Constitutional Political Economy

, Volume 26, Issue 2, pp 121–136 | Cite as

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

Original Paper

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.

Keywords

Democratic Stability Economic Development Relative Income Mechanism 

1 Introduction

About 50 years ago, Seymour Martin Lipset pointed out: “democracy is related to the state of economic development”. Concretely, this means that the more well-to-do a nation, the greater the chances that it will sustain a democracy (Lipset 1959: 75). This assertion was later confirmed by a long list of studies, until it became one of the most remarkable regularities in political economy (Acemoglu et al. 2008: 808). Nevertheless today there is still some controversy regarding whether economic development favors democratization (Boix and Stokes 2003) with recent contributions suggesting that economic factors are not sufficient to explain the emergence and durability of democracy (Congleton 2011; Apolte 2012).1

Most scholars would agree that economic development promotes democratic survival given the important empirical evidence (Przeworski et al. 2000). However the mechanisms that explain the relationship between economic development and democratic survival are not completely clear (Wucherpfennig and Deutsch 2009). Some authors have suggested that the relationship is mediated either by distributional (Boix 2003; Acemoglu and Robinson 2005), cultural factors (Inglehart and Welzel 2005), or other institutional factors (Congleton 2011).

This paper revisits Adam Przeworski’s classic (2005) paper modeling the relationship between economic development and the stability of democratic governance. Przeworski has provided the most straightforward theoretical model of the relationship between economic development and the stability of democracy. This paper suggests that the assumptions are too strong to provide firm foundations for that relationship.

In Przeworski’s view, democracy must be an equilibrium under which all those with the power to over throw it, favor continuation of the democratic regime to overthrow. Based on a starting assumption about the way in which income translates into utility, Przeworski demonstrates that when per capita income is sufficiently high, the rich accept a higher degree of redistribution, while the poor are satisfied with a lower degree. Hence, sufficiently rich societies can sustain democratic institutions in spite of distributional tensions. However, his entire analysis rests on a starting assumption, whose mere acceptance implies in itself the ultimate conclusion of the paper. More importantly, the very practical validity of this assumption is highly debatable.

The link between democratic durability and GDP per capita in this analysis, originates from the assumption (a) that any amount of consumption enjoyed by people is lessened when facing the possibility of living under a dictatorship, and (b) of significant risk aversion. As a country becomes rich, the potential increase in income that result from controlling the tax rate, is not worth the risk of losing and so being the opposition in a dictatorship. The crucial specification of the consumption utility function in the model implies that in any society consumption under a dictatorship (leaving out consumption on part of the dictator himself) yields a level of utility that is reduced by a flat fraction of utility as compared to what is reached under democracy. Average utility rises for a given level of consumption rises with democracy and falls with dictatorship.

Two interesting questions arise in relation to the presence of a direct relationship between economic development and democratic survival as proposed by Przeworski (2005). Firstly, would the same results obtained also hold if we were to assume that people have a preference for democracy independently of income? Secondly, do theory and empirical evidence support the validity of the model’s assumptions about the utility of consumption and the dynamics of redistributive conflicts?

Both important questions remain largely unanswered today. With regard to the first question, Przeworski (2005: 265), (2006: 316) (2008: 134) has suggested that the results only require diminishing marginal utility of income. The second question is not addressed in Przeworski (2005).There does not appear any deep discussion about the practical validity of his model’s assumptions.

The purpose of this paper is to extend the analysis carried out by Przeworski, and provide answers to these two important questions. In Sect. 1, I reconstruct the relationship between development and democracy put forth by Przeworski (2005). In Sect. 2, I examine the case of the relationship between GDP per capita and democratic survival when redistributive conflict depends on people’s evaluation of their relative income within their own society, and assuming a diminishing marginal utility of income. In Sect. 3, in light of the existing theory and empirical evidence, I examine the plausibility of the assumptions made by Przeworski (2005) about the utility of consumption, and finally in Sect. 4, I do the same in relation to his perspective on the dynamics of violent redistributive conflicts.2

2 A relationship that cries out for the lack of an explanation

For several years, Przeworski has maintained that the probability that a democracy survives increases with per capita income. In his opinion “You can control it for everything from the kitchen sink to the grandmother’s attic”. That relationship will survive anything. It’s monotonic, and it’s strong, unbelievably strong. (Munck and Snyder 2007: 470). However, the author also recognizes that this strong empirical relationship between economic development and the duration of democracy cries out for a theoretical explanation (Przeworski et al. 2000: 101).

