Case | HBS Case Collection | January 2006 (Revised April 2006)

Capitalism and Democracy in a New World

by Bruce R. Scott, Sarah Potvin and Alison Adams

Abstract

Focuses on the formulation of the Northwestern Ordinance as the core of a development strategy for capitalism and democracy in the United States. A precursor to the Constitution, the Northwestern Ordinance was based on the New England Model to achieve a broad and relatively equal distribution of land, ensuring that the distribution of economic and political power was also roughly congruent. By the time Alexis de Tocqueville made his study of American democracy, he observed that capitalism was producing economies of scale and increasing productivity, leading to heightened inequality and the eventual formation of an aristocracy, i.e., capitalism was driving incongruities between economic and political power.

Keywords: Equality and Inequality; Economic Systems; Income Characteristics; Laws and Statutes; Government and Politics; Growth and Development Strategy; Power and Influence; United States;

Citation:

Scott, Bruce R., Sarah Potvin, and Alison Adams. "Capitalism and Democracy in a New World." Harvard Business School Case 706-030, January 2006. (Revised April 2006.)