Reflections from Europe
NOVEMBER 1, 2010
The Best of the Worst: What Price Democracy
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For the last twenty years or so, the European economy looked tired, sluggish, beset by chronic unemployment while straining such muscle as it had to spread the "social" safety net ever wider, ever higher. At the same time, the American economy showed vigorous growth, resilience and innate energy. Europe was by and large social democrat, America unrepentantly capitalist. Opinions were deeply divided about the merits of each, mostly because they sprang from the ineradicable gut feelings of each side. Lately, however, the clean cut between the two systems has become more and more blurred. America has acquired a hugely expensive public health care system, an interventionist monetary policy to make Keynes blush, an inexorably rising deficit that made the Director of the Budget throw down his job in despair, a solid complicity between the labour unions, the tort lawyers and the administration, and an economy that seems unable to respond to doping and is crawling along as sluggishly as the European one. Perhaps a little too soon, some observers are now saying that the US have "Europeanised" themselves; both continents have become democratic in the same sense.
Valuation and Description
Any language worth the name makes a clear enough separation between words that evaluate and words that simply describe. Consider pairs of words that perform the former job and pairs that do the latter. In the first set, you find such pairs of opposites as "good-bad", "handsome-ugly", "nice-nasty", "right-wrong", "true-false" and "just-unjust". In each pair, the first word is indisputably, self-evidently superior and preferable to the second. It simple makes no sense to say that bad is better than good that nasty more agreeable than nice nor that false is worthy of more respect than true. In the second set of words, you find such pairs as "like-unlike", "great-small", "many-few", "long-short", "many-few", "equal-unequal". The first word in each pair is no more valuable, desirable or commendable than the second. They both describe; any ranking we give them comes from some particular context in which "long" is preferable to "short" or vice versa. "Equal-unequal" is such a pair of words, though you would not believe it from listening to everyday political rhetoric. So is "democratic-undemocratic".
The Maximin Rule
Winston Churchill is supposed to have said that democracy is the worst political system except for all the others. This is a good enough aphorism, but it is rather poor decision theory. It is hardly an ideal of rationality to adopt it as a rule.
There is a great multitude of possible political systems from theocracy to technocracy, feudalism to plutocracy, hereditary monarchy to populist mob rule, dictatorship of the few to democracy. Each system is capable of producing a range of good and bad outcomes, with probabilities we can only guess. It is no use saying that we refuse to guess at such uncertain outcomes; for whether we have guessed or not, or guessed right or not, the outcomes arrive just the same, and it is better to at least try and anticipate them even if we cannot be confident to guess right, than give up hope and not try at all. Perhaps needless to say, the outcomes a given political system produces depend not only on the system itself, but on the kind of people and the kind of historical conjuncture to which it is applied.
By opting for a political system, we opt for what game theorists would call a "strategy" in a game we play "against" destiny. Each strategy is geared to produce one out of a range of outcomes from very good to very bad. Rationality, understood as being true to one's likes and dislikes, requires us to opt for the strategy that offers the best combination of outcomes weighted by their probabilities.
One famous strategy, maximin, deviates from this rule of rationality. It is not the one that offers the best combination of good or bad, (where "best" combination is by definition better liked than any other), but the one whose worst possible outcome is better than the worst possible outcome of any other available strategy. Its name, maximin, means "maximising the minimum", and that leads you to the strategy whose worst outcome is the best among the worst outcomes of all the others, and never mind any of the universe of outcomes that are better than that. Democracy locks us safely into maximin. It is truly the best of the worst.
Freehold or Leasehold
"Democratic" is not a word of approval nor is "undemocratic" a word of condemnation. Like "equal" and "unequal", such words are descriptive and anyone who uses them as evaluative ones is a victim of the linguistic trap laid by politicians, media people and second-rate academics over the last half-century or so. It is an error, too, to conflate democracy with the rule of law. Prussia under Frederic the Great, France under Louis XV and Austria-Hungary under Francis Joseph were undemocratic and adhered to the rule of law.
All tenure of political power except democracy is like freehold property that perdures until some exogenous factor terminates it. Tenure of power under democracy is like leasehold property; it has a built-in expiration date at which it is terminated and needs to be renewed. Getting a fresh leasehold is a matter of competition. The lease is awarded by majority vote to the competitor who offers the highest price to a potential coalition for its support. The price must then be paid by society as a whole, but principally by the potential minority. The result is a net redistribution from the better-off to the worse-off, for rich-to-poor transfer can always outbid poor-to-rich one. The basic mechanics of political competition for a lease on power ensure that on balance democracy is intrinsically egalitarian. Egalitarian ideology is a consequence of this mechanism and not its cause.
On the road to equality of income and wealth, a terminus that is never reached and is not even seriously striven for, governments must outdo themselves at embellishing and nourishing a welfare state. Friedrich Hayek, of all people, positively commends the further expansion of the state to this end: "the only question which arises is whether the benefits are worth the cost." A very good question indeed. "Government may render... many services which involve no coercion except for the raising of the means by taxation". Government is induced by competitive pressure to pre-empt a growing share of the national product for its own expenditure, leaving a shrinking proportion for individual disposition. Short of revolt, individuals must submit to this, for majority rule ensures that collective choice trumps individual choice. The process of adopting new good ideas for "useful public goods and services" "whose benefit exceeds their cost" reaches a frenzy as the regular expiration date of the leasehold on power approaches. One has the impression that election fever begins ever earlier and election campaigns are becoming ever more massive and all-encompassing as democracy matures.
The maximin-type safety of the democratic system provided by the government having to face the expiration of its tenure at regular intervals is paid for with a heavy price. Capital accumulation and investment tend to be lower, structural adaptation meets more resistance and budget deficits are more chronic in democracy than in some, though of course not all, non-democratic systems. One need not select such extreme examples as France or Spain compared to Korea, Singapore or Indonesia to perceive the general tendency. Democracy has produced a "social model" in Europe, and is busily at work to produce one in the United States, whose attractions are visible enough, but whose costs are concealed or too easily imputed to causes other than democracy itself.
What all this suggests is not that we should somehow get rid of democracy and put in its place the miraculous "new order" stuffed with empty phrases and little else. Rather, what it suggests is that democracy does not deserve the awestruck adulation and praise, due only to some ultimate good, that it is receiving. It deserves constant critical scrutiny and resistance to its encroaching creep at the margin; the very same treatment that should be meted out to any and every other kind of political system.
"Many forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time." Speech in the House of Commons, The Official Report, House of Commons (5th Series), 11 November 1947, vol. 444, pp. 206-07.
F.A. Hayek, The Constitution of Liberty, (Chicago: The University of Chicago Press,1960), p. 222.
F.A. Hayek, New Studies In Philosophy, Politics, Economics and The History of Ideas, (London, Routledge, 1978).
Anthony de Jasay
is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State
(Oxford, 1985), Social Contract, Free Ride
(Oxford 1989) and Against Politics
(London,1997). His latest book, Justice and Its Surroundings,
was published by Liberty Fund in the summer of 2002.The State
is also available online on this website.
For more articles by Anthony de Jasay, see the Archive.