Later in 2005 he developed a theoretical model that suggested a direct relationship between economic development and democratic duration. This model provided an explanation for the empirical findings that were reached in Przeworski et al. (2000). In that model, two parties representing the poor and the wealthy, compete in elections offering proposals to redistribute income. The result of the election is an instruction to the parties about what they should do: the winner will take the government and the loser should accept the result, hoping to succeed in the next election. If the losing party rebels a violent conflict is expected.

Either contender could prevail in a violent conflict and the one who succeeds will find it more convenient to impose his/her own dictatorship than to respect democracy. Therefore, if the losing party decides to rebel against democracy, the unavoidable result will be a dictatorship. The dictator imposes his groups own distributive preferences, but at the same time there will be a sense of physical insecurity for the losers.3

Przeworski proposes a specific consumer utility function (1), where the utility of what is consumed by an individual depends on the political regime (democracy or dictatorship), and whether the person supports the government or not, if the regime is a dictatorship. In this function c is consumption, while µ is a parameter that affects the utility of consumption which depends on the regime of government and who rules. This parameter is one (µ = 1) for the entire population if there is a democracy, and also for the population that supports the government if there is a dictatorship. On the other hand, this parameter is less than one for the population that lives under a dictatorship but does not support the government (0 < µ < 1).
$$U\left( c \right) = \mu \, log \, c$$
(1)
Therefore, the probability of occurrence of a violent confrontation that ends democracy depends on a number of variables: the taxation rate that the democratically elected government imposes (which motivates the discontent in the loser party); the relative strength of each of the contending parties in a violent confrontation; and the utility that represents living in a democracy or in a dictatorship. Parties evaluate all these variables and finally decide what course of action to take.

It is a model about distributive struggle, since the ultimate reason for the clash between rich and poor seems to be the taxation preferences of each group. Following some pages of precise and elegant algebra, it is possible to demonstrate that the chances of rebellion against democratic outcomes consistently decrease with the increase of GDP per capita in a society. However, this result is hardly surprising; given strong assumptions of the model.

The specific utility function (1) directly implies all that comes later. As mentioned, the utility of consumption under a democracy is equal to (2) for the entire population. It is obvious, since µ = 1 for the entire population if there is a democracy, that democracy always ensures the average person the maximum possible utility for a given level of consumption:
$$U\left( c \right) = \, log \, c$$
(2)
If a violent confrontation occurs between the parties, either of them has a chance of winning. The losing party suffers a loss of utility in everything that they consume; these losses are measured by the parameter (µ) of the function (1). Embarking in violent conflict thus involves the risk of suffering losses the risk of which is not always offset by extra income generated by control over taxation. The losses associated with the breakdown of democracy get increasingly larger with an increase in output and consumption. They even tend to infinity as per capita income tends toward infinite. Thus, the final result of the model is not at all surprising.
Figure 1 illustrates the utility of consumption for opponents of the ruling party, depending on whether they live in a democracy (thick solid line) or in a dictatorship (thin solid line), and as a function of the evolution of GDP per capita, with µ = 0.7. As can be seen, at low levels of GDP per capita potential utility differences between a democracy and a dictatorship are small, but these differences increase more and more with higher output.
Fig. 1

Illustrative value functions. Utility of consumption for opponents as a function of per capita income, according to political regime and functional form used. Democracy (thick solid line); dictatorship according to Przeworski (thin solid line, µ = 0.7); dictatorship with functional form (3) proposed in Sect. 2 (dashed line, µ = 0.7)

