddled with numerous constraints from their stakeholders. In the perfect world, businesses could operate without any intrusions from government and society. Unfortunately, companies have to work within the boundaries of a capitalistic economy.

Because of government intervention, the United States' economy does not have a free market. The system that exists now, as flawed as it is, is a blend of the better parts of a myriad of systems. Let's examine how capitalism, pluralism and democracy affect businesses.


How would you answer the following question? Is the United States a purely capitalistic nation? The answer might surprise you. The U.S. is not purely capitalistic. The definition of capitalism is an economic system based on free and competitive markets, private ownership and minimal government regulation. Capitalism offers democratic freedom and choice for businesses.

There is significant government regulation and ownership of businesses in the U.S., so businesses do not operate in a purely capitalistic environment. For example, President Obama's Affordable Care Act puts healthcare into government ownership.


While the United States is thought of as capitalistic, it also embraces pluralism, or a society that tries to balance power between business, government and the public so that no one group overpowers another. The idea of a pluralistic government is that many groups compete to have their views heard and policies adopted.

A key identifier of a pluralistic society is that it contains numerous special interest groups, which are government, non-profit or profit organizations that are created to represent the group's best interest. The special interest groups can be created based on economic, ethnic or cultural factors. Most special interest groups in the U.S. are formed in order to influence government legislators. Special interest groups are also key stakeholders for businesses and can pressure businesses to act on their objectives. For example, MADD (Mothers Against Drunk Driving) could pressure auto manufacturers to donate money to provide education on drunken driving hazards to teens.

Pluralism is thought of as an integrated piece of democracy since it is based on the idea of governing by the people. There are some key terms of a pluralistic society:

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