Are the institutions of development and the institutions of democracy structurally compatible? This article from the journal ‘Democratization’ examines development and democracy from an institutional perspective. It argues that while development requires rapid and far-reaching change, democracy is essentially a conservative system of power producing consensual and incremental change. The institutional characteristics and requirements for development and those for stable and consolidated democracy therefore pull in opposite directions.
Economists and political scientists increasingly recognise the importance of institutions for democracy and development. Political, economic and social institutions, both formal and informal, interact with each other to shape the distribution of wealth and power in a given society. Economic development and democratisation are central foreign policy goals of Western governments and international institutions and are core challenges for developing states. However, the institutional requirements for development are structurally different from the institutional requirements for stable and consolidated democracy. The institutions required for democracy seldom promote the radical change in the control, accumulation, or distribution of wealth which is vital for establishing developmental momentum.
Development involves rapid change in the social structure and distributions of wealth and power in a society. It also involves the more even distribution of the benefits of economic growth. Understood in this sense, development both requires and engenders change in economic and socio-political institutions:
- In the economic sphere, development requires the production and distribution of a surplus and the institutional arrangements to encourage and manage the process.
- Development inevitably requires non-consensual steps, particularly where there is a legacy of significant inequality in wealth and opportunity. Land reform is a good example of such non-consensual change in economic institutions.
- Development often requires radical transformations in the political institutions of a country, directly reflecting, and helping to bring about, a changed distribution of power.
- The institutional changes that development requires have seldom been achieved consensually and have commonly faced opposition, conflict and violence.
- Development has normally required a coherent and consistent policy path, which has normally only been achieved by strong states through authoritarian rule or dominant-party democracy.
While development requires rapid and far-reaching change, however, democracy is essentially a conservative system of power which finds it difficult to make these changes:
- Democracy requires a state that enables a wide range of interests to compete for advantage, strike deals, form coalitions and make compromises. The kind of state required for development, however, must be able to override sectional interests.
- Democracy requires that losers accept the outcome of the political game, knowing that they can participate again. However, in developing country contexts, poverty, inequality and long-standing divisions can impose excessive costs for political losers.
- Democracy requires that in return for losers accepting the outcome of elections, winners agree to exercise restraint. Governments are therefore unlikely to pursue the contentious policies that are necessary for effective development.
- Achieving consensus regarding the formal and informal institutions of democracy is difficult in developing countries due to social divisions and the proliferation of political parties. The absence of such consensus hinders both development and democracy.
