THE MULTI-PARTY SYSTEM

Contemporary Capitalism is Destroying Democracy

Multiple Parties

Summary

Modern capitalism is concentrating wealth at unprecedented levels, with trillionnaires emerging and a tiny elite gaining enormous political influence. Concentrated wealth increasingly shapes policy and politics, threatening democracy globally unless stronger regulation, fairer taxation, and limits on elite influence are implemented.

XISHUANGBANNA — The world will have its first trillionnaire after Space X goes public 12 June. This will be an individual with as much personal wealth as the world's poorest billion people. No one in human history has ever been as rich as is our new trillionnaire.(1)

In 2024, the top 1% owned 43% of planetary wealth. The wealth of the world's 3,000 billionaires grew by 12% in 2025, while that of the top 10 wealthiest persons grew by 23%. Concentrated personal wealth is growing so exponentially that it is fair to speculate we will one day see an individual possess as much wealth as half the planet.

This is the point at which Chinese peasants traditionally revolted, and scholarly officials then wisely decided the Emperor had "lost the Mandate of Heaven." We, however, seem to be going quietly along with this scandalous state of affairs, admiring the Earth's new oligarchs and avidly following their tweets.

Declining Democracy and Increasing Elite Influence

Western belief that economic freedom and political freedom reinforce one another dates back as far as Adam Smith and John Stuart Mill. Their citizens are taught that they are free, living in democracies.

There were certainly decades when multi-party systems and capitalism thrived together. Today however, there is strong evidence that democracy is backsliding. The USA saw a 24% decline on V-Dem's Liberal Democracy index in 2024–2025 alone, dropping from 20th to 51st globally that year.

The decline combines a drop in trust in institutions, weakening legislative constraints, increasing concentration of power and influence, reduced media independence, constrained political rights and falling freedom of speech.

The overall Western trend is similar, if a little milder. Three long-term data sets (V-Dem, Freedom House and EIU.com), illustrate this. Freedom House, for example, reports two decades of global democratic decline, including in the United States, Hungary, France, Italy and the UK.

To give an example: Peaceful protest in the UK is being criminalized. Anti-monarchy protestors at the time of the accession of King Charles III — just people holding signs such as "Not My King" — were arrested in an echo of past lèse-majesté laws.

Australia raided a journalist's office because she was preparing a story on Australian forces committing war crimes in Afghanistan. Numerous countries have made pro-Palestinian protests illegal.

An Ipsos survey across nine Western countries in 2025 found satisfaction with democracy below 50% in eight of them, with majorities worried about democracy's future. We should be.

Growing Inequality Is the Most Important Factor

Economic inequality is the strongest predictor of democratic erosion. Unequal nations are much more likely to elect leaders who undermine democratic norms. Helen Milner's article (2021), Is Global Capitalism Compatible with Democracy? concluded that rising inequality, economic insecurity, and concentrated economic power fuel support for populist movements that challenge democratic norms.

Thomas Piketty demonstrated in Capital in the Twenty-First Century (2013), that wealth accumulation and concentration have been sharply increasing since the 1980s. Piketty contends that when return on capital outpaces growth (such as that 23% in a year, mentioned above), wealth concentrates quickly at the top. Simple math.

Enormous, concentrated wealth converts into enormous, concentrated political influence, mainly through lobbying and financing campaigns. A good example is Elon Musk's $ 1/4 billion-dollar contribution to Trump's 2004 election campaign. Wealth also buys media ownership. For instance, Jeff Bezos owns the Washington Post and stopped it from endorsing Trump's opponent. Without the support of these billionaires it is unlikely Trump would have been re-elected. Most importantly, super-wealth buys access to elite networks such as Trump's Mar-a-Lago estate where a long waiting list of supplicants all seek to pay the $1m "Initiation Fee."

We have no shortage of examples of elites' political influence in other countries. Russian oligarchs in the 1990s were particularly famous. In Italy, Silvio Berlusconi, a billionaire with a near monopoly on media became Prime Minister for several terms. India’s Gautam Adani and Mukesh Ambani are often discussed in debates about corporate influence, government contracts, and regulatory decisions. Then there are South Korea’s chaebols, large family-controlled conglomerates such as Samsung, Hyundai, and LG, that greatly influence public policy. A record five former South Korean former presidents have been convicted and imprisoned, mostly for corruption. Let's not forget Brazil's "Car Wash scandal" or the Marcos, Aquino and Duterte families in the Philippines.

The Influence of Elites Continues to Grow, Even in More Equal Countries

The data on democracy's decline are less severe in countries with greater equality, such as the Nordic countries, Canada or Australia, but we should not be reassured, for two reasons:

Firstly, the Gini coefficient that illustrates greater equality in some countries is an income coefficient not a wealth coefficient. While the US income Gini is .48, its wealth Gini is .85, close to South Africa's soaring .9. India's income Gini is an amazingly low .26 yet its wealth Gini is a very high .75.

Secondly, the inordinate political influence of a Samsung or Berlusconi is hard to deny, yet South Korea has relatively low income inequality with an income Gini of .31, and even acceptable wealth inequality at .63. Italy too has a modest income Gini of .32, if higher than the EU average, and a wealth Gini of .57 or about average for the West. Since both of these countries have been experiencing falling democracy ratings over the last 20 years in the various indexes cited above, it appears that extreme concentration of wealth in the hands of just a few persons, even if it is not enough to move the Gini needle much, can alone spur significant democratic decline.

