Copyright

Capitalism, Pluralism & Democracy: Definitions & Differences

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: What Are Interest Groups in the United States? - History & Types

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:01 Business Environment
  • 0:38 Capitalism
  • 1:17 Pluralism
  • 3:41 Democracy
  • 5:06 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed Speed
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.

Capitalism

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.

Pluralism

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:

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support