Thus, the richer a society, the more utility you risk by challenging democracy. It is obvious then, that for a given level of risk aversion, there will be a certain level of GDP per capita, at which neither the rich nor the poor would find it reasonable to disrupt democracy and run the risk of losing part of their utility derived from private consumption. Przeworski himself clearly and rigorously states that the outcome of the model is connected with the utility of consumption and risk aversion, which means that as a country becomes rich the potential increase in income that would result from establishing a dictatorship is not worth the risk of sacrificing the utility of consumption associated with being the opposition in a dictatorship:

Democracy always survives when a society is sufficiently developed (…) The dependence on income in this story originates both from the aversion to physical insecurity, more precisely from the assumption that people enjoy any amount of consumption less when they face the possibility of physical oppression, and from risk aversion. As income increases, the gap between the well-being of electoral losers and of people oppressed by a dictatorship becomes large. The stakes are too high to risk losing the income guaranteed under democracy. Przeworski (2005: 265)

But immediately Przeworski poses an interesting issue, which motivates this research. The author suggests that same results would probably be reached by assuming diminishing marginal utility of consumption.

Yet dependence on income, and all the other results, would also hold if we were to assume that people have a preference for democracy, independently of income. The interpretation of the results would then be that as the marginal utility of consumption declines, the preference for democracy (or against dictatorship) overwhelms the eventual consumption gain from becoming a dictator. Przeworski (2005: 265).

The following section examines that hypothesis and shows it to be false, or at least to require other restrictions.

3 Diminishing marginal utility of consumption and democratic stability: the critical role of relative income comparisons

Consider a society with per capita income y and consisting of two types of individuals. A proportion πp > 0.5 of the agents is poor and the remaining fraction πr is rich.4 Incomes of the poor are lower than the average, while incomes of the rich are higher than the average, so that αp < 1 < αr, where αi is a multiple of the average income. All agents have single-peaked preferences, and because there are more poor agents than rich agents, the median voter is a poor citizen and democratic politics will then lead to the tax rate most preferred by the poor τp. Two parties compete in elections, and the democratic political system determines a non-negative income tax rate, the proceeds of which are redistributed lump sum to the poor.

Given the result of the election, the rich choose actions A ∊ {obey, rebel} or {O, R}. If the rich obey, production occurs, incomes are taxed at rate τp, the revenues are distributed to the poor, consumed, and a new election is called. The average consumption of the rich in a democracy is [(1-τpr] relative to per capita GDP, Y, or [(1−τp) αrY] in absolute terms. Under a dictatorship of the rich, their income is [(1 + γ) αr] relative to per capita GDP, Y, or [(1 + γ) αrY] in absolute terms, where γ is the extent of transfers from the poor to the rich.

This representation of democracy implies that the poor have no reason to rebel against democracy.5 Only if the rich rebel does a conflict ensue; the probability that the poor class group wins in any violent conflict is q (0 < q < 1) and that the rich class is victorious is (1−q). The above is not a significant departure from Przeworski, but greatly simplifies the algebra. I also assume slightly different utility function (3) which respects the diminishing marginal utility of consumption, and also respects the assumption that consumption always represents more utility for those opposing the government in a democracy than in a dictatorship.
$$U\left( c \right) = \, log \, \left( {\mu c} \right),$$
(3)
where c stands for consumption. Under a dictator, the required coercion is assumed to reduce per capita GDP to (µY), with µ < 1.
The rich revolt when ever their expected utility increases through revolt:
$$\left( q \right){ \log }\left\{ {\left[ {\left( { 1- \tau_{p} } \right)\alpha_{r} Y} \right]} \right\} + \left( { 1- q} \right){ \log }\left\{ {\left[ {\left( { 1+ \gamma } \right)\alpha_{r} \mu Y\left] {\} > { \log }\{ } \right[\left( { 1- \tau_{p} } \right)\alpha_{r} Y} \right]} \right\}$$
(4)
Separating the αrY terms out, combining, and subtracting yields:
$$\left( q \right){ \log }\left\{ {\left[ {\left( { 1- \tau_{p} } \right)} \right]} \right\} + \left( { 1- q} \right){ \log }\left\{ {\left[ {\left( { 1+ \gamma } \right)\mu \left] {\} > { \log }\{ } \right[\left( { 1- \tau_{p} } \right)} \right]} \right\}$$
(5)
Which implies that the decision to revolt is independent on per capita GDP, except insofar as per capita GDP affects either τp or γ.

