Which Type of Government Works Well With a Free Market System


You never hear about a free market existing in a country ruled by a monarchy.

It’s just not something you run into.

So, is Capitalism not compatible with a monarchy?

A better question would be, are there certain forms of government that aren’t compatible with Capitalism?

The answer to that question is yes.

Take a Monarchy for Example

In the heyday of monarchies, the prevalent economic system was mercantilism.

Mercantilism was a messed up view of the economic world. It held that the more wealth your nation collected the less other nations had. In essence, mercantilism believed in a finite amount of wealth.

Mercantilism used government regulation to control the economy in a way that would benefit the nation at the expense of foreign nations.

Today, mercantilism is dead, but so are monarchies; except for a few places.

Most of these modern monarchies are powerless. They’re figureheads, nothing more than glorified mascots of their respective nations. There’s only a few nations that still have legitimate monarchies.

Some of those being, Saudi Arabia, Qatar, and Oman. Mostly all of them are third world nations.

Since a monarchial form of government is a dying breed, it’s hard to know whether a Capitalistic system is compatible with such a government.

I would say yes it is compatible, but only at the will of whoever is in power. With monarchies, the progression of the nation depends solely on whose king at the time. If one king is pro-market, but his successor is not, then you’ve got a problem.

With a monarchial form of government, the economic structure could be changing from ruler to ruler. It’s not a stable system at all. But yes, a capitalistic society could work under a monarchy.

What About a Dictatorship?

I like to think of monarchies as a glorified version of a dictatorship. So, dictatorships would work the same way as monarchies.

If the dictator supports Free Markets then all is well. But if his successor comes into office and enjoys passing laws then your Free Market system dies with him.

It’s all up to whoever is in power.

It’s worth mentioning that certain forms of a dictatorship are incompatible with Capitalism. Fascism is one example (but that’s for another article).

What About a Democracy?

Most Americans tend to view democracies as an overarching political term. If the people have rights, can vote, and aren’t shot in the street then it’s a democracy.

That definition is wrong.

A democracy is, for lack of a better definition, a system where the citizenry is the legislature. There’s no separation of powers like what you see in a republic. Every citizen votes on legislation, laws, etc.

It’s the rule of the people, directly. Others call it the tyranny of the majority.

Regardless of what you call it, a democracy and a Free Market system go hand in hand. If the people are a bunch of control freaks then you might end up with State Capitalism. It all depends on the people.

What About a Republic?

I would argue that republics and Free Markets go together the best. Not only do you have separation of powers in a republic, but you also have some form of checks and balances.

Republics are usually formed around the idea of individual freedom. With that comes a belief in the Free Market.


Regardless of which form of government you have, as long as there’s a belief in the Free Market, it should work out.

Capitalism is adaptable. That’s what makes it so beneficial.

Yes, there’s a connection between capitalistic economies and systems of governance, but in the end, it comes down to the people.

Do the people value the voluntary trade of goods and services? Do they understand the benefit of having an unregulated market, free of government interference?

Is the nation’s leadership open to Free Market solutions? Are they willing to stand back and let the Free Market correct itself?

If the answer is yes, then you’ll be enjoying the benefits of what Capitalism can do.

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About John-Pierre Maeli

Keeping it simple and crystal clear, because anything else is useless. I'm here to not only inform you, but to also connect with you. That's what The Political Informer is all about. Feel free to follow me on either Twitter or Google+ Let's talk!

  • Lenny deigdeig

    You’re just wrong here.

    The ONLY type of compatible government is Anarchy.

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