Dani Rodrik December 2015 Based on The Political Economy of Liberal Democracy NBER Working Paper No 21540 September 2015 with Sharun Mukand Democracy has won but what kind of democracy ID: 484143
Download Presentation The PPT/PDF document "The Political Economy of Liberal Democra..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
The Political Economy of Liberal Democracy
Dani Rodrik
December
2015
Based on: “The Political Economy of Liberal Democracy,” NBER Working Paper No. 21540, September 2015 (with Sharun Mukand)Slide2
Democracy has won – but what kind of democracy?
Figure 1
: Numbers of democracies and non-democracies since 1800
Data
are from Polity IV (
http://www.systemicpeace.org/inscrdata.html
). “Democracies” are countries that receive a score of 7 or higher in the Polity’s
democ
indicator (which takes values between 0 and 10), while “non-democracies” are countries with a score below 7. Slide3
Distribution of electoral and civil rights
Source
: Based on Freedom House raw scores for 196 countries. “Electoral rights” refer to free and fair elections (A1+A2); “civil rights” combine measures of independent judiciary (F1), rule of law (F2), and equal treatment (F4). Slide4
Distribution of electoral and civil rights
Source
: Based on Freedom House raw scores for 196 countries. “Electoral rights” refer to free and fair elections (A1+A2); “civil rights” combine measures of independent judiciary (F1), rule of law (F2), and equal treatment (F4).
modal electoral rights are quite high, while modal civil rights are on the low sideSlide5
What we do
provide an analytical taxonomy of political regimes
distinguishing, in particular,
between “liberal” and “electoral democracy”propose a particular approach to modeling liberal politicsfocusing on absence of discrimination in provision of public goods, broadly construed examine, formally, circumstances under which LDs might emergeemphasizing the role of income and identity cleavagesrelate theoretical findings to empirical casesSlide6
Three sets of rights
Property rights
protect asset holders and investors against expropriation by the state or other groups.
Political rights guarantee free and fair electoral contests and allow the winners of such contests to determine policy subject to the constraints established by other rights (when provided). Civil rights ensure equality before the law – i.e. non-discrimination in the provision of public goods such as justice, security, education and health. Slide7
Electoral versus Liberal Democracy
ED = property rights + political rights
LD = ED + civil rightsSlide8
A taxonomy of political regimes
property rights
no
yes
political rights
political rights
no
yes
no
Yes
civil rights
no
yesSlide9
A taxonomy of political regimes
property rights
no
yes
political rights
political rights
no
yes
no
Yes
civil rights
no
(5)
right-wing autocracy
(6)
electoral/illiberal democracy
yes
(7)
liberal autocracy
(8)
liberal democracySlide10
A taxonomy of political regimes: illustrations
property rights
no
yes
political rights
political rights
no
yes
no
Yes
civil rights
no
(5)
right-wing autocracy
(6)
electoral/illiberal
democracy
Argentina, Croatia, Turkey, Ukraine,…(n=45)yes(7)liberal autocracyMonaco(n=1)(8)liberal democracyCanada, Chile, S. Korea, Uruguay,…(n=46)
Source
: Based on Freedom House raw scores for 196 countries. The cutoff for electoral and liberal democracies is 0.8 on a [0,1] scale of electoral and civil rights as defined earlier. “Electoral rights” refer to free and fair elections (A1+A2); “civil rights” combine measures of independent judiciary (F1), rule of law (F2), and equal treatment (F4). Slide11
A taxonomy of political regimes
property rights
no
yes
political rights
political rights
no
yes
no
Yes
civil rights
no
(1)
personal dictatorship or anarchy
(2)
dictatorship of the proletariat
(5)
right-wing autocracy(6)electoral/illiberal democracyyes(3)n.a.(4)democratic communism(7)liberal autocracy(8)liberal democracySlide12
Three groups in society
A propertied elite, whose primary objective is to keep and accumulate their assets (
property rights
);A majority, who want electoral power so they can choose policies that improve their economic conditions (political rights);A minority (ethnic, linguistic, regional, ideological), who desire equality under the law and the right not to be discriminated against in jobs, education, etc. (civil rights).
Note the two cleavages;
the income/class cleavage (elite versus non-elite)
the “identity” cleavage (majority versus minority)Slide13
An immediate result
LD is an
unlikely
outcome of any “democratic settlement” between the elite (who have the resources) and the majority (who have the numbers) so what’s surprising is not how rare LD is, but that it exists at all Why this has been overlooked:in (formal) political economy: tendency to focus on elite-non-elite cleavagein history of liberalism: failure to ask why propertied elite should want to protect minority rights in addition to theirs (i.e., property rights), so conflation of property with civil rights Slide14
When might LD emerge? The exceptions that prove the rule
Weak or non-existent
identity
cleavagesJapan or South Korea (after late 1980s)Elite shares identity with minoritySouth Africa (after 1994)Multiple identity cleavagesLebanon (until 1975)
More can be said using explicit formal structure
Main result: LD requires both moderate income inequality and weak identity cleavageSlide15
More formal structure (1)
members
of each group
derive
utility from their (after-tax) income
and from consuming a public good
.