A slight change in the utility function leads to completely different conclusions. Here democratic stability depends on specific parameters that are likely to be independent of GDP: the probability of successful revolt and the magnitudes of the transfer lost and gained under democracy and a dictatorship of the rich.6

Theoretical models often represent some degree of oversimplification and stylization with the purpose of clarifying some point. In this case, the aim of the analysis was to develop a model almost identical to that proposed by Przeworski (2005), in order to demonstrate that only a small change in the model tends to undermine his final. As a consequence of this analysis, it can be stated that diminishing marginal utility of income is not a sufficient condition to conclude that the stability of democracy increases as a society becomes richer, even if we consider that people are worse off on average under a dictatorship.

Figure 2 illustrates the differences involved for the opposition living in a democracy relative to dictatorship under the two models. The solid line represents the functional form selected by Przeworski (1) and the dotted line represents the function (5) which is derived from the model developed here.
Fig. 2

Difference in utility for opponents between democracy and dictatorship, as a function of per capita income, and according to the functional form chosen for consumption utility. Functional form: Utility function 1, used by Przeworski (solid line); Utility function 3, hereproposed (dashed line)

In light of the critical importance of core presuppositions in theoretical modeling (Morton 1999; Clarke and Primo 2007) the next two sections are devoted to discussing the plausibility of the assumptions made by Przeworski (2005) with reference to the utility of consumption and in relation to the dynamics of violent redistributive conflicts.

4 Discussing the utility of consumption

Przeworski (2005) has presented his model as a deliberate attempt to find a deductive argument that can explain his previous empirical findings (Przeworski and Limongi 1997; Przeworski et al. 2000). The problem is that the function (1) makes the model particularly recursive, approaching a tautology, both in logical and rhetorical terms. From a strict logical point of view, however, all well conceived and valid deductive models result in tautology, and this is not a problem in itself (Wittgenstein and Ogden 1999).7 However Przeworski’s model also constitutes a tautology according to the commonly accepted meaning of the term, in other words it is a rhetorical construction of an argument that is circular, or more specifically that begs the question.

Aristotle was the first to analyze and consider problematic issues such as these:

Whenever a man tries to prove what is not self-evident by means of itself, then he begs the original question. This may be done by assuming what is in question at once; (but) it is also possible to make a transition to other things which would naturally be proved through the thesis proposed, and demonstrate it through them (Aristotle 2012[c. 325 B.C.])

These kind tautologies result from “assuming what you are to prove” (Robinson 1971: 113) or “basing a conclusion on an assumption that is as much in need of proof or demonstration as the conclusion itself” (Garner 2001). Moreover, “the transition to other things which would naturally be proved through the thesis proposed” that Aristotle mentions, is inevitably reminiscent of the algebraic complexity of Przeworski’s model. This complexity helps to obscure that fact that its conclusions are already implicit in the premise about consumption utility.8

These are criticisms of Przeworski’s style, and they do not call into question the internal validity of his model. As Perelman puts it (1979: 14–15): “the orator who builds his discourse on premises not accepted by the audience commits a classical fallacy in argumentation—a petitio principii—. This is not a mistake in formal logic, since formally any proposition implies itself, but it is a mistake in argumentation, because the orator begs the question by presupposing the existence of an adherence that does not exist and to the obtaining of which his efforts should be directed”.

