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Democracy and capitalism do not have to go hand in hand , however . Indeed , one might argue that a capitalist economic system might be bad for democracy in some respects . Although Smith theorized that capitalism would lead to prosperity for all , this has not necessarily been the case . Great gaps in wealth between the owners of major businesses , industries , and financial institutions and those who work for others in exchange for wages exist in many capitalist nations . In turn , great wealth may give a very small minority great influence over the government - a greater influence than that held by the majority of the population , which will be discussed later .
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