Category: Democracy

Economic Inequality as an Inhibitor to Democratic Change

High levels of economic inequality have frequently been cited as a reason for why democracy may not be effective in a certain nation, or why democracy cannot prosper for long periods within a country. Democracy in this context is referring to a nation that holds free and fair elections with broad participation, along with a rule of law that contains checks and balances on power (Treisman, Lecture 1). Inequality can be determined using the Gini coefficient, a number between 1 and 100 (from equal to unequal) created by examining various factors of a nation and observing which people have power and wealth. Income inequality inhibiting democracy is far more nuanced than first glance. In fact, this theory needs to be split into two separate elements: does economic inequality prevent the establishment of democracy, and also how is inequality measured in different time periods? The measure of inequality has changed over time, and as wealth has gained mobility, this has affected the way democracy might be implemented in a nation. Scholars from Aristotle to the present day have discussed this very topic, citing various factors or reasons for why inequality cannot foster democracy. It is important to look at the difference and redistribution of the rich and poor in a society, as well as a middle class, and whether that has an impact on democracy. Similarly, capital mobility and the transition from land assets to mobile assets have a significant effect that explains why inequality might impede democracy. High levels of economic inequality impact the establishment of democracy, as factors such as the unequal distribution of power, the lack of the middle-class buffer, and the differentiation of capital prevent democracy from taking hold in certain regions in the world.

The relationship between economic inequality and democracy has been examined via the theory of redistribution explained by Alan Meltzer and Scott Richard. However, this theory does not account for the immense power that the rich have in some societies around the world to suppress protest. The Meltzer-Richard model states that when the gap between the rich and the poor increases, the rich suffer more, since they will be more heavily taxed as a result of amassing a large part of the resources in the economy (Acemoglu & Robinson, 36). Theorists point to this aspect to explain why inequality can lead to democracy; they believe the rich will want to impose a democracy to redistribute the wealth to stop tax increases (Acemoglu & Robinson, 36). This is splendid if the rich, or ‘elites’ as Acemoglu and Robinson call them, gave into democracy so simply, but power is far more valuable than wealth, and the redistribution of power is unlikely to occur with a strict authoritarian regime (15). Nations with extreme inequality and authoritarianism like Saudi Arabia and Venezuela have amassed so much power and wealth that they can easily employ forces to quell pro-democratic sentiment. Their wealth and power are so consolidated at the highest level that citizens are dissuaded from protests in fear. If all else fails, elites in these places have the power to commit electoral fraud and put in a dictator, disenfranchising the poor who were hoping for democratic reforms (Treisman, Lecture 8). Electoral fraud by the elites to put their own in power can prevent democracy from taking hold in a nation, all under the guise of the democratic value of broad elections. Although the redistribution theory provides evidence for how an unequal society can potentially become democratic, it remains impractical when considering the power relations between the elites and the rest of society.

Nations with high inequality might still be democratic. However, these nations suffer from high instability and self-serving policies of the elite, due to the lack of redistributive policies. Acemoglu and Robinson use an ‘inverted U-shape’ to describe the relationship between inequality and democracy. In this case, if inequality is high, the chance for democracy to be implemented is low. However, this does not mean that there are not exceptions to this rule. Even though abuse of power may prevent democracy from flourishing in these nations, there have been many imbalanced nations that have harbored democracy, despite the inequality amongst their citizens. Latin American countries are a good example of this, as countries like Brazil have one of the highest rates of inequality in the world, but maintain a democratic system. The survival of the democratic system in Brazil is likely due to the transitional method it took to achieve democracy (Acemoglu & Robinson, 38). Since Brazil is highly unequal, its democratic transition needed redistributive policies for the poor. However, the nation took a conservative approach, which is why inequality is so high, and why Brazil has become seemingly less democratic over the years, plagued by government scandals that have taken money out of the country. As a result, democratic systems in highly unequal places are mostly unstable and volatile, since the elites are passing policies that give them more power rather than redistribute amongst the population.

