This proposition shows how the recent wave of globalization and increased international trade may again make democracy more likely but this time through a different channel. Because of the transfer of skill-biased technologies from the richer nations associated with trade opening, the income share of the middle class increases; with a richer middle class, democracy becomes less redistributive and the rich are more willing to democratize.
A similar argument can be developed to show that with a richer middle class acting as a buffer in the conflict between the rich and the poor, democracy is also less likely to fall to a coup. Therefore, through this channel, previously nonconsolidated democracies are also more likely to consolidate.
8. Conclusion
In this chapter, we examined how globalization influences whether a country becomes a democracy and, once democratic, whether it remains that way. Our main objective was to show that broadening our analysis in this way generates a rich set of predictions. Many are conditional on the impact of trade and factor mobility on income distribution. Because the empirical literature on this topic is highly unsettled, we cannot use the models of this chapter to claim definitively whether globalization is or is not good for democracy. Settling this issue requires careful and intensive empirical investigation, which is an important area for future research.
It is also useful to repeat a caveat that we raised previously when discussing the power of the elites in democracy and the effects of manipulating democracy on its creation and consolidation. We have seen that greater capital mobility - by making democracy less threatening to the elites - may lead to the creation of a consolidated democracy. However, it is also true, as with any effect that reduces the scope for collective choices in a democracy to deviate from those preferred by the elites, that greater capital mobility implies that democracy is less able to deliver what the majority of the citizens want. In such circumstances, increased globalization may reduce the ability of democracy to improve the welfare of the majority. The extent of this is also a topic for empirical investigation.
PART FIVE.
CONCLUSIONS AND THE FUTURE OF DEMOCRACY
11
Conclusions and the Future of Democracy
In this book, we proposed a framework for thinking about why some societies are democratic whereas others are not. We emphasized the two related aspects of this question: ( 1 ) why some societies become democratic in the first place, and (2) why some democracies persist and consolidate whereas others collapse. In this chapter, we revisit what we have learned, discuss some of the areas where we believe our framework can usefully be extended, and discuss what our model implies for the future of democracy.
1. Paths of Political Development Revisited
We now revisit the four narratives of political development that we outlined in Chapter 1. How does our framework help to account for these differing paths?
1.1 Britain
What explains why Britain followed a path of gradual democratization and why democracy was so easy to consolidate in Britain? At some level, the answer from our analysis is clear: the parameters-in particular, the nature of political and economic institutions, the structure of the economy, the collective-action problem, and the costs and benefits of revolution - were such that there was a sufficient threat of a revolution in predemocratic Britain and the elites could not defuse those pressures without democratization. They also did not find it beneficial to use repression to prevent democratization. However, this answer is incomplete. We also need to understand how Britain came to have the parameters that it did in the nineteenth and twentieth centuries. We now discuss which of these parameters were more important in understanding the British case and how they evolved.
In the seventeenth century, a series of political conflicts was won by those interested in introducing political institutions that limited the de jure power of the monarchy. This change in political institutions greatly improved economic institutions. By reducing the risk of state predation, property rights became more stable. De jure political power in the new system was in the hands of people with commercial and capitalistic interests; this led to large induced changes - for instance, in capital and financial markets - that were important for economic expansion.
The reason that these institutional changes arose in Britain appears to be twofold. First, at the start of the early modern period, Britain had political institutions that limited the powers of the monarchs more than in other places (Ertman 1997). Why this was so seems to be the outcome of a complex historical process of the building of dynasties and invasions. Second, significant changes took place in the structure of the economy that greatly strengthened the interest of various groups, particularly capitalistic farmers (the so-called gentry) and merchants, in different economic institutions. Also significant was the early collapse of feudal institutions in Britain (Brenner 1976). These changes increased the de facto power of these same interests, which critically influenced the outcome of the Civil War and the Glorious Revolution (Tawney 1941; Brenner 1993; Acemoglu, Johnson, and Robinson 2005). For example, merchants who became rich from trade in the colonies were able to play critical roles in both conflicts on the side of Parliament.
The outcome of the seventeenth-century conflicts in Britain was a set of economic institutions that gave property rights to a broad set of people (Thompson 1975). The result was the ending of the Malthusian cycle and the beginning of modern economic growth. Yet, the structural changes that consequently began (e.g., urbanization and the rise of the factory system) had further implications for the distribution of de facto political power. In particular, they began to make the exercise of de facto power by the poor and politically disenfranchised much easier (Tilly 1995 and Tarrow 1998 document the changing qualitative nature of collective action during this period). The rise in the de facto political power of the poor made the existing regime unsustainable and necessitated a change in political institutions in their favor to defuse the threat of revolution. This was to tilt the future allocation of de jure political power and, consequently, to ensure future economic institutions and policies consistent with the interests of the poor. This is exactly what the process of democratization did. Political tensions were also exacerbated by the rise in inequality, which (see Chapter 3) most scholars believe took place in the first half of the nineteenth century.
