There are two approaches to the study of transitions to ...



Karla López de Nava

PS 311 Week 5

Economic Development, Elite Behavior and Transitions to Democracy

There are two approaches to the study of transitions to democracy. The first one is the macro-level approach, which analyses the aggregate economic data of a country (or countries) and relates it to the rise, life, and death of a political regime. Some of these macro-levle studies suggest that transitions from authoritarian regimes to democracy are a function of the economic development that the countries experience.[1] Others simply assert that the survival of democracy depends on economic development (Przeworski, 2000).

The second approach focuses on the micro level to explain the transition to democracy as a result of choices and strategies between different and significant political actors, i.e., elites in and outside the regime and civil organizations.[2] Democracy is the outcome that results from the interaction between the different political forces (Przeworski, 1991). In this context, democracy is an equilibrium, but not the only possible one.

Do the economic conditions determine the transition from an authoritarian regime to a democratic one, or are the actions of the elites the factors that account for this transition? Is there any link between these two types of research? Are they able to explain the process of transitions, or do they end up focusing on other aspects of democracies? Are they mutually exclusive, or do they complement each other? In this paper, I will explore these questions by taking as my theoretical foundation[3] the work by Adam Przeworski in Democracy and the Market (1991) and Democracy and Development (2000).[4] In these books, Przeworski studies transitions to democracy from both the macro and micro level points of view. The order of this paper is as follows: First, I will briefly describe both of Przeworski’s approaches to the study of democracy and the main findings of his work. I will suggest that these models are not mutually exclusive, but complement each other because they examine different aspects of democracy. The micro-level approach successfully explains the transition process, which the macro-level approach fails to do, yet the macro model identifies the factors that determine the survival of a democratic regime.

Even though these approaches seem to focus on different explanatory variables[5] and end up answering different questions, I believe there may be a link between them. The incentives that move elites to push for regime change are not only shaped by their probability of gaining or loosing power, or by their probability of success if they decide to rebel, but also by their material well being under the existing regime. If the existing regime is not able to satisfy the material needs of all the political forces, some of these groups may have strong incentives to rebel against the status quo and establish another type of regime. This hypothesis may explain the transitions from democracies to dictatorships under bad economic conditions, but it still does not explain why Przeworski (2000) did not find a relationship between bad economic performance in dictatorships and their demise. I will propose some hypotheses of why he did find a relationship between bad economic performance and the fall of democracy, but did not find it in authoritarian regimes. One possible explanation is that the costs that the elites have to pay for rebelling against a democratic system are lower than the ones elites pay in authoritarian regimes. Another possible explanation is that under dictatorships, although elites may value economic well-being, there are other factors that induce them to rebel. These factors may include the desire to gain power and participate in government. This may be why Przeworski finds that dictatorships undergo a transition to democracy under different economic circumstances.

In Democracy and the Market, Przeworski defines a democratic regime as a system in which some parties loose elections. It is a system of organized uncertainty where the actors strategically comply with the rules in order to further their interests. There are some distinctive elements that characterize a democracy: (a) ex-ante uncertainty: players do not know the outcome of the elections before the elections; (b) ex-post irreversibility: players cannot change the results of the elections; (c) repeatability: elections are repeated so all the outcomes are transitory and not permanent; and (d) the whole electoral process is organized by rules. For Przeworski, a consolidated democracy is a self-enforcing equilibrium in which nobody (even the parties who loose power under this system) considers defecting to another institutional setting.

How does an authoritarian regime change to a democratic equilibrium? Przeworski explains that a democratic equilibrium is reached when one set of institutions is capable of generating a self-enforcing equilibrium under the context of transition. He explains that most transitions to democracy are preceded by what he calls a “liberalization” process, meaning the creation of autonomous organized groups in civil society. This liberalization process is the result of the interaction between a cracked authoritarian regime and an organized civil society. Some groups in power perceive the dissatisfaction of society and take advantage of this context to consolidate their power by forming alliances with certain sectors of society. The liberalization process is unstable and may not always end in a democratic transition, but it can set the foundation for the transition. Przeworski explains the transition as a result of a fight between elites that act under a context of uncertainty. There are some elites that want to abolish or reform the authoritarian regime, but there are two types of confrontation. One is between the elites that are in favor of the authoritarian regime and the elites that prefer the democratic system. The second is the result of a fight between the competing proto-democratic elites that unite against the authoritarian elites but want to stay in power once democracy is established.

