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Democracy and Redistribution
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Democracy
and Redistribution. Cambridge University Press. July 2003.
Abstract of the Book
This book develops, and systematically tests, a unified formal model to explains the distribution
of different political regimes, that is, the occurrence of democracies, right-wing authoritarian
regimes, revolutions leading to civil wars and communist or left-wing dictatorships:1. Democracy prevails when either economic equality or capital mobility are high in a given
country. On the one hand, economic equality promotes democracy. As the distribution of capital
becomes more balanced among individuals, the redistributive impact of democracy diminishes
and the probability of a peaceful transition from an authoritarian regime to universal suffrage
increases. On the other hand, a decline in the specificity of capital, that is, a reduction in the cost
of moving capital away from its country of origin, curbs the redistributive pressures from non
capital holders. As capital becomes more mobile, taxes under a democracy must necessarily
decline -- if they were too high, capital would escape abroad. Accordingly, the extent of political
conflict among capital holders and non-holders diminishes and the likelihood of democracy rises.2. By contrast, authoritarianism predominates in those countries in which both the level of
inequality and the lack of capital mobility are high. In highly unequal societies, the redistributive
demands of the worse-off citizens on the wealthy are particularly intense. As a result, the latter
have a strong incentive to oppose the introduction of democracy, which would enable the
majority of the population to impose heavy taxes on them. The prevalence of highly immobile
types of capital exacerbates the authoritarian solution. Unable to shift assets abroad to escape the
threat of high taxes, capital owners grow more resolute in their efforts to block democracy.3. Whether the adoption of an authoritarian regime is stable, that is, unaffected by political
conflict, or not depends on the political resources of the contending parties. If the working class
is demobilized or the ruling elites have strong repressive capabilities, there is a peaceful and
durable authoritarian regime. However, as the organizational capacity of the poor rises, and given
a society with high inequality and asset specificity, the likelihood of revolutionary explosions and
civil wars escalates. If the poor win, they proceed to expropriate the wealthy's assets and establish
a left-wing dictatorship.The book tests the implications of the model in the following ways:
1. To test the predictions the model makes about the distribution of different types of political
regimes and the likelihood of political conflict, it first exploits through econometric techniques
two data bases for the periods 1950 to 1990 and 1850 to 1980. It then analyzes the evolution of
constitutional regimes and suffrage requirements within two confederate states: Switzerland from
the 15th century till the 1874 constitutional reform and the United States until the first third of
the 20th century. The empirical analysis shows that the model is borne out by the data.2. To examine the distributive consequences of democracy and representation, it examines the
size of the public sector evolves in response to a change in the political system across the world.
By showing that democracy indeed reshapes the role of the state in the economy, the results of
this chapter corroborate the assumptions that underlie the theoretical model of the book. That is,
they confirm that redistributive struggles are at the heart of the choice of political regimes.3. Finally, the book also examines the level of rent-seeking and government efficiency by regime
with data from 1980-95 and several focused historical comparisons.