Sunday, September 13, 2009

Preconditions of democracy

Came across this 2006 essay by Charles Boix on democracy and inequality of fixed assets.

The essay is an inquiry into the preconditions of democracy, and a very useful and informative one too. Boix holds, as I do, that oil, not Islam, is the great curse of Middle Eastern government and politics:
it is not nationalism or even religious animosities that explain the current violence in Iraq — but rather oil, its geographical distribution, and the loss of its political control by the Sunni minority that monopolized the state until two years ago.
Boix is sceptical of religious (and thus, by implication, cultural) explanations of failure to achieve democracy:
It is worth remembering that not many years ago Catholicism was (wrongly) believed to thwart liberal institutions in Southern Europe and Latin America
if we take into account the large Muslim populations of countries such as India, Indonesia, Bangladesh, and Turkey, the majority of the world’s Muslims live now under democratic regimes.
Which is hopeful in its way.
Refuting any Weberian assumptions about religion and politics, Catholic countries are not any more likely to be authoritarian. A growing proportion of Muslims does not jeopardize democracy either, once we take into account the structure of the economy and the weight of fixed natural resources. Democratic instability grows only with more ethnic fragmentation, but this result takes place only in middle income economies.
Because the number of examinable cases is building up, it has become more possible to do serious statistical analysis in political science.

A classic example of this is Paul Collier’s work on the “feasibility” thesis regarding civil conflict. As a recent paper co-authored by him (pdf) concludes:
The three new variables point to the primacy of feasibility over motivation, a result which is consistent with the feasibility hypothesis. The feasibility hypothesis proposes that where rebellion is feasible it will occur: motivation is indeterminate, being supplied by whatever agenda happens to be adopted by the first social entrepreneur to occupy the viable niche, or itself endogenous to the opportunities thereby opened for illegal income.
In an earlier paper (pdf), Paul Collier writes:
When the main grievances - inequality, political repression, and ethnic and religious divisions - are measured objectively, they provide little or no explanatory power in predicting rebellion. In most low-income societies there are many reasons for grievance, but usually these do not give rise to rebellion. Objective grievances and hatreds simply cannot usually be the cause of such a distinctive phenomenon as violent conflict. They may well generate intense political conflict, but such conflict does not usually escalate to violent conflict.
By contrast, economic characteristics dependence on primary commodity exports, low average incomes, slow growth, and large diasporas are all significant and powerful predictors of civil war. These characteristics all make rebellion more materially feasible: they enable rebel leaders to buy the guns and feed the soldiers, and furthermore to perpetrate large scale killing without themselves being killed in the process. A viable private army, which is the distinguishing feature of a civil war, is extremely expensive to maintain over the long periods that such wars typically last. Where a private army is viable, the agenda of its leadership could potentially be anything.
Always, look to incentives and capacity.

Noting that the evidence about economic development favouring democracy is firmer when viewed at a given time ("cross-section" as statisticians would say) than over time ("longitudinally"), Boix argues very persuasively that inequality in fixed assets is hostile to democracy, because it means that a wealthy minority has much to fear from democracy. Mobile assets do not have the same effect, because they can run away from expropriation. So, the more an economy is dominated by fixed assets (land, natural resources) and the more unequal such holdings are (fairly inevitable with oil and other such natural resources), the more likely authoritarian government is. Unless, such as in the case of Norway, democratic institutions and norms are already firmly established.

With democracy:
If too much is at stake — that is, if bets are too large — the incentives to cheat become irresistible. Similarly, the participants in elections will assent only to the rules of the democratic game if the effects of the electoral outcome do not fall on any of them too heavily. The losers will submit to the electoral result if what they forsake at the moment of defeat is not too excessive, that is, if it does not threaten their living standards or political survival. Likewise, the winners will not exploit their preeminence to redraw the electoral mechanisms (to diminish the uncertainty of future elections) only if the value of the offices they hold and the political decisions they make is not too large.
Which is why the advent of Leninism was so bad for democracy. Leninism raised the stakes of the political game so high, that the serious prospect of a Leninist victory made the abandonment of democracy as too risky much more likely. If—as was the case in Germany, Italy and Spain—expropriation of landed property is widely supported on the political left, then, in fear and desperation, landowners (large and small) are much more likely to turn to a Mussolini, Franco or Hitler to save them. Where such expropriation is not widely supported on the left—as in France, Northern Europe and the Anglosphere—then fascist, authoritarian conservative or national socialist politics never broke out of the political fringe.

Of course, there is a bit of a chicken-and-egg problem here, as the expropriation policies may be a response to large inequalities in the first place. As Boix notes:
Big landowners have always opposed democracy, whether in Prussia, Russia, the American South of the nineteenth century, or Central America in the twentieth. By contrast, for democratic institutions to prevail, at least before industrialization, there had to be a radical equality of conditions. The Alpine cantons of Switzerland in the Middle and Modern Ages or the Northeastern states of the United States in the eighteenth and nineteenth centuries are cases in point.
On the other hand, it was small peasant landowners that gave Mussolini, Franco and Hitler break-through mass support.

The difference between fixed assets (vulnerable to expropriation because they cannot run away) and mobile assets (less so because they can) in explaining outcome is very important. As Boix illustrates nicely from the case of South Africa:
While opposition to democracy ran high among the Afrikaner farming communities, it hardly existed among the English-speaking financial and industrial elites, who could easily (and actually did) move their capital abroad. In fact, over the postwar period, South African prospects for democratization improved as part of the Afrikaner community gradually moved from farming to industrial and financial activities — that is, from holding fixed assets to investing in mobile capital.
Boix’s analysis is not comforting regarding East Timor, with its natural gas and oil “bonanza”:
the discovery of natural resources is fatal in already authoritarian or weakly democratic societies. Unconstrained by any domestic mechanism of control, the existing political and economic elites alone benefit from those natural riches. The new wealth reinforces their political muscle. It reduces, too, any incentives to follow economic policies that may foster growth and industrialization. Were the latter to succeed, new social and economic strata might arise that could in turn challenge the existing political status. In short, illiberal countries that suddenly strike oil or any other mineral wealth become trapped in authoritarianism. This is the standard story of many oil- and gas-rich Middle Eastern and North African countries. It is the tale of all the former Soviet Union states in Central Asia. It partially explains the fragile nature of liberal institutions in Russia. It fits the pattern of violence and dictatorship that devastates many African nations. And, in combination with appalling levels of inequality, it is behind the turmoil of several Latin American economies, such as Venezuela, Ecuador, and Bolivia.
Understanding the preconditions for democracy is obviously worthy and useful. It is not necessarily all that cheering, however. Revolutions based on expropriation do not lead to good places and the substitute of foreign intervention has its own pitfalls and preconditions. The Middle East may not get much better until the oil doesn't matter.

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