Democracy is not a universal typology in governance and structure. There are several variants of Democracy which I will probe tentatively in this article. I broadly discuss four variants of democracy. Each variant has overlaps with other variants but also has certain crucial differences. The four variants of democracy are - Social democracy, liberal democracy, illiberal democracy and Potemkin democracy.
Refer to my old article on concept of legitimacy. Legitimacy of political system is derived from two important aspects - perceptional legitimacy and substantive legitimacy. The two variants - Social and Liberal democracy - have a strong foundation in both regards. The Potemkin democracy has very little or no legitimacy at all. A central feature of any political system - whether democratic or otherwise - is rule of law - and is also a core feature of social and liberal democracies.
Without rule of law, any political system cannot be considered civilized and modern by any standards. Even economic prosperity is tied to conditionality that society has rule of law - healthy institutions of public & governmental accountability. Rule of law is a mechanism that removes/punish/prosecute people or entities that undermine well being of society. Rule of law punishes an ordinary thief or a big corporation or a criminal politician or a person/entity of whatever stature who commits act of kind that undermines society.
(understandably rule of law is an idealistic concept but one which a political system must aspire for in full. Realistically speaking, the rich & powerful can escape accountability even in developed democracies though they have good institutions)
Social Democracy
Social Democracy is a political system where market economy is the dominant player of economic production. The political structure is based on government (parliamentary or Presidential or hybrid) elected by universal suffrage and periodic elections. The rule of law, healthy institutions (typically of Weberian proficiency), human rights, civil rights, political stability and principle of separation of powers are characteristic features of social democracy. While the private sector largely owns economic production, the government exercise a policy to influence distribution of income (through regulation, taxes etc).
The government also provides economic rights to some degree (but not fully) like social safety net, education and universal healthcare. However the economic rights are limited in nature. Usually higher education is costly and government subsidies are insufficient. Government tries to influence social development indirectly like through subsidies and tax reliefs for buying a home or education grant for colleges. Government won’t build large scale public housing projects and sell it for affordability of people. Government won’t build & run large public universities to make higher education as a right. The government relies on markets to do things and participate only peripherally (like government will buy mortgage securities on secondary markets to indirectly promote housing).
The markets in social democracy are moderately regulated by government. The entrepreneurs are free to try new ideas, corporations are allowed to grow enormously and there’s also significant speculative areas in economy (finance, derivatives, crypto etc). There are giant corporations, oligarchs in social democracy but their influence is not as overreaching in political sphere relative to liberal democracy (discussed below). The percent of labour force in government employment & government enterprises is also significant although this trend in social democracies has declined since 1970s.
Social democracy is the closest a democracy has come to idealistic Classical doctrine of democracy (Schumpeter’s concept). Social democracies were typical of post war Europe that was reconstructed after destruction of first and second world war, and the great depression. Although the Europe of 21st century has significantly changed (especially due to Neoliberal currency union & collapse of USSR), there is still a significant strain of social democracy in Europeans nations, although more in nations like France, Sweden, Norway etc, and now less in nations like Greece and UK.
Liberal Democracy
When talking about Liberal democracy vs Social democracy, we’re essentially looking at contrast between American and European political systems.
Liberal democracy significantly overlaps with social democracy on many things like universal suffrage, Weberian institutions, principle of separation of powers, rule of law, private sector controlling economic production, civil rights etc but it also differs in certain regards. The markets in liberal democracy are similar to social democracy but have bigger role in economic production, and income distribution is also allowed to be shaped by markets to a greater degree. The government is passive in progressive taxation policies and regulatory function to fetter the markets.
(Starting in late 1970s, Reaganomics and Thatcherism was the early doctrine of liberal democracy put into action.)
