It is not that people are particularly wise. They aren't. And the larger number of people involved in a decision, the poorer a decision is likely to be. To find the IQ of a group, take the average IQ of the people involved and divide by the number of people in the group. Anyone who has ever marched troops can verify that a hundred men have the collective intelligence of a centipede.  Worse. A centipede doesn't step on its own Feet.

No, democracy is a good system because it is an extremely stable system.

In many parts of South America and Africa, when an individual becomes truly disgruntled, he gets together with 600 friends, 300 rifles, and maybe a hundred bullets, and starts a revolution. This practice is socially disruptive and results in lost work time, destroyed property, and dead bodies, which increase the spread of disease.

In America, such an individual does not go off to the hills with a gun. He becomes a political candidate. Of course, he knows that, to be effective, he must start at the bottom -- say, sewer commissioner. So he runs against six other social misfits for that office. If he loses, at least he feels that he has done his best to straighten things out, that if the people don't appreciate him, they don't deserve him. Anyway, an election is so exhausting, physically, financially, and emotionally, that he is likely to be over his initial anger.

If he wins, well, he can't really do much harm. There are engineers to make sure that [the effluent] flows downhill. And who knows? He may turn out to be a good sewer commissioner.

In any case, society is the winner. Seven potential trouble-makers have been defused, only one of them has to be paid, and they just might get some useful work out of that one.

The Eastern Bloc nations do not enjoy this social advantage. A single political party approves all candidates for office, assuring their loyalty,
 but also screening out the obvious mental defectives, at least on the lower levels. In so doing, they increase the amount of social frustration, which causes a lack of the very stability that the approval process was designed to ensure. Still, it's a better system than having the sons of kings warring to see who will become the next king.

Democracy doesn't work well unless the proper level of education and the proper institutions both exist. Capitalism, as practiced in the 20th century, has some definite advantages. For one thing, companies are allowed to fail and so cease to exist. The physical assets are redistributed, the workers find new jobs, and the poor management which generally caused the problem is put out to pasture.

In a centrally-controlled economy, it is extremely embarrassing or politically impossible for such powers that be to eliminate inefficient managers.

In large organizations, it is hard to be noticed, so it is very difficult to do something that is demonstratively right. It therefore becomes critically important to your career that you never do anything that is demonstratively wrong. Fools may not be fired, but they are rarely promoted, either. To downgrade a subordinate manager seems to imply that one didn't know what one was doing when one promoted him in the first place.

Best to leave him alone and hope that nobody notices. It takes something fairly obvious, an exploding atomic power plant for example, to get anything changed. But generally, things just go on as usual.

This results in the same fools making the same mistakes forever.

People become demoralized, especially the best, most useful workers.  Useful work slows or even comes to a halt. I don't mean that the workers  stop working. They are all furiously active, looking busy. They worry all day long and go home tired. But they are not doing anything useful.

Nor is this problem limited to the centrally controlled economies of Eastern Europe. In major American corporations, poor managers are sometimes
given "lateral promotions," perhaps to company historian, but they are rarely removed.

Another advantage of capitalism is that small companies can do astounding things without the matter becoming political. And I mean both astoundingly good and astoundingly stupid. If enough people try enough new things and if there is some mechanism for dumb ideas to be eliminated, better processes will develop and society will benefit.

People will shake their heads and laugh at someone doing  something silly  with his own money, but they won't try to vote their congressman out of office because of it. But if it is the government's money being spent, they rightfully think it's their money being wasted and the whole matter becomes political. Consider the way one blown gasket stopped the entire American space program for years.

Progress is impossible without trying new things. New things often don't work. Since large corporations do not permit failure, virtually all progress  results from the work of small, private companies.

Yet capitalism has a number of serious problems that seem to be intrinsic to it.  Private companies are generally founded by productive people, often engineers. But when the founder retires, somehow the accountants always seem to take over, and a button-counter is rarely a good decision maker. Or, the founder's widow or son-in-law tries to run the company and things are worse.

Such foolishness would be unthinkable in eastern Europe. There, managers are almost always trained engineers. Many are not brilliant, but most are competent.

Oh, the worst faults of capitalism, the ones Marx was concerned with, have been patched over with government regulations or red tape, at least in America. Monopolies are forbidden or regulated. Surplus workers are not allowed to starve. Vast profits are largely taxed away, although there is still a huge class of people who do nothing productive, but are very wealthy.
 

Yet this very patchwork has problems of its own.  In Poland, if your teeth are bad, you go to a dentist and he fixes them. No matter who you are, even if you are not a citizen, you have a right to good teeth. Paperwork is minimal.

In America, some people have this right and some don't. Most people don't, so they have a vast number of office workers filling out forms to try to prove that only those with special rights get these special privileges.