Democracy vs Capitalism: Role of social-welfare schemes in the privatisation era

There seems to be an inherent contradiction between the idea of a free market economy of the globalised era and that of enforcement of 'positive' socio-economic rights by the state. This is largely due to the divergence in the role of the state that either sees as adequate. Though this conflict is being increasingly experienced by developing economies, there isn't much normative literature that has emerged on the subject, with the exception of a few very recent writings highlighted in a previous post on this blog.

Ashutosh Varshney, in his column in the Indian Express, has come out with a possible explanation to this conundrum which the Indian economy is also facing today. He characterises it as a clash between democracy and capitalism and concludes that the government must try to ensure both mass welfare as well as economic freedom in order to attain the fine balance between the two. He believes that while UPA-2 has attended to the former, it has taken growth for granted and has thus faltered in facilitating the latter. The idea that he therefore carries in his piece is that if the government stops assuming that the economy will fuel itself on its own and takes positive decisions in this regard, socio-economic schemes brought in by the same government would not contradict the capitalistic ideals but will, in fact, complement them.