The social safety nets are weaker in Liberal democracy. The economic rights are more restrictive than social democracy. The power of labor is more suppressed. The power of oligarchy in liberal democracy is stronger than in social democracy. The political and regulatory institutions of liberal democracy are much more tailored in interests of free markets (revolving doors are much more extensive in liberal democracy). The oligarchs and corporations have greater control over political spheres. Although elections as a process are free & fair in liberal democracy, much of politicians in liberal democracy, irrespective of party, are representatives of donor class. While citizens have right to chose their politicians and parties, there is narrow difference in economic policies of parties. Liberal democracy is also referred as Dollarocracy as it’s founded on principle of one dollar one vote.
To explain the policy contrast between liberal and social democracy. Think of universal healthcare system. After world war 2, UK adopted the universal healthcare system (work of Beveridge & Keynes). In contrast, Frances Perkins tried valiantly in New Deal era to push for universal healthcare in America but faced a stiff political resistance. In post war era, the New Deal programs were expanded (great society of LBJ) but US could never implement universal healthcare. Current US healthcare system is an inefficient wasteful system where government pours enormous money into health programs but the standards of healthcare is still poor compared to other developed nations (much of the money lands in pockets of rentier insurance companies and Big Pharma etc).
Another interesting feature of American Liberal democracy is that it was the birth place of Bastard Keynesians - the academic intellectuals that subverted Keynesian philosophy by creating Neoclassical synthesis. Neoclassical ideology, in time, translated into Neoliberalism. If you seek for ideological basis of modern social democracy, it was Keynesian philosophy and not Marxian Class conflict. Keynesian philosophy found its early followers in America but interestingly it was bastardized in America after demise of FDR. The pushback against Keynesian philosophy came strongly from America which also had a negative impact on social democracies in Europe.
(Keynesian philosophy on economy did not assert antagonizing relationship between Capitalists and Proletarians which was Marx’s central thesis)
Here I like to assert that I am measuring America as a liberal democracy by political standards of 2016 - a ten year time lag. Thereafter with arrival of Trump, American politics is turning into something different and I am yet to pass a judgement on current American politics as its in the flux. Although early signs indicate American political system is transforming into something worse.
Potemkin Democracy
If social democracy is closest you get to Schumpeter’s classical doctrine of democracy, Potemkin democracy is the polar opposite - the farthest away from classical democracy. Potemkin democracy is a system which lacks perceptional as well as substantial legitimacy. Typically in such kind of system, political elites, oligarchs and gangsters (the underworld - organized crime groups) are fused together for purpose to plunder society. These elites’ sole purpose is marauding society and its national resources without any restraint. Russia, Pakistan, India, Iraq etc are examples of this type of democracy. These nations are infested with acute poverty, inequality, social & economic backwardness.
The characteristic feature of Potemkin democracy is its Potemkin nature - it superficially has a universal suffrage, multiparty politics, periodic elections, a constitution, so called institutions of checks & balances etc. But all of this is a thin veneer without and actual function & foundation. In reality, there’s no rule of law in such society, there are no checks & balances and there’s no governmental accountability. The governments in Potemkin democracy are, and operate, like organized crime groups. Potemkin democracy is also referred as electoral autocracy because while on paper it has democratic institutions and periodic elections, the elected governments are autocratic and tyrannical without any accountability.
In terms of economy, these political systems don’t innovate & invent anything. They’re users & abusers of technology rather than creators. There’s no competitive industry in such economies and whatever limited amount of inefficient & polluting industry there is, it’s operated by oligarchs and is profitable only through large government subsidies and contracts. The markets (inefficient enterprises of Oligarchs) of these nations are insulated from foreign competition through protection barriers, licenses and tariffs. These nations, especially in third world, have extensive pollution and ecological damage due abuse of carbon intensive fuel, lack of environmental protections and unplanned growth.
The entrepreneur tendency in these nations is minimal and very much rentier rather than material innovation. For example, the oligarchs own oil & gas fields, ports, roads & expressways, foreign trade licenses etc. The economic activity is substandard production, low value added manufacturing, simple FMCG products, real estate, obsolete automobiles (polluting ICE gas engines), poor yield farm produce etc. These nations rely heavily on Capital imports, especially technology imports and selected oligarchs stand at front of supply chains to extract rents.