The basic intuition that guides Przeworski is that in a rich and democratic country, there is much to lose if a dictatorship ensues. To avoid this feared outcome, parties in conflict on distributional grounds prefer to restrain their distributive expectations and thus democracy endures. But this would not happen in a poor democratic country, where there would be less to lose if a conflict occurs.

According to Przeworski, people have the ability to abstract and somehow compare their absolute levels of consumption with that of other societies or historical times, and when they find that this level of consumption is high enough, they stop giving importance to interpersonal comparisons of consumption with peers of their own society. Only if a historical and sociological abstraction of this kind is performed by common people, would the increasing levels of absolute consumption of contemporary societies be the decisive factor.

It seems more likely that rather than use historical yard sticks to assess their consumption levels, both rich and poor citizens would make comparisons with each other (as with the ratio [αp/αr] in the above model). If relative rather than absolute income matters, it is possible that the poor in the above model, which favors the poor, would nonetheless find it useful to revolt, if reductions in income associated with coercive regimes also tend to increase the ratio of poor to rich income as absolute GDP fell.9

Many researchers (Easterlin 1974, Frank 1997) have reported that absolute increments in consumption do not appear to produce higher utility on a subjective level. This result has been explained by several factors: as a consequence of a steady rise in social expectations; as a result of adaptation to higher levels of consumption; and by the importance of interpersonal comparisons of consumption with members of the same society.

Hence, Przeworski’s reasoning can be challenged on two major accounts. Firstly the very notion that in some societies “there is much at risk because they are rich”, while in other societies “there is little at stake because they are poor” is questionable as the model shows. Second, absolute income may not be the correct measure of consumption for assessing increases in welfare, as opposed to wealth. Individuals seem to adapt and get used to changes in income (Burchardt 2005) such that their subjective sense of well-being does not increase steadily with the absolute increase in consumption (Brickman and Campbell 1971, Frederick and Loewenstein 1999). An increase in consumption may have only a transient effect of wellness, which later dilutes (Grund and Sliwka 2003; Di Tella et al. 2007). Therefore, two societies with very different levels of income can get similar utility from consumption as a result of social adaptation over time (Easterlin 2005). If levels of utility obtained from consumption do not differ significantly, the utility derived from consumption simply would not increase in the long term as a result of rising income (Galbraith 1958).

Here it must be acknowledged that emigration tends to be from poor to rich countries, suggesting that absolute income is also important, insofar as emigrants often have relatively low relative income in their new societies. The point here is that relative income effects need to be taken into account. Given relative income effects, it is unlikely that at a certain level of consumption, individuals would suddenly decide that it would no longer be worth fighting for redistribution.

The utility obtained from consumption by an individual seems to depend more on interpersonal comparisons of consumption with other individuals of the same social context, than on the absolute level of consumption (Gaertner 1974; Pollak 1976; McBride 2001; Layard et al. 2009; Stutzer 2004; Knight et al. 2007). Humans pursue social recognition (Polanyi 1944; Hirsch 1995), and their preferences are constructed within a concrete historical environment and by comparisons drawn regarding the welfare of others living in the same social context (Tomes 1986). These are the kind of motivations that might be behind distributive conflicts.

People seem to compete for material goods and social status, and thus increasing the income for everyone may not lead to an increased general utility. If the distributive preferences are constructed in comparison within members of the same social context (Veblen [1899] 1994) then the redistributive pressure would not be linked to the absolute levels of consumption (Marx [1849] 1952). Two societies with very different levels of absolute consumption, but with similar patterns of distribution of economic resources, effort and leisure, could also have quite similar levels of redistributive conflict, despite the differences on total output.

In such cases, redistributive conflict would not steadily decrease as a result of the increase in the absolute levels of consumption, a hypothesis quite plausible in light of historical and anthropological evidence (Dahl 1989; Huntington 2012; Bollen and Paxton 1997). Even more so, experimental evidence seems to support this hypothesis. Individuals appear to prefer lower levels of absolute consumption if a better social position is assured, than higher levels of consumption involving a relatively worse social position. This trend to relative comparison and behavioral response consistent with this kind of preference has been tested even in animal experiments (Brosnan and de Waal 2003).

