The "marketplace" of individuals and entities all seeking to maximize their share of the central-state swag doesn't make a democracy.
A democratic republic is a government in which power flows from citizens to their elected representatives. The American revolutionaries did not make a big distinction between republic and democracy, for in the context of the late 1700s, the dominant political structure was monarchy, and democracy meant the people have the final say via elections.
As Gordon Wood explains in his seminal book The Radicalism of the American Revolution, the upper-class revolutionaries had their doubts about the rabble's ability to pursue the common good above their own narrow self interests. This ability to focus on the public good rather than on one's own financial interests was widely understood to be the make-or-break dynamic of a durable democracy: without a class of citizens who could set the public good above their own interests, democracy would fail and be replaced by a neofeudal system of patronage in which loyalties followed a hierarchy of self-serving privilege.