OPINION: How democracies die and economies grow

DHAKA (The Daily Star/ANN) -The new breed of authoritarian democracies may try to deliberately pursue an approach of “technical insulation” of economic policymaking, as Malaysia did under Mahathir's previous regime.

There are two prominent themes of contemporary development
discourses, both lacking a consensus, as reflected in academic research
and in their popular versions in bestseller books. One of these is about
finding the reasons for the decline of democracies since the late 1980s
and the early 1990s when the erstwhile military rule and dictatorships
gave way to democratically elected regimes in many developing countries.
A representative book on this is Competitive Authoritarianism: Hybrid Regimes After the Cold War
by Steven Levitsky and Lucan A Way. Levitsky has also recently
co-authored another bestseller, How Democracies Die, with his Harvard
University colleague Daniel Ziblatt. The second theme is about how the
quality of governance could explain why some countries economically
prosper and others do not. On this, one of the best-known books is Why Nations Fail: The Origins of Power, Prosperity, and Poverty,
co-authored by two well-known political economy experts, Daron Acemoglu
and James Robinson. The two themes, though interrelated, are quite
distinct, and much confusion is created by not recognising these as
such.

At the time of the so-called new wave of democratisation across the
developing countries, it was believed that these countries would pass
through an initial transition phase for building and consolidating their
democratic institutions. In reality, only a few followed this path of
gradual deepening of democracy; Indonesia or Botswana are often cited as
examples. Some others degenerated into unstable and fragile states and
returned to authoritarianism or worse. But in most cases, the transition
phase did not lead to more democracy, but resulted in a new kind of
stable hybrid regimes—authoritarianism mixed with democratic
institutions in various degrees.

The initial democratic aspirations in most of the countries did not
materialise for various reasons. In some cases, such as in South Africa,
Singapore or the erstwhile Malaysia under Mahathir's rule, the
dominance and popularity of a single party left little room for
multi-party democratic competition. Sometimes, charismatic leaders like
Hugo Chavez of Venezuela who themselves did not believe in democracy but
enjoyed popular support, came to power through genuinely contested
elections. More often, however, democracy was gradually weakened at the
hands of democratically elected leaders faced with fading popularity.

In the latter case, democracy is diminished slowly, in barely visible
steps, unlike in an abrupt fashion of a military coup. The nominally
democratic institutions remain in place and these steps are taken
“legally”, in the sense that these are approved by the legislature and
accepted by the courts; yet democracy is subverted by more subtle means,
by gradually eroding the credibility of state institutions including
higher judiciary, capturing the business bodies, bullying the media,
curtailing the space for civic activism, and rewriting the rules of
politics to tilt the playing fields against the opponents. A former
president of Kenya, Daniel arap Moi, once famously remarked: Politics is
not a football game that you need a level playing field. Ironically,
thus, democracy may ultimately die at the hands of those leaders who got
elected with a popular mandate to strengthen democracy.

When it comes to the economic performance of these hybrid regimes, it
will depend on how they are advantaged or disadvantaged by the
democratic and authoritarian characteristics that they simultaneously
embody. We now know that developing countries can achieve high economic
performance both under democracy—as in India—and under authoritarian
regimes—as in contemporary China and the erstwhile East Asian countries.
The common element shared between these contrasting governance systems
seems to be “accountability”, which lies behind the more proximate
preconditions for good economic management such as efficiency and the
primacy of public good over private gains through rent-seeking.

The way accountability in policymaking is ensured in a
well-functioning democracy is too well-known to need elaboration, but
the issue is more complex in the case of the successful authoritarian
regimes. In the case of the erstwhile authoritarian regimes in East
Asia, the key to ensuring accountability lay in their quality of
economic bureaucracies which were “technically insulated” from patronage
politics and whose policies were subject to performance-based scrutiny.
In China, the governance reforms introduced in the wake of economic
liberalisation have put in place a hierarchical system of strict
accountability within the communist party's bureaucracy regarding
achieving economic targets. As one commentator on China has aptly
brought out the contrast in the structure of performance incentives
under democratic and authoritarian regimes: in democracy, politics is
interesting while bureaucracy is boring; in China, the reverse is true.

The new breed of authoritarian democracies may try to deliberately
pursue an approach of “technical insulation” of economic policymaking,
as Malaysia did under Mahathir's previous regime; but these regimes
generally lack the kind of governance effectiveness or party cohesion
that is needed for mimicking the purely authoritarian mechanisms of
accountability. At the same time, the regimes have the advantage of
having some of the democratic accountability mechanisms. Even poorly
functioning democratic institutions can help. How?

So long as the ruling regimes face periodic well-participated
elections, they are aware of the risk that even flawed or rigged
elections may be lost; this may happen if the extent of corruption in
high places and the excesses of patronage politics cross certain
thresholds of public tolerance. The voice of the opposition party even
in a weakly functioning parliament of elected representatives may
sensitise public opinion against excesses committed by the ruling
regime. In case of rigged elections and non-functional parliaments, the
watchdog bodies and the judiciary can act as a fallback, even when the
integrity of these state institutions is compromised to an extent.
Beyond these institutional mechanisms of accountability, the media and
civic activism can be another fallback. And lastly, the ruling regime
knows that its survival ultimately lies in its legitimacy in the eye of
the common people, unless it increasingly resorts to coercive measures
to stay in power. In a hybrid regime, that legitimacy can be maintained
only by compensating the democratic deficits by delivering visible,
rapid economic progress.

Herein lies a potential for both a virtuous and a vicious cycle in
the new hybrid authoritarian democracies. Strengthening the democratic
institutions of accountability may contribute to creating an environment
for better economic performance that may in turn enhance the legitimacy
of the regime, thus creating incentives for the regime to further
loosen its authoritarian grip on those institutions. The opposite is a
downward spiral of lesser accountability leading to poorer economic
performance and even further curtailing of the democratic accountability
mechanisms in the face of declining regime legitimacy. Only countries
with exceptionally strong growth drivers that can withstand poor
economic governance can escape such a vicious cycle, at least for some
time.

At one point or another, many of the new democracies may thus find
themselves to have arrived at such a crossroads. Whether a country will
choose the right direction at such a time will depend on a range of
factors like the prevailing norms of political behaviour, aspirations of
the people, and the vision and statesmanship of the political
leadership. These factors are mostly country-specific, so that academic
generalisations based on stylised facts are not of much help in making
predictions.

Wahiduddin Mahmud is a former professor of economics
at the University of Dhaka and is currently on the Board of Global
Development Network.

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