base communism principles are based on democracy - rule of the people and all...
Of course in reality it never happened (yet), but theoretically, sure.

No, non-capitalistic economies requires authoritarian/totalitarian governments with centralized power over everything to operate. If power is centralized and the government is telling you how to live, your votes are obviously meaningless and democracy is impossible since you can't change anything with your vote. Obviously a republic has a similar downfall, the elected representative has to actually operate on the platform he runs on for your vote to matter.

no this incorrect.
The market system is not in anyway connected to a specific system of government.
Yes, under communism, the state/government controls the economy, industry, market etc. However, this government can still be democratically elected.
Just because the state owns everything, doesn't make the system automatically authoritarian.
Even under capitalist democracy, not every individual gets to do what he likes, but only what is acceptable by MAJORITY. And if you go against that majority, you are perceived as a criminal.
Communism democracy runs on the same principle.

This argument goes back to my main point, it was If there was no government, capitalist would create a government to protect it's assets and investments.

Think back to your history lessons. Remember our forefathers? The writers of the Constitution? The Creators of our current government? What were they fighting against? Taxation without proper representation right? Now here are a bunch of RICH guys who no one elected trying to piece together a government after they've defeated the British. Every single one of them knew their history from other democratic societies. All of them had been well educated, Had read Locke and other famous political theorists. So now they're creating a Confederation because each guy was from a different state where they had set up their own wealth and they had gotten together and decided what was best for the nation in absence of government, but all they came up with was a system to protect their and their fellow business mans wealth. And they built this up on the backs of the laborers. Also like those dirty hippies on Wall Street, this was easy to do, because the dumb fuckers (the common man) didn't pay attention to what was happening until it was too late and they had already been fucked (Sounds like the protesters in the Occupy group)