Przeworski asserts that there are different types of transitions to democracy with different institutional consequences; some transitions, for example, may end up with a very autonomous military force that can create instability. Nevertheless, there is one thing in common between all these transitions: all are the result of bargaining between the elites. The construction of democratic institutions will depend on how much each competing political elite knows about the relationship of force between itself and the rest of the elites. Summarizing Przeworski’s transition model, one can say that in order to achieve and maintain the democratic equilibrium, every significant political interest has to be protected and at the same time it has to generate material well being. These two factors are important because they create the incentives for compliance with the democratic institutions. If these incentives are lost, elites may be tempted to change their strategy and rebel against the regime. This decision is not only a function of the probability of success of a rebellion and the costs it may imply, but it also depends on the material well being that elites are experiencing under the regime.

In Democracy and Development, Przeworski analyses the relationship between regime transition and economic development. He studies the impact of economic outcomes (measured as income per capita) on the type of regime (democracy or dictatorship) and on regime change.[6] Interestingly, contrary to what modernization theory asserts, economically developed dictatorships are less likely to make a transition to democracy than less developed dictatorships. In fact, Przeworski finds that intermediate developed dictatorships are more likely to undergo a transition to democracy than affluent dictatorships or very poor dictatorships.[7] His empirical evidence questions modernization theory. Nevertheless, Przeworski’s model fails to explain the causes of transition to democracy by level of economic development. His model cannot explain the rise of democracies, but it succeeds in finding the causes of survival or endurance of democracies. Democracies are more likely to survive in affluent countries. But why is this so? Is it because wealth means more education, and more education means more defense of democratic values? This hypothesis is not likely because it would mean that affluent dictatorships would have incentives to undergo a transition to democracy, and that is not the case. Is it because wealth brings more political stability? Perhaps. Przeworski is not clear in explaining why democracies survive in affluent countries. He states the causal relationship, but does not explain the intuition behind it. This problem may be inherent in macro-level analyses; they sometimes fail to explain the whole picture. It may be useful to also look at the elite interaction to explain how the countries move from a non-democratic equilibrium to a democratic equilibrium and vice-versa, under what conditions they move, and what are the institutional factors that permit the endurance of certain types of equilibrium. This is the missing link between the macro and micro level analyses. How does the economic performance affect the elite’s incentives and bargaining strategies? Are these two factors independent of each other?

My hypothesis is that they are definitely not independent. They shape each other, and in order to comprehend a transition to democracy or a transition to dictatorship one has to take both aspects into account. From the micro perspective, the probability of elite rebellion will increase if the probability of success and the utility gains from staying in a democratic regime are low. Unsatisfactory material well-being may lower the gains the political elites attach to complying with regime rules. If economic performance does influence the bargaining strategies of the elites, this may be why the probability of leaving a democratic equilibrium increases when the economic performance is bad. What is still left unexplained is why bad economic performance in dictatorhips does not give elites an incentive to make a transition to democracy. One possible answer is that, under dictatorships, even though economic outcomes may impact elite’s incentives, there are other factors, such as the costs of rebellion that may also determine elite behavior. On the other hand, the simple fact that there is very limited access to power under a dictatorship may be sufficient to prompt elites to risk the cost of rebellion, in order to gain access to the power. In a democracy, political participation is open, so elites may assign a much higher weight on economic performance, and this may be why the probability of democracy survival is much more sensitive to changes in economic growth. Still, if elites in < a dictatorship assign more weight to political participation than to economic performance, one would expect that affluent dictatorships would be more likely to undergo a transition to democracy. This is not the case. The fact that affluent dictatorships are more likely to survive than less affluent authoritarian regimes may even confirm that elites do care a lot about economic performance, so their incentives for rebelling against the regime lower when the economic outcomes are good.

My conclusion is that the micro-level elite bargaining model is connected to the empirical evidence from the macro-level analysis. Economic development influences elite behavior under both democracy and dictatorship, but other variables may sometimes play a more important role in shaping elite behavior. Both micro and macro level aspects of regime transition influence and complement each other.

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[1] Modernization theory is an example of this type of approach. It suggests that authoritarian regimes will undergo a transition to democracy once they have reached a certain level of economic development. “The basic assumption of modernization theory was that societies (under authoritarian regimes) undergo one general process of which democratization is but the final facet. Hence, the emergence of democracy would be an inexorable consequence of development” (Przeworski, 2000, pg.3).

[2] It generally uses game theoretic models to explain the interaction between the different actors.

[3] My conclusions will be based exclusively on Przeworksi’s theoretical foundations.

[4] This book was co-authored by Michael E. Alvarez, José Antonio Cheibub and Fernando Limongi.

[5] The micro approach focuses on the bargaining actions of the relevant political forces while the macro approach focuses on the aggregate economic variables.

[6] He also incorporates other variables in his model, such as mobilization, income inequality, ethno-linguistic fragmentation, history of regime change, cultural, and international variables. Even though he finds that some of these variables are correlated with the stability and the regime transition, I will only concentrate on the impact of economic development.

[7] His model also asserts that the history of political and intra-regime instability affect the probability of survival of any type of regime, democratic or non democratic.

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