Another aspect that is sometimes forgotten in this discussion of inequality hindering democracy is the establishment of a strong middle class that is instead the reason for democracy in the first place, and its absence in a country makes it difficult for an unequal country to compromise amongst its citizens. Aristotle believed that the middle class was the way to achieve democracy, exclaiming: “great then is the good fortune of the state in which the citizens have a moderate and sufficient property; for where some possess much, and the others nothing, there may arise an extreme democracy, or a pure oligarchy; or a tyranny may grow out of either extreme…” (Aristotle,108). Rather than a highly unequal society being the cause for a lack of democracy, looking at the establishment of a large and mobile middle class can explain why democracy occurs in certain places rather than others. The middle class has access to a sufficient amount of resources as well as being educated, which makes democracy easier to swallow for elites that are concerned about extending democracy to the outer reaches of society (Acemoglu & Robinson, 39). Additionally, the middle class normally pushes for democracy because they have the economic means to participate in a social movement (Acemoglu & Robinson, 39). It is during a period of a large middle class that democracy does well, and societies without an established middle class suffer from this lack of a buffer between the rich and poor (Acemoglu & Robinson, 39). Acemoglu and Robinson reference Costa Rica as being a strong democracy in comparison with its Central American neighbors like Nicaragua and El Salvador, who lacked the middle class Costa Rica had. As a result, it was difficult for democracy to take hold in the region; there was larger inequality between the rich and the poor, with no middle class to bridge the gap. However, there are cases where a middle class is present, and the country is highly unequal, and this inequality prevails over a middle class trying to establish a democracy. China is a prime example of this, as the high level of inequality in the country and the oppressive power of the elites in country prevent the middle class from participating in any democratic movement. Ultimately, the absence of a middle class will usually stop democracy from gaining hold in the region, because the middle class provides resources for the transition to democracy.

One of the most important factors supporting the notion that inequality hinders democracy is the differentiation and disbursement of capital across time. Carles Boix, one of the proponents for inequality hampering democracy, believes there is a downward sloping relationship between the two, and the less likely it is for a democracy to emerge from an extremely unequal society (Tresiman, Lecture 8). One aspect of his graph he is missing is that he does not seem to take into account the change in capital that members of the elite have procured. In the 19th century, capital and property of the rich was based in land ownership. As a result, there seems to be a negative relationship between the land owned by large farms and a democratic system; when the elite owns most of the land, democracy does not flourish (Treisman, Lecture 8). When examining the 20th century, it is important to take into account the change from land being the primary source of capital to relatively mobile assets like human or financial capital (Treisman, Lecture 8). Money, technology, and goods are all easily movable to places like offshore banking centers, something that was impossible to do with land. Since the rich accrue mobile capital, a threat of democracy, and subsequently a redistribution of wealth, can be quickly avoided by transferring capital out of the nation. This tactic of hiding capital provides the elites with more power, as wealth could be held captive, ultimately making the poor citizens refrain from democratic movements. The movement of wealth in the 21st century allows highly unequal states to remain authoritarian, since the elites will simply use their mobility to invest elsewhere, leaving the lower classes in a precarious situation.

Nations with high inequality hinder democracy due to the immense power of the elites, along with a lack of a middle class, and the easy mobility of capital, all of which prevent citizens from fighting for democratic reforms. Other factors of course influence a country’s unique transition to democracy, like race, religion, or class reasons. Future research could potentially reveal other effects that explain a country’s ability to democratize, like the influence of global or ideological factors. The absence of a middle class, combined with the power and mobility of the elites in highly unequal countries create a climate relatively unsuitable for democratic change.

Works Cited

1. Acemoglu, Daron, and James A. Robinson. Economic Origins of Dictatorship and Democracy. 2006, Chapter 2, pp. 15-47.
2. Aristotle. “Section 11”. The Politics, Book IV, pp. 106-109.
3. Treisman, Daniel. Lecture 1: Introduction. Roots of Democracy, University of California Los Angeles, January 8, 2019, Los Angeles.
4. Treisman, Daniel. Lecture 8: Inequality and democracy. Roots of Democracy, University of California Los Angeles, January 31, 2019, Los Angeles.