The organized crime groups and Mafias infiltrate parliaments and various elected bodies, and use public office to extract rents while enjoying immunity. For example, half of Parliamentarians in India have official criminal records (unofficially maybe 90% of them are criminals). From elite State agencies & intelligence and down to local police, all institutions are infiltrated by gangsters and organized crime. High level as well as Petty corruption is rampant in government departments. These criminal enterprises gravitate towards political sphere to seek shield of political office to run their criminal enterprises and maximize their rackets - black marketing, extortion, land grabbing, drugs, money laundering & other illicit activities. These organized crime groups are synergistically fused with oligarchs to plunder national resources of country.
Civil rights are significantly restricted in Potemkin democracy but not entirely absent. This is most felt in areas of journalism, academia, government bureaucracy and social activism where criticizing government or trying to expose a public scandal or doing humanitarian work or sometimes even stating simple truths can be harmful, even fatal. Journalists critical of government are typically relieved from media enterprises (media enterprises are tentacles of oligarchs who are friendly with government), social activists trying to bring public scandals & corruption to light are threatened into silence or killed if they don’t comply, Intellectuals in academia are easily fired if they criticize government’s policies.
There is very little rule of law and civil order in Potemkin democracy. There is some civil order, chaotic & patchy, in Metropolitan cities of third world nations (emphasis here on nations of South East Asia - India, Pakistan, Bangladesh etc) to an extent but outside these Metropolitan cities there is Jungle Raj where gangsters have a field day and there’s no effective law enforcement (you can’t differentiate between Police and Gangsters). The educated & middle class people migrate to Metropolitan cities where there is some civil order however patchy it is, and middle class people can find at least some opportunities to build secure life. Shortly below, I will discuss how this lack of security and economic opportunities cause brain drain and emigration from these nations.
The politics of Potemkin democracy is either centralized tyrannical (as in Putin’s Russia) or highly fragmented marred with dog-eat-dog infighting and paralysis in multi ethnic country (like India). The case study of Indian politics is made in my previous article and it can be applied to other Potemkin democracies as well by making few changes. For study of Russia’s politics, you can read Paul Klebnikov’s insightful book. Politics of Potemkin democracy is infested with violence as rival political factions (most of them are gangsters) seek to neutralize each other through overt violence or through using politicized governmental agencies. Governmental agencies (law enforcement, tax authorities, intelligence agencies etc) are handmaidens of politicians who mobilize them for their personal gains.
Illiberal Democracy
Illiberal democracy is a wide realm which covers many nations and difficult to pigeonhole into single typology. The characteristic feature of illiberal democracy is like this - There is separation of powers, human rights, market economy, periodic elections etc in illiberal democracy. But the institutions are dysfunctional & not-weberian although not totally malignant as in Potemkin democracy. The markets are not mature & deep like western economy, the government has paternalistic attitude towards economy (for better as well as for worse), the sociopolitical temperaments are not advanced enough to achieve broad freedom of expression and speech but some freedoms do exists.
The rule of law in illiberal democracy is patchy and precarious. There’s no uniformity and consistency in mechanism of rule of law but it’s not entirely absent. There is some degree of substantive legitimacy in illiberal democracy but not to the high mark of affluent social & liberal democracies. Generally, illiberal democracies are those nations which have not fully progressed or for some reason stuck in a stunted condition. Illiberal democracies are typical to South America, former Soviet States & satellites and other developing nations. Nations like Hungary, Iran, Argentina, Turkey, Georgia, Ukraine etc are some examples.
