The Capitalist system is based on the principle that if people are allowed to invest freely, they will compete with each other and that will result in hard work among people. In other words the capitalist are of the opinion that people are selfish and that they will work hard only if their selfishness is encouraged . On careful analysis, we can find that this argument is not correct. If people are selfish and their selfishness is encouraged, there will not be the need for law or legal system or the state. After all what is law . Law is a social contract. Law is for saving the society from chaos. In other words the law curtails the unlimited freedom of the individual. For example the law in almost all the Capitalist countries prevent the individual from doing theft and killing each other for money. If people are selfish they will fight each other and there will not be any need for law. But this does not happen because people in general are not selfish. That is why they entered into a social contract. Hence the economic doctrine of ‘laissz faire’ in the Capitalist Democracy is the greatest ‘Utopian’ ideology in the world. That means capitalism cannot function without legal system or state. Therefore I am of the opinion that Democracy is Socialistic. But Capitalism may be individualistic. Because it is the right of the individual to enterprise which is the characteristic feature of Capitalism yet the two are co-existing. If we analyze world history, we can find that a form of Democracy Co-existed during the period of slavery and feudalism also. Hence we cannot say that Democracy is an institution of Capitalism. For example the British and French Democracy are evolving towards socialism. The coming to power of Labor Party in Briton and socialist Party in France indicates that.