Beginning in 1832, the British political elites made a series of strategic concessions aimed at incorporating the previously disenfranchised into politics because the alternative was seen to be social unrest, chaos, and possibly revolution. The concessions were gradual because in 1832 social peace could be purchased by buying off the middle class. Moreover, the effect of the concessions was diluted by the specific details of political institutions, particularly the continuing unrepresentative nature of the House of Lords. Although challenged during the 1832 reforms, the House of Lords provided an important bulwark for the wealthy against the potential of radical reforms emanating from a democratized House of Commons. Later, as the working classes reorganized through the Chartist movement and subsequently through trade unions, further concessions had to be made. The Great War and its fallout sealed the final offer of full democracy.
Why did the elites in Britain create a democracy? Many other countries faced the same pressures and the political elites decided to repress the disenfranchised rather than make concessions to them. The problem with repression is that it is costly: it risks destroying assets and wealth. In the urbanized environment of nineteenth-century Europe (Britain was 70 percent urbanized at the time of the Second Reform Act), the disenfranchised masses were relatively well organized and therefore difficult to repress. Moreover, industrialization and the policy of free trade after the 1840s based on Britain’s comparative advantages had led to an economy based on physical and, increasingly, human capital. Such assets are easily destroyed by repression and conflict, making repression an increasingly costly option for the elites. Because capital is more difficult to redistribute, the
elites in Britain found the prospect of democracy less threatening and were easier to convince to accept it.
Repression is attractive not just when it is relatively cheap but also when there is much at stake. Our discussion suggests that the changes in economic and political institutions that allowed sustained economic growth to emerge also made democracy much less of a concern to the British elites.
Nevertheless, democracy did bring changes in economic institutions away from those preferred by the elites. In the nineteenth century, economic institutions - particularly in the labor market - disadvantaged the poor. For example, trade unions were illegal and as late as 1850, British workers trying to organize a union could be shipped to the penal colony in Tasmania, Australia. As discussed in Chapter 3, this practice and many others changed, particularly after 1867 when economic institutions were altered to cater to the demands of the newly enfranchised. Although important for the working of the British economy in the nineteenth century, the implications of these changes were much less damaging to the elites than the potential of the freeing of rural labor markets or the threat of land reform in an economy dominated by landed elites. In fact, compared to the changes in economic institutions faced by the elites in Russia or Austria-Hungary in the nineteenth century or those in Guatemala and El Salvador in the twentieth century, the changes in Britain were relatively easy for the elites to accept.
What about the promise of redistribution to prevent democratization? The political elites in Britain seem not to have seriously considered mass income redistribution as an alternative to democracy, although they certainly anticipated that democracy might lead to it. Perhaps, as Stephens understood, promises to redistribute could not be believed. It is significant, for example, that the Chartists’ petition that gained the most attention from Parliament was presented in 1848 in the midst of the European revolutions. With such a threat of revolution, the political elites had to be seen as listening; however, as long as they maintained power, they would only listen as long as the threat was present — the Chartist movement produced only transitory threats. Consequently, perhaps it is not surprising that promises of redistribution to defuse the social unrest were not first on the agenda in Britain.
Finally, why did democracy in Britain consolidate so easily? Our framework suggests that this was influenced by many of the same factors discussed in the context of democratization. It consolidated because coups were too expensive and, in any case, democracy was not radical enough to pose a sufficient threat to the traditional elites. Democracy eventually brought major changes in British society but it took half a century and had to wait until the full effect of educational reforms were manifested. The elites never faced the type of threats common in democratizations elsewhere in the world, such as radical asset redistribution. Under these circumstances, our approach suggests that the elites should have been less opposed to democracy and, indeed, they were.
1.2 Argentina
Many of the same forces that led to democracy in Britain seem to have been in operation in Argentina. As in Britain, democracy in Argentina was induced by a series of revolts stimulated by economic and financial crises. Also as in Britain, the process of democratization took place in the context of rapidly rising inequality and economic growth. Yet, Argentina democratized with different underlying political and economic institutions than in Britain. The economy relied on agricultural exports and the boom in world trade, rather than decreasing, increased the value of the assets of the rich elites: land (O’Rourke, Taylor, and Williamson 1996). Moreover, because the economy was less diversified, it was more susceptible to instability and more volatile, creating windows of opportunity to induce political change. The landed elites, although forced to concede democracy, did not like it and were able to undermine it during the crisis surrounding the onset of The Great Depression.
In addition, political and economic institutions did not facilitate democracy. Unlike those that emerged in Britain after 1688, political institutions placed fewer constraints on the use of political powers, particularly those of the president, as witnessed by the actions of Yrigoyen in the 1920s and Perón in the 1940s. With respect to economic institutions, Argentina shared to some extent the legacy of other Spanish colonies that had been based on the exploitation of indigenous peoples. Although this legacy was minor relative to countries such as Bolivia or Guatemala, the underlying set of economic institutions - particularly with respect to access to land - increased the stakes from political conflict.