Disadvantages of Democracy Essay

The theoretical discourse underpinning the relationship between democracy and the developmental performance of markets and states, especially in the developing countries, has been at stake for millennia and still has not reached a definite consensus about whether this particular type of non-market institutions actually causally results in economic growth. However, the comprehensive existing literature on this highly salient topic draws on the idea that even if democracy is preferable, it is not a necessary precondition for development. In order to assess the failures of the democratic system in promoting good economic governance, it is firstly necessary to clarify how these concepts are understood and used in this paper. This essay will argue that the success or failure of the political system to promote good economic governance is deeply interconnected with the historical context of the country that characterizes. To clarify this, the paper will present the contemporary and classical perspectives that dominate this discourse. Thirdly, the essay will argue that the rise of democracy is dependent on “local knowledge” of the state it occurs and, conversely to the classical view, it cannot be applied everywhere disregarding those circumstances. Indeed, the essay will present the main differences in the political and economic systems that underpin advanced and developing countries and that explain why democracy is not always functional to the early economic take-off.

First of all, both concepts of democracy and good economic governance are very broad and difficult to define, however in this essay, the former is defined as a system of rules for electing the executive and the legislature that constitute the government of a society through a process of competitive and contested elections (Khan, 2005). On the other hand, the latter is often described to involve the creation of a government, which is, among other things democratic, open, accountable, transparent and which respects and fosters human rights and the rule of law (). The contemporary perspective that characterizes the discourse around the relationship between regime types and economic governance argues that democracy improves the quality of economic governance through accountability, transparency, and civil participation. Indeed, the democratic system hold rulers accountable through contested election and through the presence of civil society and seems to legitimize very difficult decision-making.

The classical perspective of scholars like Donnell and Huntington, on the contrary, argues that miracle economies were facilitated by the authoritarian rule. Huntington claims that at the early developmental stage authoritarianism is the more conducive political framework for economic development. Indeed, economic growth depends on regime stability, which in turn depend on political institutionalization. In other words, economic growth generates higher social expectations that, if not met, lead to social conflicts. These conflicts are the result of social participation that necessitates to be institutionalized and guided and in democratic regimes, at this early phase of industrialization, people still may not be used to compromise.

Essentially, in this view by prioritizing the long-term authoritarianism wealth creation the formation of the middle class is facilitated and the formation of the middle class provided the basis for democratization and the rise for a more liberalized economy. Therefore, authoritarianism long-termism unleashes social forces in the shape of the middle class that then overturn the authoritarian rule in favor of democracy.

From the analysis of these two views it is already clear that for some countries the democratic system works better than in others in promoting good economic governance. In these instances, the essay will take into scrutiny two case studies that best support the concept of “local knowledge” (Rodrik). This definition involves clearly accepting the institutional plurality that underpins the globe. Indeed, American capitalism is distinct from Japanese capitalism, and both are distinct from European capitalism. Nonetheless, most structural change in developed countries is predicated on the expectation of a single system of structures worth emulating. By examining the disparities in democratic rivalry between emerging and industrialized countries, it becomes apparent that democracy has contributed relatively little to economic development in developing countries. Narayan et al., state that economic democracy requires a nation to have defined channels that instill a balance of the executive powers, have a well-developed legal system, and a forum that promotes transparency and enables civil participation in the development of economic policies (). This is confirmed by the majority of advanced countries. The level of economic development of advanced capitalist countries means that the have a dominant capitalist sector (). In this context, a high level of economic growth often suggests that redistributive agendas are structured around broad-based institutions that embody the economic interests of vast numbers of people. Democracies, hence, result to be the optimal institutional system for promoting economic governance.

On the contrary, the less industrialised a nation is, the more acute the divergence between its features and those of advanced countries is. Developing countries seem to lack a well-defined economic framework, and their government structures are much more chaotic than in industrialised countries. Secondly, economic underdevelopment results in highly personalized redistributive agendas (). Additionally, patron-client networks are expected to evolve as the most rational organisational framework for faction representatives around the social structure. Factional leaders make promises to their customers in exchange for their corporate patronage, which motivates those below them, resulting in the formation of the so-called pyramidal patron-client network. Political groups, in particular, pursue an alliance that can mobilise organisational power at the lowest possible expense to the faction leader in order to accomplish wealth and income allocation by a mixture of legitimate, quasi-legal, and illegal means. Brazil, for example, demonstrated that it suffered from the democratic cycle that began in 1945 and ended in 1964, in this context of political factionalism and economic underdevelopment. Indeed, democratic Brazil excluded a majority of adults due to literacy requirements. As a result, conservative Brazil neglected civil participation. This can be illustrated by returning to Huntington’s classical view, which holds that political engagement can be accomplished following the development of basic capital in order to encourage educational investments and literacy. Another aspect of the failure of the democratic system towards good governance is the predilection towards short-termism that characterizes modern democracies. Politicians in this setting sometimes serve terms of fewer than five years, leading not only to potential political instability, but also to create policy confusion. As a consequence, leaders tasks are often disrupted by campaigns, which divert attention away from the task of tackling long-term policy issues.