Civil rights are constricted in illiberal democracies or at least not at par with liberal & social democracies. For example in America, you can burn the Bible or American flag as a symbolic protest - it’s considered as freedom of expression. But you can’t do similar thing in Iran (Blasphemy can be punishable by death penalty). The freedom of expression and speech are limited and there are stiff penalties for offenders. Similarly, rights of women & certain social groups may be curtailed in illiberal democracy. The criticism of government is intolerable, and journalists, activists and academia are suppressed when they step out of line.
Illiberal democracies may be semi-autocratic in nature but not fully tyrannical as in Potemkin democracy. The central difference between Illiberal and Potemkin democracy is that in Potemkin democracy, the political regime is exclusively built for marauding and plunder of society while illiberal democracy may retain at least some consciousness of national interest and governmental responsibility towards society.
Stability of democracies
Both Social & liberal democracies are stable internally and territorially with few exceptions where political secessionist movements do exist though not violent in nature (like Catalonia movement in Spain, and Scottish movement in UK). The territorial boundaries of these nations are secure, the political system is civilized and stable and importantly there’s long tradition of peaceful transfer of power among political forces through civilized elections.
Potemkin and illiberal democracies are prone to civil conflict, riddled with balkanization and separatism. Multi-ethnic democracies of third world nations are most unstable in this regard where sub-nationalist and secessionist movements are always simmering and come to boil now & then. The government of these unstable nations have to rely on heavy handed tactics to tame & neutralize endemic insurgencies because political mechanisms of resolving conflict and enforcing law & order mostly do not exist.
Potemkin & illiberal democracies are also prone to brain drain and emigration as skilled labour choose to vote with their feet by migrating to developed nations for better prospects. For example, a lot of executives in Silicon Valley and doctors in America’s health system are Indian emigrants. Similarly, a lot skilled professionals have migrated out of Russia to settle in Europe. The migration is not limited to high skill professionals but even ordinary menial workers migrate if they can. For example, since wages for construction labour and domestic workers in India and Pakistan is abysmally low, they migrate to gulf (UAE, KSA, Kuwait etc) or other nations where they have somewhat better prospects.
For a poor unemployed people which are significant portion of population in third world, they have little choice other than starving. While Neoliberalism has diluted the social safety nets of social & liberal democracies, still they remain generous and affluent compared to other types of political systems. For poor unemployed people in liberal & social democracies in developed world, they have reasonable degree of welfare support from government although it has diminished in recent decades - but they will not starve.
The society and general population of liberal & social democracies has a tolerant and peaceful culture which includes tendency of assimilating immigrants. This assimilation of immigrants especially the high skill professionals (doctors, engineers, scientists, technicians etc) is also a critical factor in technological advancement of developed nations which are cosmopolitan hubs attracting best brains from third world nations.
(Interestingly Xenophobia is rising recently in certain Liberal and social democracies which is part of ongoing transformation in sociopolitics of these nations)
Creative destruction in Social and Liberal Democracy
Which economic system has greater power of creative destruction - Social democracy or Liberal democracy? It’s inconclusive. There are different set of opinions. America is currently ahead of Europe in cutting edge technology, especially AI & Computers. The proponents of America, which even includes European politicians, claim that unfettered markets and allowing monopoly transnational corporations (Apple, Microsoft, Google, Facebook, Amazon etc) to prosper has been a great boon for America. The excess regulations and anti-monopoly practices in Europe has constricted technological growth and productivity in Europe.
But there are more reasons to America’s rise. First of all, America had always been ahead on curve of industrial trajectory compared to Europe. The two world wars in Europe left much of its industry & infrastructure in rubble and enormous debt especially the first world war debt (after second world war, US was more generous and helped rebuilding Europe from scratch). By end of second world war, the industries of America were running full steam ahead while a destroyed Europe was only beginning to rebuild. I think that Europeans are as innovative & creative as Americans but America was around 20 years ahead in industrial trajectory by mid 20th century.