Therefore, it is not reasonable to assume without a clear basis and a previous discussion, that higher absolute consumption levels are perceived by people as such, and that these are enough to wipe out and replace distributive preferences built upon relative consumption comparisons with others of the same society. Given the importance of this assumption to sustain the argument that the level of output explains the duration of democracy, more efforts should be concentrated on theoretical and empirical research to support its validity. But as we have seen, by now there are numerous precedents in the literature that contradict this presumption.

5 What kind of democratic equilibrium?

As can be seen, the idea that democratic survival is explained by the average levels of output relies heavily on a single and widely debatable assumption about the utility of consumption. But there can also be other sets of objections concerning the relationship between the distributive equilibrium described by Przeworski and the disappearance of violent political conflicts that destabilize democracies. It should be remembered that while the relationship between inequality and violent political conflicts have long been analyzed (Cramer 2005), this has been developed in relative isolation with research that deals with the causes of democratic consolidation (Dunning 2011).

A part of the literature about the origin of political conflicts, points towards inequality as being a fundamental factor responsible for feelings of anger and frustration that lead to violent conflicts (Gurr 2011; Midlarsky 1988). As discussed in the previous section, these authors suggest that conflict has at its origin a deprived actor with unmet expectations constructed from the comparison of his/her relative situation with others from the same society. However, since inequality as a phenomenon is more or less present in all societiesit is difficult to use it as an explanatory factor behind why conflict occurs insome circumstances and not in others.

Other authors have provided interesting answers regarding the relative disconnect between conflict and inequality (Canel 1997). They point out that in addition to inequality, other political factors need to be met for violence to emerge (Schock 1996; Østby 2008; Schneider and Wiesehomeier 2008; Mine et al. 2013). Conflicts involve concerted political action towards the mobilization of resources, implementing codes of conduct and taking advantage of rising political opportunities (Tilly 1978; McAdam et al. 1996). In this vein, organization, resources and leadership, are factors that determine the possibilities of action and therefore conflict, although there are different perspectives on the problem (Collier et al. 2000; Guichaoua 2012).

Other factors than income and income inequality are evidently also important. Conflict only emerges when a group is able to articulate and make public demands that are threatening to another group, and this process is not automatic, it requires the solving of a number of collective action problems (Apolte 2012).The existence of networks and horizontal links that reaffirm the identity of groups—networks such as cultural, ethnicor economic—are basic to the configuration of structural opportunities for collective action. By emphasizing on opportunities of collective action, some authors criticize the former view that tends to regard conflict as the product of isolated, irrational, and impulsive actions by some groups, when facing disruptive social processes. In group or ‘horizontal’ inequalities and grievances can also give rise to conflict (Stewart et al. 2005; Cederman et al. 2011; Esteban et al. 2012; Langer and Stewart 2013; Koubi and Böhmelt 2013).

With respect to democracy itself, both the socioeconomic elite and the poor may find better security of their persons and their property under some dictatorships than in a fully democratic regime, especially in unequal societies. It is very common that those who overthrow the democratic institutions justify their actions on the need to restore the order and security, especially with regard to the consequences of distributive conflicts. In this vein the dictators often justify the legitimacy that derives from imposing a social order capable of generating material progress and the conditions to enjoy this achievement safely.

In such cases, a large part of society might perceive the utility function of consumption to be exactly opposite to that shown in Fig. 1. If a dictatorship ensures greater security and protection of property, the utility functions of consumption could be higher in this context as compared to in a democracy where there would be more insecurity and utility losses, especially for the rich, but also for the poor insofar as instability leads to capital flight or constant policy cycles. Thus given the huge number of possibilities at hand, it is not clear that Przeworski’s claim that under all circumstances opposing forces within a democracy would avoid conflict simply because of the fear of losing.