Since electoral institutions promote such short-term projects, policymakers also overlook long-term economic problems, such as education and infrastructure, that do not yield immediate political benefits.

To summarize, it has been argued that liberal democracies do not always lead to good economic governance due to a number of factors that underpin both the economic and political context taken into consideration. In particular, the concept of “local knowledge” proved to be crucial in the explanation that there is not only a single set of institutions, namely the democratic ones, that can lead to good economic governance. In addition, in order to support this hypothesis the essay analyzed the main differences underpinning developed and developing economies, that in turn led to the clarification of those democratic practices that delay economic and social growth.

Analysis of Relationship between Democracy and Economic Growth

Democracy is seen as a worthy cause in the world, but there is a lot of debate about the consequences of democracy, the process of democratization and its image of being the most perfect system ever. For example, it is questionable whether democratization brings benefits economically as a given and whether democracy leads to peace. On the other hand, there is also a debate about the possible causes of natural democratization. Do developing countries have less chance of democratization, does corruption prevent the democratization process? In this essay a similar debate is going on with regards to economic growth.

Economic recessions are seen as a problem, but its causes and consequences are a subject of discussion. Does economic growth lead to a decline or to an increase in democracy and vice versa? Does economic development turn to an increase in corruption without democracy?

Democracy and economic growth are also frequently linked. Both are seen as a possible cause and possible consequence of the other, in other words: 1) economic development increases or decreases the chance of democratization; 2) democratization and democracy lead to an increase or decrease in economic development.

Why Democracy Is Linked to Economic Growth?

Democratization is expected to affect a decrease in financial inequality on the basis of the median voter hypothesis. The median voter is the voter whose income is equal to the median of all incomes. Half of the voters earn more than he does, half earn less. As long as it is in the interest of half (plus one) of voters to redistribute, because the average income is higher than theirs, a democratic government according to the median-voter hypothesis would do so for the benefit of the half plus one. For example, through a progressive tax system. More money for most people would lead to a stronger middle-class and more leverage for economic development to grow the economic, thus the theory (Carbone, 2009).

After all, according to the standard theories, the government conforms to the will of the median voter (Boix, 2010), in which the will of the poor or victims of economic underdevelopment cannot be ignored if they make up too much of the population. In the event that the median voter earns less than the average they will argue for redistribution or more quality developmental programs/initiatives for the economy. This is confirmed by the fact that the extension of the right to vote (to the poorer population) in Europe has led to unprecedented redistribution programs and huge economic development programs in poorer regions of the continent to stimulate economic growth (Acemoglu, 2000).

This idea is undisputed in many literatures and functions as a kind of baseline for all research related to this topic. There is almost no pin between its theoretical explanation. It cannot be otherwise than that a democratic system, based on the idea of equality and fair voting, has a better effect than an autocratic, fundamentally unequal system. Nevertheless, a number of drawbacks adhere to this hypothesis.

Drawbacks of This Theory

First of all, this hypothesis works only when political power forms a pure representation of the population in a country. If the election turnout is not 100% (and not by chance perfectly representative), then this leads to less (or more) redistribution of economic goods, depending on which income group is underrepresented (Bonica 2013). In those cases, the median voter does not have the actual median income and thus its final result will not be able to claim that economic growth is due to democratic institutions creating a forceful demand for quality economic growth.