It’s a remarkable achievement for unified Europe to stand back on its feet by end of 20th century but it also made certain blunders. The Neoliberal currency union forged at the zenith of Neoliberal era (after collapse of USSR) put permanent fetters on economic potential of Europe. The lost decade of Europe after GFC due to self inflicted wound - the sovereign debt crisis in Euro area - that put major hurdles on European growth. While America too had been crippled by Neoliberal policies, still it had distinct advantages over Europe like dollar being a reserve currency & monetarily sovereign which allowed US to expand its deficits enormously & attracting Capital financing from the world.
The new technological innovations are also intangible types which occur in clusters. When such clusters form & get going in a region (like Silicon Valley), they become a magnet to attract capital & labour from across the world. It’s also difficult to emulate/replicate these innovate clusters elsewhere once their foothold is established in particular region. Factoring all the above mentioned reasons, it’s understandable that Europe is somewhat lagging behind America in certain sectors.
A more peculiar phenomenon is that a non-democratic nation like China which was also shattered by second world war and remained backward agrarian even until 1970s but has shown remarkable speed to catch up with developed world.
Corruption
It’s a misconception that liberal and social democracies of developed nations are free from governmental corruption while governments of third world illiberal and non-democratic nations are exclusively corrupted. Corruption exists in liberal/social democracies as well as illiberal/Potemkin democracies, but nature of corruption in government is different.
Corruption in liberal and social democracies is systematically organized and concentrated at top level of politics. Oligarchs and economic industrial lobbies bribe, campaign finance and payroll politicians (revolving doors) to draft favorable policies & regulations. The nature of this ‘quid pro quo’ is well recognized, tolerated and even accepted norm in social & liberal democracies. Lobbying is in fact a white collar profession and there are various think tanks, organizations and experts that are employed full time by corporations and oligarchs to advance their interests. Similarly there are SuperPACs & other opaque quasi political entities that channel dark money into politics and all this is legalized.
Corruption also exists in illiberal and Potemkin democracies but it’s not limited at the top. Recall that social & liberal democracy have Weberian institutions (proficient, technocratic, independent) and these to significant extent are insulated from political corruption. In Potemkin democracy, the entire State & institutional structure from top to bottom is corrupt, malignant and incompetent. While at top level, the marauding of country by politicians and oligarchs happens unrestrained, the same goes on at every level of government institutions by various bureaucrats, pen pushers and Babus. These nations are notorious for petty corruption - function & duty of government is only possible through bribes; getting a GST registration for your business, getting a business loan from State bank, getting an approval for building a factory, getting an electricity connection for your home. Everything requires bribes. Government jobs are scarce and positions especially in law enforcement, licensing & regulatory agencies and similar rent seeking departments are filled by bribes. As a result, only the most incompetent & corrupt people are accumulated in government offices.
Such petty corruption is almost non-existent in developed nations of liberal & social democracies. It’s not surprising that Potemkin & illiberal democracies of third world nations are not known for entrepreneur activities. Entrepreneurs and high skill professionals choose to migrate to developed nations to realize their potential. While corruption exists in all countries and all types of political system, it’s largely true that corruption is greatest in Potemkin democracy.
Here I like to expound on importance of national institutions. An important differentiating factor between developed and developing countries is the nature of their institutions. If you look at politicians of developed society like America (or UK) today and compare them to politicians of backward society like India, there is not a great difference between them - both are bastards of democracy, parliamentary cretins, deranged scoundrels and intellectually feeble. It’s actually the long standing inertia of good institutions of developed nations that differentiate these nations from third world.
Who runs the nation? - Power centers of various types of Democracy
In mainstream political theory, a democratic government is of the people, by the people, for the people. Heterodox theory of democracy goes beyond this idealistic and quite nonsensical narrative. The government is ruled by rivaling power factions who, in a democracy, contest for power in a civilized way through elections and political campaigns.
