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CHAPTER 12:
CRONY CAPITALISM
AND DEMOCRACY
After the Berlin Wall collapsed in 1989 and
the Soviet Union dissolved in 1991, Francis
Fukuyama declared the establishment of democratic
government and market economies as “the end of
history,” meaning that democracy and market-oriented
economies were the final evolution of economic and
political institutions. 1 Fukuyama’s characterization of
democratic government as the end of history understates
the importance of constitutional constraints on government.
“Democracies” do not operate under the principle
that the government does whatever the majority wants;
rather, democratic governments have constitutional constraints
on the activities they can undertake.
The US Constitution provides a good example of a
formal constitution that gives enumerated powers to the
government—in other words, the government has only
those powers that the Constitution specifically allows it.
The constitutional framework of other Western democracies
is similar, although every nation is different. Britain,
for example, does not have a formal written constitution,
but the constitutional rules that run British government
are similar to those of the United States. The point is that
CRONY CAPITALISM AND DEMOCRACY 89