In our era there is an ongoing debate about the relationship between democracy and commerce. We have three locations that raise the question. Singapore is a socialist country with thriving commerce. Hong Kong was a free market, now a pseudo-democracy with thriving commerce and then there is China, a country with thriving commerce and not a shred of democracy.
I am a champion of commerce. What is my opinion about the role of democracy?
From my position it appears that Mancur Olson has answered this question with his metaphor of a saucer. Olson argues that industrial commerce, thrives on the flat part of a saucer. The low part of the saucer is anarchy in which industrial commerce has no ability to build a market and maintain enduring management. The high outside tip of the saucer is the tyrannical environment where the tyrant will confiscate a business that succeeds and give it to his brother (or his campaign donors).
I think it is necessary to re-examine Olson's saucer. What we have in the low inside part of the saucer that is identical to the high outside part of the saucer is the absence of a reliable legal system. The rule of law is the sine qua non of industrial commerce. One needs to have private property protected by the rule of law in order to avoid the problems of both anarchy and tyranny.
China does not have an established 'rule of law' that applies to everyone in the society. It might prove to be a failure over time. We can therefore require a longer period of time than the current 30 years of Chinese success to examine the question of commerce and democracy. At this point I would say that democracy is not necessary but the reliable rule of law is.
The only question is whether we can have the rule of law in a society that is not democratic. We do not have sufficient answers to this question at this point in history.
I do not want to suggest that the rule of law is the end all of commerce. Commerce thrives at the trade level in anarchy. People still buy and sell food, cigarettes and sex in an anarchistic environment. They also sell and buy weapons and ammunition. (Trade is different from industrial commerce.)
The rule of law also has its upper limits. In the United States where we claim great priority for the rule of law, we still have property confiscated for self-interested plutocratic reasons under the eminent domain rule. We constantly have businesses punished by regulatory authorities and taxed out of existence. But, we have some fairly extensive rule of law that applies to the vast market of businesses.