The voting system also plays an important role in this. After all, this is the basis for a democratic party system, the government composition and thus the possible political motive for economic development (Iversen 2006,). For the electoral system too, not every voter has the same influence when not every vote counts equally. The voice of the economically disadvantaged seems to be better heard in a system of proportional representation: in that state of being, it is more likely to have a pro-economic development coalition in power (Iversen 2006).

Thirdly, the extent to which society as a whole is organized is important for the extent to which actual political pressure can be exercised and thus the question of whether the government proceeds or is able to develop its economy. A strong civil society is better able to exert effective pressure. The construct in which the poor voters in particular are organized makes a difference for their influence on policy and thus for political pressure to redistribute or develop.

Democracy always has its winners and losers and not every citizen has the same influence. Often the upper class is considered to be better organized and therefore more influential than the poor, who have the greatest difficulty influencing the policy process to suggest better qualitative programs to support economic growth (Carbone, 2009). In other words, it is very questionable whether the casting of a vote offers sufficient and equal opportunity to exercise influence by every citizen. If not, the median voter can argue for redistribution or development, but the richer electorates actually have more influences because of their stronger position in civil society and thus less effective pressure for economic development/growth will adhere.

Finally, even if it were to be assumed that every electorate exercises the same effective influence, votes for purely economic considerations and thus actually moves the country to proceed to focus on economic growth, the question remains whether this government policy that came from electoral positions can also bring about the desired consequences. In other words, does government policy work? Do people know what is best for them? Democracies tend to invest in the social sector, but that does not guarantee that the poor or the economy actually benefit from it (Carbone, 2009, p.135). The state capacity differs per country and a weak state has an impeding influence on policy implantation (Bermeo, 2009) The power of a state and of a democracy in particular is supposed to be related to its stability. Stability arises over a long time, creating a much stronger link between political participation and the understandings of the economy than the democratic level and willingness alone, at least when controlled for economic growth (Muller, 1988). On this basis, it is suggested that the influence of democratization on economic growth only after about twenty years will begin to play a role, but it is still not clearly defined as a sole reason for positive results. A recently democratized state cannot be expected to make policy for the long term, while everything in that is still fluctuating.

Conclusion

The more theoretic, procedural requirements of maximum voter turnout and proportional electoral systems seem in any case to play no or a limited role. I suspect this has to do with the narrow approach to democracy (as process) where these variables are strongly ignored: the electoral system, degree of organization, corruption differs, voting motives and effectiveness of governments. In my opinion, the relationship between democracy and a country’s economic growth is thus far inconclusive.

References

1. Carbone, G. (2009). The Consequences of Democratization. Journal of Democracy, 20(2).
2. Acemoglu, D., & Robinson, J.A. (2000). Why Did the West Extend the Franchise? Democracy, Inequality, and Growth in Historical Perspective. Quarterly Journal of Economics.
3. Bonica, A., McCarty, N., Poole, K., & Rosenthal, H. (2013). Why Hasn’t Democracy Slowed Rising Inequality. Journal of Economic Perspectives.
4. Iversen, Torben and Soskice (2006). Electoral Institutions and the Politics of Coalitions: Why Some Democracies Redistribute More than Others.
5. Bermeo, N. (2009). Does Electoral Democracy Boost Economic Equality? Journal of Democracy.
6. Muller, E. (1988). Democracy, Economic Development, and Income Inequality. American Sociological Review; Official Journal of the American Sociological Association.

Essay on Good Leadership Contributes to the Success of Democracy

In the modern day, an increasing number of autocratic regimes are being overthrown and replaced with democracy. Within a short time, several North African and Middle-Eastern countries have had their autocracies challenged and overthrown (Danju, Maasoglu, and Maasoglu 2013). It can be argued that development spurs democratic transitions or stabilises current democracies (Boix 2011). In this essay, I will begin my island (Saboc) with a despotic leadership and demonstrate a gradual change towards democracy.

In many developing countries, autocracy was seen as the ‘price to pay’ for rapid development as only autocracies can repress consumption (Luo and Przeworski 2019). For this reason, Saboc is an established despotic autocracy six months into the island journey. Despotism is a legitimate and legal form of authoritarian government in which a set of laws set by the leader or ruler exist (Turchetti 2008). The old Lawyer is the despotic leader and runs a tight ship. There is no set currency system in place, and everyone works for the betterment of everyone else. Two cross-island marriages have seen a Saboc resident relocate to Island Partially Friendly (IPF) and a high skilled boat maker from IPF relocate to Saboc. The man has taught the Islanders how to safely travel between islands. This reduces the risk of travelling.