There are different type of power factions in various countries but can be divided into two broader categories - 1) economic/industrial lobbies and oligarchs 2) Social groups like labour unions, identity groups (feminists, LGBT, religious forces) etc. In liberal and social democracy, the first category - economic industrial lobbies and oligarchs - have a strong sway over politics, and social groups exercise minimal power. The social groups in the past meant labour unions and they were strong in golden years but greatly diminished by 1980s and 90s. Thereafter, the new social groups emerged which although had size in numbers but had little or no substance in political consciousness.
Unlike the sentimental & irrational electorate, the economic industrial lobbies are conscious of their self interest and nurture political campaigns to relentlessly pursue their goals. Their campaigns also entice emotions and sentimental appeal of electorate on which charismatic & cunning politicians - the political entrepreneurs - are tasked to take them across electoral finish line. The military industrial lobby back politicians to advance defense spending and hawkish foreign policy, the Tech industry back politicians to advance deregulation of Cryptocurrency, social media, cyberspace etc, the Big oil industrial lobby back politicians to rollback environmental regulations which hinder their profits, the banking & finance industrial lobbies back politicians to advance privatization of social security & public services so that private corporations can expand their rent seeking fiefs.
A crude way of summarizing politics is a simple statement - Wall Street runs America. But in past social groups also had a strong sway over politics at least up till the late 1970s when labour unions were strong & militant (especially in UK where government had ownership of several enterprises) and demonstrated their power through strikes and tangible political demands. That changed after 1980s - the era which entailed globalization (offshoring of manufacturing), rise of Neoliberalism and also change in technological trends (the technology became more labor replacing rather than labor enabling).
Thereafter, new Social groups emerged which can be best described as identity groups. A characteristic feature of these groups was that while they also protest & organize mass rallies, they had no meaningful political demands and a perspective of class consciousness. These movements were feminists, BLM (black lives matter), LGBT, students, Woke etc. The political & oligarchical elites are comfortable with these identity political groups because they are disoriented and directionless - they are less headache for politicians.
(The current ‘Woke’ and BLM movement shouldn’t be confused with Martin Luther King’s civil rights movement. MLK’s agitation had a class perspective and strong political demands)
Politicians are like relationship managers who balance the demands of social groups with the interests of economic industrial lobbies & oligarchs (in short - the capitalists). When labour unions were the prominent social groups, it put politicians squarely against their financial masters - the capitalists - and thus gave headaches to politicians. Unions demanding wage increase, reducing working hours, more labor protections, healthcare rights, pensions etc made politicians uncomfortable because it was in conflict with capitalists. But that changed with new social movements.
Politicians and oligarchs aren’t worried about people marching on streets with slogan of - ‘defund the police’ or LGBT groups parading to demonstrate gay rights. A recent example is million feminists marching against Donald Trump in 2017 & thereafter which cause no impact on American political dynamics. The politicians easily capture identity groups to cultivate their political fiefs. While a politician’s true loyalty is to his oligarchical industrial lobby (financial paymasters), the politician demonstrate his populist appeal by mobilizing the large crowds of these identity political groups.
Let me expound on concept of political entrepreneurship. Politics is just like any other profession where politicians are motivated by wealth and power (esteem, influence, authority). Politics overwhelmingly isn’t about serving any national interest these days. In a globalized world of transnational corporations, the interests of corporations are not necessarily overlapping with national interest. Their production and supply chains are globalized, their Capital is mobile and offshore. The economic and industrial lobbies of these corporations are main source of political financing. Without political financing, politician’s outreach to people, presence on media & cyberspace, the capacity to finance giant rallies, targeting political rivals (through ads & opposition research), access to various platforms to connect with population is impossible. In simple terms, there’s no political career without the backing of oligarchs and financial donors.
Critical art of political entrepreneurship is connecting to financial donors, and allegiance of political entrepreneurs is thus strongest to their donor class. But money alone isn’t sufficient to win elections, politicians also need some kind of populist appeal and likability by electorate. This is where social groups come into play. In a democracy, if campaign financing - which is overwhelmingly by economic industrial lobbies - are heart & lungs of political entrepreneurs, the social groups are their hands and feet. Social groups connect politicians to people & communities, help establish the groundwork for political campaigns, organize political rallies, make them popular and household name.