.
pre-tax/transfer
shares of the elite and non-elite given by
and (1-
), respectively.
elite
constitute a negligible share of the population but control more than half of pre-tax/transfer output (
>
).
non-elite are split between a majority and a minority, with population shares
n
and (1-
n
), respectively (
n >
).
gap
between and is a measure of the class (income) cleavage. Slide16
More formal structure (2)
we
model the identity cleavage by assuming groups exhibit differences in the type of public good they prefer.
type of public goods is indexed by
three
groups’ ideal types are given by
,
the deadweight loss associated with the provision of public goods increases with the level of expenditures and the gap (from the perspective of each group) between the type that is provided and the preferred type.
denoting total expenditure on the public good by
, the utility derived from the public good is thus expressed as
we normalize the majority’s preferred public good by taking
.
Slide17
More formal structure (3)
the political regime determines
(
i) how the public good is financed (whether through general taxation or the extraction of a surplus from the non-elite), (ii) the level of expenditures on the public good, and (iii) the type of public good provided
.
in right-wing autocracy (RA), the
elite
make
all these
decisions
in liberal autocracy (LA), the elite remain in the driving seat, but they cannot discriminate against any particular group
in taxation or the nature of public goodin electoral democracy (ED), the majority selects an economy-wide tax rate and chooses the type of public good, disregarding the minority’s wishes completely.
in liberal democracy (LD), the majority retains control over the tax rate, but they cannot discriminate against the minority.
so they must provide
a public good which lies somewhere in between the majority and minority’s ideal
typesSlide18
Taxes and public
goods in different political regimes
political rights
no
yes
civil rights
no
(
5)
right-wing autocracy (RA
)
(6)
electoral democracy (ED
)
yes
(7)
liberal autocracy (LA)
, with
(8)
liberal democracy (LD)
, with
political rights
no
yes
civil rights
no
yes
Slide19
ED versus LD: nature of public goods
political rights
no
yes
civil rights
no
(
5)
right-wing autocracy (RA
)
(6)
electoral democracy (ED
)
yes
(7)
liberal autocracy (LA)
, with
(8)
liberal democracy (LD
)
, with
political rights
no
yes
civil rights
no
yes
Slide20
ED versus LD: taxes
political rights
no
yes
civil rights
no
(
5)
right-wing autocracy (RA
)
(6)
electoral democracy (ED
)
yes
(7)
liberal autocracy (LA)
, with
(8)
liberal democracy (LD
)
, with
political rights
no
yes
civil rights
no
yes
since
Slide21
Payoffs to groups in different political regimes
political rights
no
yes
civil rights
no
(5)
right-wing autocracy (RA)
(6)
electoral democracy (ED)
yes
(7)
liberal autocracy (LA)
(8)
liberal democracy (LD)
political rights
no
yes
civil rights
no
yes
Slide22
Payoffs to groups in LD versus ED
Majority:
<
(unambiguous)
Minority:
>
(
unambiguous)
Elite:
if elites share identity with minority
(
e.g.,
)
<
if elites share identity with majority
(
) and income/class cleavage not too deep
(
)
Slide23
A specific game
status quo: Right-wing Autocracy (RA)
shock makes RA unsustainable, in the sense that expected utility to majority from revolution exceeds utility under RA,
i.e.
[
is probability revolution succeeds; otherwise majority gets payoff of 0]
elite
move first and offer a regime in the set
majority
move next, and they either accept the regime offered, or they mount a
revolution
finally
,
minority
move last, and they decide either to join the revolution or to stay
put
Slide24
Results
The parameter space under which
ED
emerges is larger than (and encompasses) the parameter space under which LD emerges. Proposition 1. There exist parameter combinations under which ED will emerge and LD will not. The reverse is not true.Under the specific parameterization in the paper:
Proposition 2
.
The
equilibrium configuration of the political regimes is as follows:
when
, the elite offer LA and the majority accepts it;
when
, the elite offer LD and the majority accepts it;
when
, the elite offer ED and the majority accepts it;
when
, the majority mount a revolution regardless of what the elite offer.
