Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people.
Soft despotism gives people the illusion that they are in control, when in fact they have very little influence over their government. Soft despotism breeds fear, uncertainty, and doubt in the general populace. Alexis de Tocqueville observed that this trend was avoided in America only by the "habits of the heart" of its 19th-century populace.
In Volume II, Book 4, Chapter 6 of Democracy in America, de Tocqueville writes the following about soft despotism:
Thus, After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.
I have always thought that servitude of the regular, quiet, and gentle kind which I have just described might be combined more easily than is commonly believed with some of the outward forms of freedom, and that it might even establish itself under the wing of the sovereignty of the people.
Our contemporaries are constantly excited by two conflicting passions: they want to be led, and they wish to remain free. As they cannot destroy either the one or the other of these contrary propensities, they strive to satisfy them both at once. They devise a sole, tutelary, and all-powerful form of government, but elected by the people. They combine the principle of centralization and that of popular sovereignty; this gives them a respite: they console themselves for being in tutelage by the reflection that they have chosen their own guardians. Every man allows himself to be put in leading-strings, because he sees that it is not a person or a class of persons, but the people at large who hold the end of his chain.
By this system the people shake off their state of dependence just long enough to select their master and then relapse into it again. A great many persons at the present day are quite contented with this sort of compromise between administrative despotism and the sovereignty of the people; and they think they have done enough for the protection of individual freedom when they have surrendered it to the power of the nation at large. This does not satisfy me: the nature of him I am to obey signifies less to me than the fact of extorted obedience. I do not deny, however, that a constitution of this kind appears to me to be infinitely preferable to one which, after having concentrated all the powers of government, should vest them in the hands of an irresponsible person or body of persons. Of all the forms that democratic despotism could assume, the latter would assuredly be the worst.
When the sovereign is elective, or narrowly watched by a legislature which is really elective and independent, the oppression that he exercises over individuals is sometimes greater, but it is always less degrading; because every man, when he is oppressed and disarmed, may still imagine that, while he yields obedience, it is to himself he yields it, and that it is to one of his own inclinations that all the rest give way. In like manner, I can understand that when the sovereign represents the nation and is dependent upon the people, the rights and the power of which every citizen is deprived serve not only the head of the state, but the state itself; and that private persons derive some return from the sacrifice of their independence which they have made to the public.