During the 1930s and 1940s, a highly polarized situation arose in which urban working classes, which dominated democratic politics, aimed to redistribute income toward themselves. Such a situation was intolerable to the rural elites and increasingly to the military, which came to adopt a rabid anti-Perónist stance. Given the structure of the economy, the costs of coups against democracy were tolerable and were exceeded by potential benefits of the nondemocratic regime, especially given the threat of radical redistributive and populist policies in democracy. Although all sides attempted to structure institutions in their favor - for example, in 1912 and again in the late 1950s when the military sponsored the introduction of proportional representation in the hope that it would lead to the fragmentation of the Perónist party - none of these measures managed to make democracy more acceptable to the elites.
Is democracy now consolidated in Argentina? Our analysis gives some reason for hope. The substantial increase in globalization - in particular, the capital mobility brought by the financial integration since the mid-1970s — implies that democracy may be much less of a threat to the elites interests than it has been historically. Perhaps more important, Argentina is a relatively highly educated society and the increase in the value of human capital has created a strong middle class that can act as a major buffer in the conflict between the rich and the poor. Consequently, democracy was stable in the 1990s despite a significant rise in inequality, suggesting that the underlying political equilibrium has changed. Moreover, one of the long-run effects of the economic policies implemented by the military after 1976 is that the economic base of the left and organized labor is much weaker in Argentina than it used to be, which is an explanation for the radical shift in the economic and social policies of the Perónist party in the 1990s. Paradoxically, this shift may be beneficial for the poor segments of society, because, given the shift in policies, democracy may at last be consolidated in Argentina.
1.3 Singapore
Why has Singapore not democratized? Our analysis suggests a rather simple answer. Singapore is a very equal society. There are no traditional wealthy landed elites and the economy relies on external capital and businesses. Most people, therefore, appear to be relatively happy with the status quo - at least, not so unhappy that they want to engage in serious and potentially costly collective action to induce a major change in political institutions. There is little to gain relative to what they already have.
By the same token, however, the current elites of the PAP have little to lose other than power. The PAP primarily consists of successful middle-class people and has remained relatively open in the sense that it has tried to co-opt people of talent and potential opponents. Although it is undoubtedly linked to the rich elites that exist in Singapore, none are likely to face expropriation of their assets or wealth. Although the political elites would likely lose their considerable rents from office holding, this is unlikely to be sufficient to justify a long period of repression to keep their privileged positions. Our analysis, therefore, also suggests that Singapore should eventually become a consolidated democracy. At some point, there will be pressure from a segment of the population for more representative political institutions; at that point, the elites and the PAP will not find it profitable to use repression to prevent democracy.
1.4 South Africa
Why was democracy so long delayed in South Africa and what triggered its final creation? The historical situation here could not be more different from that in Singapore. The white elites o
f South Africa had much to lose from democracy that historically would surely have led to large demands for land reform, the redistribution of wealth, and a massive restructuring of economic institutions away from those that benefited the rich white elites.
The state of South Africa was founded as a settler colony similar in many ways to those in North America or Australia. Yet, unlike in the United States, the indigenous peoples did not die off from imported diseases, which led to a situation in which the indigenous Africans became the labor force that the rich white elites could employ cheaply and control with coercive methods (Lundahl 1992). In this environment, the whites not only made no concessions to the Africans, they also even created a philosophy (i.e., apartheid) to justify the unequal distribution of resources in society. Repression was relatively cheap and feasible in South Africa because of the apartheid philosophy and because it was aimed at one easily identifiable racial group.
Yet, the apartheid regime was ultimately unsustainable. As the economy developed, the African majority became more vital to the sustenance of the white economy. They became increasingly hostile to their predicament and politically mobilized. In response, the white regime used intense repression, being prepared to ban, imprison, torture, and murder to maintain its hegemony. Yet, even this could not work indefinitely. The profitability of the apartheid economy gradually declined because of external sanctions and the disruptions caused by repression. Moreover, as the world changed, not only did apartheid become less internationally acceptable after the end of the Cold War, a globalized economy also meant that the rich white elites had less to fear from democracy. As land became less important and mobile capital more important, the threat of a radical African majority dissipated. It addition, the concessions that the white regime made during the 1970s - in particular, the legalization of African trade unions - reduced many of the economic rents that apartheid had created for the whites. This reduction meant that the whites had less to lose from the loss of political control. Indeed, as Rosendorff (2001) noted in exactly this context, inequality fell from the mid-1970s onward. Finally, the whites, in conjunction with the ANC, were able to negotiate a structure of political institutions that gave the whites sufficient confidence in a democratic future that they were willing to stop fighting and allow democratization.
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