For example, even if there is little chance of winning, parties may initiate action against each other because the cost of losing is low. Such conflicts are often initiated by small insurrectional forces can last a long time and be detrimental to democracy. Many conflicts that lead to the breakdown of democracy start with the perpetrators conducting, several very different calculations as compared to those proposed by Przeworski in his model.10

Recent events in Latin America demonstrate how democracy can breakdown without necessarily resulting in a generalized violent conflict. Electoral frauds, continued erosion of the rule of law or disruptions in the in the checks and balances between different branches of government, are equally damaging to democracy. These practices strongly reduce costs associated with a democratic breakdown, and while doing this those who promote such action, might even declaim the intention to comply with the rule of law. Democratic breakdown does not always produce generalized repression and insecurity that justifies the loss of utility that reflects function (1). Therefore, there are many less expensive ways to breakdown democracy, which also have to avoid if democracy is to endure. Such low cost breakdowns also need to be brought into the analysis. Przeworski seems to imply that only violent democratic breakdowns end democratic regimes.

6 Conclusions

The explanation for the cause of an event does not end with an empirical generalization. An explanation is a demand for making intelligible the structure of the facts (Hanson 1958). Society demands of science such types of elucidation. In recent times this concern for theoretical mechanisms explaining empirical phenomena has also become applicable to the statistical relationship between development and democracy (Wucherpfennig and Deutsch 2009).

Przeworski (2005) is not the first to attempt to suggest a causal mechanism that directly links economic development with democracy. His starting point is inductive, he says that observation shows that while democracy is fragile in poor countries it is impregnable in developed ones and no democracy ever fell in a country with a per capita income higher than that of Argentina in 1975. With the explicit aim of explaining this pattern he suggests a theoretical model, which has been widely studied and cited by the scientific community.

Przeworski model is innovative and interesting, and due to its widespread impact and its implications for promoting democracy, it is worthy of profound analysis.11 Such has been the aim of this study, which makes it clear that the analytical model developed by Przeworski starts with a claim that is essentially tautological. Democracy, per se, is more valuable as societies become richer and therefore richer democracies are more stable.

But leaving aside questions on Przeworski’s style, a more significant issue with his theory is that he does not discuss in detail the rationale for this assumption, which is very hard to accept in light of the theory and empirical findings about the utility of consumption (Easterlin 1974; Frank 1997). Similarly, his model of the dynamics of violent conflict is not enough to conclude that conflict disappears as countries become rich. Recent literature has shown that democracy as a formal institution can only regulate the allocation of de jure power, while de facto power depends upon the development and use of specific political technologies (Acemoglu and Robinson 2008). Groups with different relative power might go so far as to procure the technology necessary for a conflict and invest in the preparation of a confrontation (Besley and Persson 2011), with inequalities often aligning with ethnic or cultural identities fuelling conflicts (Fearon and Laitin 2003; Thorp et al. 2006; Østby et al. 2009).

Regrettably given all this, it is possible to imagine many other forms of conflict or institutional deterioration that can lead to democratic failure in the future (Oberschall 2007).

The objections I raise to Przeworski (2005)—concerning the style and the foundations of his analysis—can pose a problem for any theoretical model, and do not necessarily mean that its conclusions are entirely wrong. There are no problems in the internal logic of the model, and the idea of democratic stability as a product of the wealth of contemporary societies cannot be ruled out completely, given the empirical results. Nonetheless, the above critique implies that more theoretical work and empirical work is necessary to account for the empirical findings of Przeworski et al. (2000).12

Footnotes

  1. 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. 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. 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. 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. 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. 6.

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

  7. 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. 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. 9.

    In Eq. 5, the effect of relative income disappears along with that of per capita GNP. The relative income effect occurs through parameter αr 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 αr as well as per capita GDP.

  10. 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. 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. 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).

Notes

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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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Universidad de la RepúblicaMontevideoUruguay

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