Norway may seem to have low inequality as measured by a low income Gini coefficient of .28, but its wealth Gini (officially unavailable), is estimated at a high .75. Norway has an "Inner Circle" of corporate directors who leverage influence through "serving" on government advisory boards. Wealthy owners of the same corporations then further their influence via corporate donations to right-wing parties.

In Denmark, with similarly high wealth inequality of 0.75, a core of some 275 directors acts as "hardcore brokers," enjoying privileged access to legislative committees. The elite mostly favors technocratic governance, at times entirely drowning out public political debate.

In Canada (income Gini .36), the wealth gap has just hit a breaking point. The top 1/5th now have 2/3 of net worth, while the bottom 40% have just 2.7%. This is mild by international standards and there is scant evidence it is causing democratic deactivation.(1) However, Canada is not immune to polarization and this may cause problems in future.

In Australia (income Gini .31, wealth Gini .61), Clive Palmer donated $116m to the United Australia Party in 2022, an amount that dwarfs Elon's $250m for Trump if compared to Australia's GDP, and then gave $50m to his own "Trumpet of Patriots" political party in 2024/25.

When Australia limited donations to $20,000 per party per year last year, major parties just set up "associated entities" that have no limits and no disclosure. Parliament then passed another new law blocking this but raising the effective limits. Most importantly, they set a limit of $90 million per party for a federal election campaign and $800,000 per House seat. That may make a difference, or it may spur the emergence of something like US "Super PACS", which have completely bypassed such laws there.

In China, an income Gini coefficient of .36 approaches the USA's .42 and its wealth Gini of a high .7 approaches the USA's very high .85. Inequality soared during the reform era begun in the 1980s and political corruption by financial elites then ran rampant, threatening China's democracy (yes, I said democracy.(2)) Today, after more than a decade of anti-corruption work, political leaders are firmly back in control of the private sector's elite. A total of 15-20 Chinese billionaires have been detained or arrested in China in the last 7-8 years, either for corruption, financial violations including excessive debt and risk to the banking sector, or excessive political interference. Many others, including impressive numbers of senior officials and Generals, have also been convicted of corruption, mainly for accepting bribes from business people.

Solution or Dystopia?

With democracy declining in more countries than not, undermined by soaring wealth inequality and super-wealth, there is a clear danger for almost the entire world.

Globalization has forced most states to compete with each other to lower taxes and offer other incentives to the world's biggest corporations and richest tycoons, enormously weakening public bargaining power. In most countries the very rich pay taxes at lower rates than the middle classes. The richest are permitted to openly buy political influence, such that it is difficult to win office without their 'generous support.'

There are, however, signs that we are waking up. A minimum corporate tax of 15% has now been agreed to by 150 countries. That is an important step forward, though the United States insisted on a unique exemption for its own corporations. But it is far from enough to curtail the rampant enrichment we are witnessing.

We are going to need to do much more, particularly to stop political power from being auctioned off. Without very strict limits on campaign contributions, elections alone are becoming insufficient for a government to claim legitimacy, while non-electoral political systems also mostly succumb to the rich.

Our grandchildren risk living in a terrifying dystopia where one man or woman possesses more wealth than half the world's population — where voting has become pointless compared with their power and free expression is widely suppressed. It is up to all of us to ensure that doesn't happen.

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1) To find someone who once possessed equivalent personal wealth proportional to the rest of the world, we need to go back 2,000 years, to Rome's Emperor Augustus, but that was a world of an estimated 170 million souls — a mere 2% of today's 8.3 billion. Mansa Musa in 14th century Mali was also a contender, mining vast quantities of gold, but likely had "only" $4-500 billion in today's terms.

2) Economist Intelligence Unit (EIU): "Improving. " Canada jumped to 9th globally in 2025 (up from 14th), with its score rising by nearly 0.4 points. It remains classified as a "Full Democracy" and is one of only three in the Americas.

Freedom House: "Stable/Very High". Canada scored 97/100 in the 2024 report (covering 2023). While this was a one-point drop from previous years, the country remains "Free" and ranks in the top 5 globally. However, Freedom House criticizes long delays in Canada's courts, high legal costs, and inferior Indigenous access, while Quebec's secularism law has restricted religious freedom for public employees.

V-Dem Institute: "Stable" but Canada ranks a lower 25th on the Liberal Democracy Index. The country fluctuates between "Liberal Democracy" and "Electoral Democracy" based on specific indicators like access to justice .

3) Westerners are usually incredulous to learn that the lowest, township or county level of representatives in China are all chosen in public elections. They in turn elect the prefecture level whose representatives then elect the provincial level, who elect the national level representatives who go to Beijing. All citizens over 18 have the right to vote and stand for election and voting is by secret ballot. Fully a third of those who make it to the People's National Congress in Beijing each year are not members of the Communist Party. See Kan (1 February 2026), "My China." Though far from perfect, this is a considerable degree of democracy that most Westerners know nothing about.

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