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Income and the stability of democracy: Pushing beyond the borders of logic to explain a strong correlation?

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Abstract

The statistical relationship between economic development and duration of democracy is one of the strongest in Political Science. Nevertheless, the theoretical mechanisms underlying this statistical link have been debated for decades. Adam Przeworski has proposed the simplest explanation, by indicating that wealth itself increases the probability of sustaining democracy, economic development and democratic stability are thus directly related. This paper discusses whether the assumptions of the influential model of Przeworski (Public Choice, 123(3–4):253–273. doi:10.1007/s11127-005-7163-4, 2005) are plausible, and extends the analysis to a setting in which: (a) absolute per capita income varies; (b) people have preference for democracy independently of income; and (c) consumption is subject to diminishing marginal utility. The analysis demonstrates that the mechanics proposed by Przeworski (2005) are particularly recursive. One of the assumptions in his model implies in and of itself the final conclusion of the analysis, and if this contentious cornerstone is removed or slightly changed, it is no longer possible to conclude that economic development could create per se any democratic equilibrium.

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Notes

  1. Suffrage expansions associated with the rise of western democracies for example cannot be explained as simply a consequence of increases in voter income, there are other political and ideological factors that play a pivotal role in as well (Congleton 2011). In a similar vein, Apolte (2012) shows that due to collective-action problems amongst those oppressed by non-democratic regimes income inequality in not a sufficient condition for a democratic revolution to occur.

  2. Both the analysis of institutional change and stability, as well as the study of the emergence of violent political conflicts -which is obviously related to institutional dynamics in extreme cases- had received several recent contributions worth of considering (Schneider and Wiesehomeier 2008; Congleton 2011; Apolte 2012; Esteban et al. 2012; Langer and Stewart 2013). These works share a common interest in incorporating to analysis a set of important political, ideological and institutional factors that are often neglected or set aside. In this sense collective action dilemmas; ideological shocks, and the ability to bargain over constitutional designs, have received renewed attention demonstrating its importance to explain constitutional developments and their stability.

  3. Dictatorships not only redistribute income: they use force to repress their opponents and the threat of torture, or death is sufficiently foreboding that the same consumption generates lower utility when one’s physical integrity is threatened (Przeworski 2005: 257).

  4. While all the results below hold considering a society consisting of three classes of individuals, in order to simplify the analysis I will work with two groups, the rich and the poor.

  5. This assumption is quite plausible given the empirical evidence (Hobsbawm 1990:76; Huntington 2012: 9; Galbraith and Berner 2004:216), and it is also reasonable since the median voter is a poor agent and she/he will decide the tax rate under a democratic regime.

  6. The optimal levels of τ p and γ are affected by the marginal deadweight loss of tax and transfer systems, rather than GDP, as in Meltzer and Richard (1981).

  7. As Bertrand Russell (1919: 76) puts it "everything that is a proposition of logic has got to be in some sense or other like a tautology".

  8. As indicated by Hurley (2008), a way of begging the question is by leaving a possibly false key premise out of the argument, while creating the illusion that nothing more is needed to establish the conclusion. While Przeworski extensively covers all the premises in his model, he fails to highlight the importance of a key premise about consumption utility, which appears entwined with other assumptions weaving a needlessly complicated model. It is this complexity that hides the fact that Przeworski’s conclusions are dependent on a single premise.

  9. In Eq. 5, the effect of relative income disappears along with that of per capita GNP. The relative income effect occurs through parameter α r in this model, although it is not represented as a separate source of utility nor as the value from consumption. This effect can be incorporated into the model by assuming that dictatorship reduces α r as well as per capita GDP.

  10. The breakdown of two of the most traditional democracies in Latin America in 1973 is very illustrative. In the case of Chile, the coup d'état was launched by the army, when it had almost complete certainty of success. Meanwhile in Uruguay, the coup was preceded by a long process of institutional decay and violent political conflict with the Tupamaros urban guerrilla. Due to its small size, the guerrilla never had any real chance to prevail, but in spite of this, it took years before they were defeated. As noted Hulquist (2013) small insurgent groups are sometimes difficult to defeat in the short term.

  11. In that sense is necessary to note that from the model stems strong normative implications, that could leads one to focus solely on economic growth as a precondition to democracy over and above other social alternatives such as for example a more equitable distribution of resources (both economic and political).

  12. Recent contributions had criticized the statistical association between GDP per capita and democracy at the empirical level (Acemoglu et al. 2008: 836). It also exist historical and anthropological evidence that contradicts the hypothesis that democracy requires wealth to survive (Huntington 2012: 13; Bollen and Paxton 1997).

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Acknowledgment

Author would like to thank two anonymous referees and the editor for their valuable comments and suggestions. I also thank Anjini Mishra for helpful suggestions.

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    Federico Traversa

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Traversa, F. Income and the stability of democracy: Pushing beyond the borders of logic to explain a strong correlation?. Const Polit Econ 26, 121–136 (2015). https://doi.org/10.1007/s10602-014-9175-x

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