Democracy is an application of the "wisdom of crowds" theory long before the theory was defined. However, crowd theory only works if people have access to unbiased information on which to apply their own biases. Here are some interesting attributes for the "wisdom of crowds" to work.
The three conditions for a group to be intelligent (wise) are diversity, independence, and decentralization.
The best decisions are a product of disagreement and contest.
All of these attributes were designed into our form of government. However, the Founding Fathers also feared that the wisdom of crowds could turn into the tyranny of mobs and as a precaution, they also established individual civil rights that provided not only minority rights, but the ability of the minority to express themselves and hopefully persuade others to join them.
We need the First Amendment to make democracy work and to take full advantage of the wisdom of crowds. However, the recent participation by both the media and government in censoring expression highlights that those in power don't trust the wisdom of crowds.