Economic globalization and the change of electoral rules

Abstract

This paper takes up an argument from Ronald Rogowski about the “natural affinity” between trade and an electoral system with proportional representation. We draw on literature on the historical determinants of electoral system choice to advance the general argument that trade integration and PR are related because the adoption of PR helps to secure gains from trade. Our specific model of electoral rule changes in the age of globalization predicts that the likelihood of electoral rule change towards more proportionality increases with levels of trade integration in the world economy. The theoretical model draws on a micro model of the distributive effects of increased economic integration. Because more proportional systems are more credibly able to commit to compensate the losers of globalization processes, there will be increased demand to change the electoral system towards more proportionality under economic circumstances that increase the costs of maintaining a closed economy. In accordance with our model, our empirical tests find a positive association between (a) trade integration and the proportionality of the electoral system, (b) proportionality and social spending, and (c) global integration levels and the probability of electoral rules changes that render voting rules more proportional.

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Notes

  1. 1.

    In particular, CIS (2007, p. 385) refer to the presence of a “guild tradition and strong local economies”, “widespread rural cooperatives”, “high employer coordination”, centralized industry unions and a “large skill-based export sector” and build an additive “coordination” index from these components.

  2. 2.

    In a bivariate model analogous to CIS’ model 3 in Table 5 that regresses the effective threshold only on export specialization instead of coordination, we obtain a coefficient of −22.8 with a standard error of 3.55 for the export dummy. The model thus predicts the average effective threshold in 1919–1939 to be 22.8 percentage points lower in a country with a large skill-based export sector (as classified by CIS for the beginning of the nineteenth century). The R² is 0.72 instead of the 0.82 one obtains with the coordination index. We thank Torben Iversen for sharing his data with us so that we could perform these calculations.

  3. 3.

    “Why was electoral compromise possible? […] the strong incentives that economic openness provided for export specialization reinforced economic and social links between sectors that in larger countries were more sharply opposed. It was the coincidence of these political opportunities and social convergences, reinforced constantly by economic openness and the perception of vulnerability, that inhibited the emergence of a winner-take-all mentality and thus made possibly the corporatist bargain” (Katzenstein 1985, p. 157).

  4. 4.

    Ehrlich (2007, p. 573) points to the endogeneity problem involved and concludes: “Future work, though should further investigate how trade policy may influence institutional design.” This is what we aim to do here.

  5. 5.

    The causal logic connecting these different characteristics is that a more proportional electoral system will generally tend to lead to a less concentrated party system. Given a more fragmented party system, parliamentary majorities will tend to require the support of more parties increasing the number of “partisan veto players” (see Tsebelis 2002). Finally, in a parliamentary two-party system with a one-party government the executive typically easily achieves control over the legislature as the governing party commands over a legislative majority. This executive-dominance will typically be lower in a more fragmented party system given that governments have to rely on a more fragile support base consisting of several parties. Accordingly, governments also tend to be less stable under PR. Given this central role of the electoral system, it should come as no surprise that the mentioned features are strongly correlated empirically and load on a single dimension (Lijphart 2012, chapter 14). The bottom line is that the electoral system is a very basic feature of the organization of representative democracies that plays a central role in the distinction of different types of democracies that some have called “consensus” vs. “majoritarian” types (Lijphart 2012) and others “proportional” versus “majoritarian” (Powell 2000) with the number of veto players being lower at the majoritarian end.

  6. 6.

    A functionally equivalent effect could be brought about by the existence of a second chamber or other veto players not connected to the voting system. We will test for these possible influences in the empirical section of this paper.

  7. 7.

    While structural economic change can be conceptualized as contributing to transitory switching costs caused by trade liberalization, a higher volatility can be understood as contributing to permanently higher uncertainty at higher levels of trade openness. Insofar as both types of uncertainties might lead to demands for credible compensation, both types of risks are potentially relevant to our argument here. Despite the large body of literature on the compensation hypothesis building on this premise (see below), some studies are, however, skeptical whether overall macroeconomic risk, often operationalized by volatility in aggregate output, is indeed higher at higher levels of trade openness (Iversen and Cusack 2000; Kim 2007). While we cannot settle this question here, we note that the first premise that trade liberalization tends to cause structural economic change, which is more central to our argument and is also the premise of the F/R (1991) model we draw on, is uncontroversial.

  8. 8.

    Using the absolute change in mean district magnitude is problematic because most countries don’t change their rules most of the time. Thus, most observations on this variable would be zero, which linear models don’t handle well.

  9. 9.

    We thank one of the reviewers for this insightful suggestion.

  10. 10.

    Among these we conceive the relative rareness of major changes to electoral systems, the idiosyncrasies that might potentially also play a major role in individual cases of electoral reform, the difficulties of operationalizing the opportunity costs of maintaining a closed economy and the fact that our chosen proxy for these opportunity costs inevitably (but appropriately, we believe, as this reflects substantial changes over time we are interested in) exhibits a strong trend over time.

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Correspondence to Christian Walter Martin.

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Martin, C.W., Steiner, N.D. Economic globalization and the change of electoral rules. Const Polit Econ 27, 355–376 (2016). https://doi.org/10.1007/s10602-015-9203-5

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Keywords

  • Electoral reform
  • Trade
  • Economic globalization

JEL Classification

  • F15
  • I38