I have been thinking about the 'Istana Zakaria' topic and very humbly believe that you can stretch this whole topic to quite a number of relevant and interesting sub-topics. Among those is the relationship between democracy and capitalism.

Now, if you plot a scatter diagram with democracy representing the Y-axis and capitalism as for the other you will have countries like US and UK positioned somewhere on the top right corner and some developing countries that have low economic creation with political conflict, civil wars and less developed democratic institutions at the lower left end corner. In between, you will have scattered dots of countries and few extremes that reside beyond the majority population.

All in all, you will, roughly, find a straight 45 degree line that denotes a positive relationship between democracy and capitalism. The higher the level of democracy, the more prosperous the countries are. That is something that you can interpret and reckon from that relationship.

However, what is more important is to understand whether the relationship is independent of or dependent on each other? In other words, whether democracy causes and pushes capitalism or vice versa or whether you cannot have good capitalism without democracy or vice versa.

Is it a chicken and egg question or something that is more than just that? I opt for the latter and would argue that it is a question of correlation and causation. The fact that democracy and capitalism are correlated to one another does not mean that they both act as the opposite-causation agent for that correlation (i.e. capitalism causes democracy and vice versa). I would like to argue that it is all based on the motivation or the key drivers for each part.

Capitalism is motivated by wealth creation and for wealth creation to take place, you need some degree of economic liberalisation in the forms of capital ownership, resource mobilisation, et cetera, et cetera. The same goes to democracy in which the main motive of democracy is freedom. And for freedom to exist, you need political liberalisation in the form of freedom to choose and freedom to vote, et cetera, et cetera.

What we can conclude is that both democracy and capitalism share a common trait or denominator in the form of liberalisation. Because capitalism needs economic liberalisation to prosper and because democracy requires political liberalisation for it to develop, you will find, as a result, an underlying positive relationship between capitalism and democracy due to the commonly shared denominator of liberalisation, be it economics liberalisation or political liberalisation.