|Montreal, September 27, 2003 / No 129|
by Jean-Marc Kilolo
There is a wide consensus that democracy favors social cohesion and economic growth. Empirical data seems to show that rich and developed countries are more likely to have democratic regimes(1).
However, democracy has not kept its promises in developing and transition economies. The recent shift toward democracy in these countries coincides with the emergence of ethno-nationalism and severe conflicts along ethnic lines. This can be attributed to the fact that this institutional change has not occurred in parallel with the establishment of the main driving forces behind economic growth, namely the guarantee of private property rights and the rule of law for all.
Many people believe the state apparatus is designed to maintain political
and social order; that is why the state has at its disposal a monopoly
over coercion to enforce private property rights. This task however requires
financial means that public authorities get through taxing members of the
community. In this case, the use of force is socially productive, since
the defense of private property rights strengthens the incentives to pursue
productive works, instead of encouraging predation(2).
In the developing countries of Africa and transition economies of Eastern Europe however, state monopoly over violence has led more and more to a predatory behavior since the early introduction of democratic regimes. This has provided ground for such wrong claims from defenders of authoritarianism that democracy is neither universal nor suitable for Africans.
To understand why things are getting worse, we have to shed light on the very role of the state. If the state must do anything useful, it must provide protection against enemies and guarantee to its members the enjoyment of their properties. In the Hobbesian view, members of a community agree to a social contract in which they all give up certain rights to the benefit of the state apparatus.
Public Choice theorists however teach that the state apparatus is not an abstraction but is made up of human beings pursuing their own agendas and goals(3). Instead of acting in the public interest, politicians will rather tend to use public funds to give privileges to their supporters ("pressure groups," or in this case, ethnic voters). In other words, state officials can deviate from the public interest goal of protecting property rights; they can even use their coercion monopoly to encroach on private properties and enrich themselves, thus accelerating political disorder and economic downturn(4).
So what has this to do with democracy and the rise of ethnic conflicts? One has to bear in mind that the social and political order depends not only on present tax revenues but also on the current government's assessment of its prospects to collect revenues if social order collapses. If private agents foresee that they could not benefit from the fruits of their labor if the state engages in predatory behavior, they will reduce their labor efforts and investments. But as long as the government believes that it will raise revenues in the future, it will tend to avoid predatory behavior and instead commit to protecting private properties.
The drastic change introduced by the democratic process is that officials are no longer certain they will keep their positions. This uncertainty in the early stages of a democratic process augments the returns of plunder and partisan short-term public policies in favor of the dominant ethnic group, even at the cost of lasting ethnic conflicts.
Since ethnic membership often influences one's political affiliation and social class in a society where there exists widespread discrimination, mobilization of ethnic members by officials is made easier. That is why electoral competition is often viewed as a "winner-take-all" game. As the end justifies the means, competition among ethnic groups for the control of a country's riches can take the form of war.
If property rights and rules of law applicable to all were firmly established previous to the launching of the democratic process, officials might find it harder to mobilize members along ethnic lines. It goes without saying that in a free society, people don't exchange with one another on the basis of kinship. They seek first of all their private satisfaction; that is why they trade with whoever is able to meet their needs. In this latter case, a predatory regime would harm even members of the leading ethnic group, who would resist such change.
These arguments provide some clues about the poor performance of democratization in the developing and transition economies. Obviously, the sequence of reforms matters. A majority of African and East European countries in a developing or transition process had authoritarian regimes that did not guarantee property rights. Except in a few cases, these were not well established when the first democratically elected governments took over.
But for democracy to keep its promises, a necessary condition is that people be allowed to engage in productive activities and be granted the assurance that they will keep the fruits of their labor. When democratization is not preceded by sufficiently secure property rights, it can create appropriative competition and, thus, lead to more intense ethnic conflict. To conclude, the net effect of a democratic reform rests on the strength of property rights.
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