Reading over this, there seems to be a logical gap between the idea of willingness to compromise and the idea of productivity. There could be other gaps, but that's the most prominent one. This is exactly what (C) says. This is not to make it look like magic but rather to point out that fairly often it's possible to anticipate (at least approximately) the assumption the LSAT is looking for you to identify. This is a little but of an art, but it gets easier with practice.
Still, let's go through what's wrong with the other answer choices (other than that they are not assumptions of the argument).
(A) is out of scope both because it mentions disagreements (you might strain to relate this to compromise, but try to keep it simple) and also because it starts talking about directly proportional relationships - something we don't need to know about.
(B) is also out of scope - we don't care how relatively important compromise is for a given number of political parties in a given system.
(D) is totally out of scope - we are only interested in democracies.
(E) is not an assumption of the argument. We can see this by negating it. It really doesn't matter whether this statement is true or false - the argument holds equally well regardless - the mark of an incorrect answer.
I hope this helps. Let me know if you have any questions. I'd love to hear additional thoughts or comments about this problem