The only societal actors currently present in Saboc are the apparel-making business. One of the skilled men currently makes all apparel for the Islanders and for trade. Although they do not trade for currency, they trade with IPF for tools, seeds and fertilisers. The Lawyer’s daughter is the representative of the island and goes to IPF to negotiate and trade. She also acts as a messenger and delivers any grievances or issues to the leader. Trade and democracy are commonly linked in political and economic discussion (Milner and Kubota 2005) which suggests the island is already making some strides towards democracy. At this stage, the focus of the island is efficiency and survival, and so factors such as representation, equality and accountability are not of primary concern.

Eighteen months into the island journey, an increasing number of IPF Islanders have relocated to Saboc. Relations between the two islands have somewhat eased, and people have moved to Saboc from IPF due to the community spirit and respected leader of Saboc. There are more boats between the islands as Islanders with boat-making knowledge now inhabit the island. The island is not yet ready to travel to Island Developed (ID) but is developing quickly due to the newfound knowledge and skills from new people. Due to higher productivity, there has been a greater focus on wellbeing. The Lawyer’s daughter is quite popular with the Islanders as she is making strides to improve welfare for each member of the island. There is only one recognised language on the island, and there is a makeshift school for basic language skills and education for children and adults. The Lawyer’s daughter also teaches the Islanders about the laws of the island and listens to their concerns before voicing them to the Lawyer. Voting has been introduced for some significant decisions on the island, but elections are still not in place.

The marginalised woman is a lot happier in the society as the Lawyer’s daughter listens to and acts on her concerns. She is becoming educated through the school system and is also teaching other Islanders about her culture. The marginalised woman has also been granted an opportunity to publicly give her opinion on all big decisions by speaking before voting commences. She is also working together with some of the new Islanders on making a group that speaks up for minorities on the island. By the end of year two, they expect to be recognised as an NGO on the island. The movements made up to the eighteen-month mark such as the introduction of voting and representation show a shift towards a democratic system.

When a country undertakes a political transition to democracy, it faces a complex period of change (Kalpokaite and Radivojevic 2019). By the time of the third year, the combined efforts of the new Islanders from IPF and the Islanders of Saboc have successfully travelled to; and established relations with Island Developed. The high-value apparel is now a very profitable business of six employees and a very attractive investment for Island Developed. ID have sent a representative over to live in Saboc and assist in developing and maintaining a representative democracy with their first election just passing. A representative democracy can be defined as a “governing system in which politics are organised around an elected assembly.” (Lovenduski 2019, p.19). The representative reports back periodically to the president of ID. The Lawyer won the election and still is very well respected as the president of the island. People are able to move between the islands as the new Islanders from ID have brought new technology and knowledge over, advancing the island’s productivity and potential.

The marginalised woman runs the NGO for minorities and is a political representative for the island minorities. The school has now developed and is teaching higher value education to the Islanders. There are a small group of businesses currently on the island and Saboc is using the established currency from the Island Developed. A small eatery has been established with high skilled cooks migrating from ID, the aforementioned apparel business and school, and some small trades such as carpentry and fishmongers. Tensions between IPF and Saboc have eased due to many people moving freely between the islands. An educated immigrant from IPF writes a newspaper and gives her opinion on political decisions. She is also part of a political lobbyist group who hold the president accountable for any questionable decisions or bring to light any inequality in the society. Year three indicates that the island has developed into a functional representative democracy and is rather progressive in terms of representation and equality.

The change from autocracy to democracy is one that often faces a lot of conflict as autocratic leaders are not always willing to lose absolute power. In the case of Saboc, the Lawyer was well-respected and open to change. He had enough confidence in his ability and in the voters to vote for him that he agreed to adapt to a representative democracy in order to improve relations with a far more developed society. The island addressed representation concerns of the people and are focused on improving the lives of the Islanders in terms of equality and economic prosperity. The transition of the island proves to be successful and promotes positive change for the people of Saboc.