Authors: Lipset
Summary: The entry, of about 1000-word length, is compiled only from a theoretical perspective. After defining market theory as a "theoretical approach that develops models of the effects of economic markets on politics and society", it succintly reviews the literature from Tocqueville to post Cold War views.
According to Tocqueville, democratic dictatorship of public opinion would jeopardize market forces owing to envy, corruption and, in his view, state control of the economy, theme further developed by Hayek.
In contrast with this pessimistic view, M. Friedman argued that market is necessary for political freedom since it disperses power. Moreover, he wished a privatization of social security programs because he thought that it would enhance their efficiency.
Post Cold War thinkers proved Tocqueville wrong, since it has now been accepted that democracy, far from being incompatible with market is "an essential condition and complement for economic freedom".
The entry closes with a brief mention to some governments privatization plans in the '90s.