Slide25
Note:
the
greater the identity cleavage (
), the larger the difference between
and
Slide26
Equilibrium regimesSlide27
Equilibrium regimes
LASlide28
Equilibrium regimes
LA
RevolutionSlide29
Equilibrium regimes
LA
Revolution
EDSlide30
Equilibrium regimes
LA
Revolution
ED
LDSlide31
Equilibrium regimes
LA
Revolution
ED
LD
Note:
the emergence of liberal democracy requires both mild inequality (low
) and the absence of large identity cleavages (proximity between
and
).
Slide32
Discussion
region
in which
LD emerges as equilibrium is squeezed from below by the availability of LA (which satisfies the elite’s incentive constraint) and from above by ED (which satisfies the majority’s participation constraint)Size of LD zone
depends
on the nature of identity cleavages.
when
the elite share an identity with the minority they would prefer
LD
to
ED
for a larger share of the parameter spacewhen the identity cleavage between majority and minority gets smaller, the majority’s preference for ED
over LD becomes weaker. Slide33
The West versus the rest
In the West, liberalism comes before franchise
conflation of property rights with minority rights
extending the franchise is a compromise for liberalsED arrives when social mobilization is based on class (rather than identity)In developing countries, bleaker prospects for LDsocial mobilization in the context of identity politics (decolonization, wars of secession or national liberation)ethnic/identity cleavages comparatively strongdelayed industrialization (and premature de-industrialization), so class-based
cleavage comparatively weak Slide34
Final words
Puzzle is not rarity of liberal democracy, but that it exists at all
Endogeneity of cleavages
determined both by structural and ideational factorsFundamental political difference between income/class versus identity cleavagesboth cleavages can serve as basis for majoritarian populism, but populism of the “left” aims to ultimately overcome income cleavage, while populism of the “right” necessarily deepens identity cleavageSlide35
Additional slidesSlide36
But what kind of democracy?
widespread rights violations
discrimination against minorities and opposition groups in many OECD countries: Hungary, Croatia, Israel, Mexico, Turkey
much worse in countries like Russia and Venezuelaeven though elections remain in principle free and competitivepreponderance of intermediate regimesFareed Zakaria: “
illiberal democracy”
Steve
Levitsky
and Lucan Way (2010
): “
competitive authoritarianism”Slide37
Our treatment of “civil rights” (1)
We model civil rights
as
the non-discriminatory provision of public goods. We interpret the relevant public goods broadly, including justice and free-speech rights as well as education, health, and infrastructure. what sets LD apart from ED is
that an elected government cannot discriminate against specific individuals or groups when it administers justice, protects basic rights such as freedom of assembly and free speech, provides for collective security, or distributes economic and social benefits.
Our treatment has the
advantage
that it provides a tractable approach for modeling
LD and
distinguishing it from other political regimes.
thinking
of liberalism broadly as non-discrimination allows us to sidestep debates about what are the “essential” characteristics of liberalism. our formulation is flexible enough to encapsulate individual
and minority rightsit applies to a variety of different contexts – non-discrimination in the administration of justice, access to
education, use
of public
infrastructure, or
right to free
speech
furthermore
, our emphasis on public goods means that we focus on an outcome that is sufficiently general that it can be applied in different country, cultural and historical contexts. Slide38
Our treatment of “civil rights” (2)
Our distinction between electoral and liberal democracies relies on the presumption that free and fair elections – the hallmark of electoral democracy – can be separated from equal treatment and non-discrimination – the hallmarks of liberalism.
It may be difficult at times to disentangle certain civil rights from political rights. In particular, it can be argued that elections cannot be entirely fair when the capacity of citizens to participate and compete in elections is constrained – indirectly – by restrictions on their civil rights. Citizens who are deprived of, say, adequate educational opportunities or the protections of the rule of law cannot be effective participants in electoral contests.
But this is a caution about the fuzziness in practice between electoral and liberal democracies, rather than an objection that renders our distinction between the two regimes entirely invalid.
To require equality of access across the full range of public goods as a precondition for free and fair elections would also set too high a threshold. Slide39
A taxonomy of political regimes
property rights
no
yes
political rights
political rights
no
yes
no
Yes
civil rights
no
(1)
personal dictatorship or anarchy
(2)
dictatorship of the proletariat
yes
(3)n.a.(4)democratic communismSlide40
What about Liberal Autocracy (LA)?
political rights
no
yes
civil rights
no
(
5)
right-wing autocracy (RA
)
(6)
electoral democracy (ED
)
yes
(7)
liberal autocracy (LA)
, with
(8)
liberal democracy (LD
)
, with
political rights
no
yes
civil rights
no
yes
minority
could
prefer
LA
to
ED
due to nature of public goodSlide41
Slide42