Unit 10 Women’s right to vote and the reduction in child mortality in the United States

10.3 Democracy as a political institution

Harold Lasswell, a prominent mid-twentieth-century American political scientist, is best known for his book Politics: Who Gets What, When and How. The title captures a basic point of this unit; politics is about:

• who gets what
• who gets to be what
• who gets to do what.

political institutions

An institution is a set of laws and informal rules that regulate social interactions, sometimes also termed ‘the rules of the game’. Political institutions are the institutions that determine who has power and how it is exercised in a society.

democracy

A political system that ideally gives equal political power to all citizens, and which is defined by individual rights such as freedom of speech, assembly, and the press; and fair elections in which virtually all adults are eligible to vote, and the government leaves office if it loses.

The reason is that the political institutions of a country are the rules of the game that determine who has power and how it is exercised in a society. Democracy is a political institution, which means it is a set of rules that determine:

• who makes up the government
• the powers they can use when governing.

Political institutions differ from country to country and over time. In addition to democracy, major categories of political institutions include dictatorship, and other systems intermediate between the two.

The key value motivating democracy is political equality. Citizens should have substantially equal opportunities to be able to express their views in ways that can shape the policies and other activities of the government.

Democracy is sometimes advocated as a means to ‘let the people rule’, or because it represents, in Abraham Lincoln’s words, a ‘government of the people, by the people and for the people’. But who ‘the people’ are and what ‘the people’ want is difficult to determine. Kenneth Arrow is an economist who contributed not only to our understanding of microeconomic theory, but also to our understanding of the problems that elections sometimes encounter in selecting between different courses of action.

Kenneth Arrow studied collective decision-making. How can we reach decisions that take into account the differing and often conflicting preferences of all the individuals who make up society? While democratic voting systems have desirable properties, they allow voters only to express an order of preference, for example preferring A over B over C, rather than their strength of feeling. And even when we accept this limitation, Arrow demonstrated that no voting procedure produces coherent decisions in all circumstances. Although this seems a negative conclusion, the work of Arrow and others on collective decision-making helps in the design of processes that reduce the risk of manipulation by individuals or groups.

Great economists Kenneth Arrow

Kenneth Arrow (1921–2017) was born in New York City to Romanian-American parents. His essay ‘A Cautious Case for Socialism’ explains how the Great Depression and the Second World War influenced his ideas, especially those of ‘freedom and avoidance of war’.¹

invisible hand

The invisible hand is a phrase used by Adam Smith to describe the way that markets can be a decentralized method of organizing the economy that (under the right conditions) could result in an allocation of goods and services that benefited most participants even if all of those involved were entirely self interested.

In addition to his work on voting systems, he was among the first to demonstrate that there were conditions under which something like Adam Smith’s invisible hand would work. Characteristically scholarly and detached from ideological rhetoric, he later wrote:

There is by now a long and … imposing line of economists from Adam Smith to the present who have sought to show that a decentralized economy motivated by self interest and guided by price signals would be compatible with a coherent disposition of economic resources that could be regarded … as superior to a large class of possible alternative dispositions. … It is important to know not only whether it is true but whether it could be true. (Original emphasis, General Competitive Analysis, 1971).

Arrow was a pioneer in the study of many of the themes in The Economy, including asymmetric information and the economics of knowledge, and helped broaden the scope of economics to include insights from other disciplines. A year before his death, Arrow co-taught a course about inequality at Stanford University using an early draft of Unit 19 of The Economy 1.0, which was revised in light of his comments.

A good summary of Kenneth Arrow’s explanation of the problems of using voting to determine which action is preferred, and his broader contributions to economics and social science, are in Steven Durlauf’s essay ‘Kenneth Arrow and the Golden Age of Economic Theory’.²

rule of law

The principle that all members of a society are bound by the same laws, and nobody—however powerful—is ‘above the law’.

civil liberties

Civil liberties refer to freedom of speech, religion, and association with others, freedom of the press and other media, freedom from arbitrary detention, and other guarantees by a country’s laws and social norms that protect the members of society against the misuse of government power.

We use the word democracy to refer to a form of government characterized by three principles:

• Rule of law: All individuals are bound by the same laws, and nobody—not even the most powerful government official—is ‘above the law’.
• Civil liberties: The members of a society are guaranteed rights of free speech, assembly, and the media and it is not costly or personally dangerous to oppose the policies of the current government.
• Inclusive, fair, and decisive elections: Fair elections in which no major population group is excluded from voting, and after which the losing party leaves office.

Ideally, in a democracy those who have power are elected in an inclusive and open competitive process, and the rule of law and civil liberties limit the things they can do with that power.

Democracy has been advocated as a good political system on two quite different grounds:

• democracy in its own right: as a political system consistent with individual dignity and freedom for all citizens
• democracy as a way of addressing national problems: as a system that works better than other forms of government, so that the government is more a problem-solver than a problem.

Here we focus on the consequences of democracy for addressing problems (the second point), not on its intrinsic merits (the first point). No existing government fulfils the democratic ideal of political equality, where each citizen has equal influence over an outcome. Similarly, no government today can be said to conform perfectly to the three political principles of democracy.

Think about inclusive elections. Some population groups—those convicted of major crimes, for example—are excluded from voting in many countries, but we still consider the country’s political system as democratic. However, exclusion of a major population group—women, for example, as was common in recent history, or a racial or ethnic group—is a sufficiently serious violation of the ‘inclusive elections’ criterion to disqualify a country from the club of democratic nations. Examples include:

• West Bengal: An example from Unit 5 of the microeconomics volume helps to show how significant restricting the right to vote can be. It describes a land reform in West Bengal called Operation Barga. Figure 5.29 of the microeconomics volume illustrates the effect of the reform on landowners and farmers. Inclusive elections could affect the likelihood that reforms like this take place. If only landowners could vote, and they voted in their own economic interests, then they would not support a party proposing a reform that would reduce their income. With universal suffrage, the result would be different. The farmers making up the majority of the electorate would vote for a party proposing the land reform. In real life, the political party that introduced the reforms in West Bengal went on to win elections and, as a result, control of the state government for three decades.
• The United States: The Voting Rights Act of 1965 secured the vote for large numbers of effectively disenfranchised African American citizens. The result of African Americans getting the vote was a substantial shift in educational spending in districts with large numbers of previously excluded black voters.
• Brazil: Before the mid-1990s, casting a valid ballot required that voters could read and write reasonably well (which perhaps a quarter of the population could not). Around 11% of ballots cast were declared invalid due to communication barriers, most of them cast by poor voters. New electronic voting introduced in 1996 used pictures of candidates and an interface similar to phone keypads or ATM screens, and prompted the voter through the process step by step. The effect was to increase the number of valid votes made by the poor. The resulting change in the nature of the electorate led elected political leaders to pri­oritize the kinds of spending predominantly benefiting the less well-off. Expenditure on public health, for example, increased by more than a third.³

As we will learn in the following sections, how a government actually works is not determined solely by the presence or absence of civil liberties, the rule of law, and inclusive fair elections.