(In fast emerging digital age, the social media & cyberspace is becoming highly critical for political success. There are anecdotes that some politicians have won elections even without ground based political campaigns and mass political appeal. The emergence of large scale social engineering through nefarious algorithms and weaponization of internet (see Cambridge Analytica scandal) is the new reality which will further degrade politics in age of AI)
How does political entrepreneurs connect to social groups? Back in the day when labour unions were influential groups, politicians had to give concessions to them to build popular support. As I explained, this was a headache. Betraying labour unions was difficult as they had tangible demands. But new identity Social groups are easier to handle - they can be duped and manipulated more easily because they have no class consciousness. This is another critical art of political entrepreneurship - cultivating social groups as their fiefs. This involves lying, deceiving, thuggery - the Machiavellian traits in general. It’s not surprising that sociopathic personalities & people with impaired empathy are much successful in politics. LeBon described popular democratic leaders as half deranged and intellectually feeble. Their true skill is exploiting people rather than creating new ideas to genuinely solve societal problems.
You cannot make masses understand things but you make them follow you. We live in culture of mass ignorance where electorate aren’t aware of national issues and have no understanding of policy making. How this culture of dumbing down of society came about is a separate discussion but it’s suffice to say that political entrepreneurs operate in this environment and exploit it to their benefit. Thus lying is natural to politicians, for even if they want to speak the objective truth, that won’t get them anywhere in politics.
(The left liberals in American democracy captured the identity political groups of BLM, feminism, LGBT, Woke etc. The right wing & conservatives captured the identity groups of religion like Christian evangelicals & White nationalists.)
In liberal democracy, the major power factions are thus oligarchical - America is a polycentric oligarchy with factions like Banking & finance, Tech industrial complex, military industrial complex, Big Pharma & insurance, Big oil etc. The politicians are representatives of this donor class and try to balance the interests of their donor class with demands of electorate. In American democracy, the interests of donor class (the oligarchy) is supreme and donors have strong influence over both political parties. The social groups of today are good at creating psychodrama but lack actual political power.
In social democracy, there are oligarchical factions but the political entrepreneurs are tilted to a few degrees more towards interests of electorate & social groups although the interests of the markets (the oligarchs, economic industrial lobbies) broadly remain protected. Even in social democracy of many European nations, the so called bond holders and creditors are prioritized in making national policy (term bond holder is just euphemism for private banking and financial interests). Recall that during Eurozone debt crisis, there were countless mass protests by labour unions, students and other groups especially in nations like Greece, Italy, Spain, Portugal etc but these nations were still forced to swallow bitter austerity of Troika (European commission, ECB & IMF).
You may get the impression that oligarchical control of political system is bad for democracy. But now let’s examine third world nations and certain illiberal and Potemkin democracies where in addition to oligarchs & industrial lobbies, there are social groups which also exercise significant political power. This exercise of political power by social groups doesn’t necessarily translate into a healthy democracy.
Take example of India (a Potemkin democracy) where apart from economic industrial lobbies of oligarchs, there are three other important social groups - 1) Religious fundamentalists 2) Ethnic sub-nationalists 3) Farmer unions. In economically backward and rural agrarian economy like India with nearly half of labour force employed in agriculture, the farmer unions are a strong lobby. Modern economy is based on industry and technology based farm production with minimal labour but India’s Farmer unions have stalled land and agriculture reforms. They demand endless loan waivers and other subsidies to sustain their otherwise inefficient farm practices.
Another important social group in India is heterogeneous mixture of sub-nationalist, tribal & ethnic factions. I have explained their agenda in detail in previous articles (1, 2). Basically these factions militantly agitate over reservation & social benefits for their respective fiefs (ethnic, sub-nationalist, tribal etc). This leads to all kinds of destructive economic policies as well as political instability. To understand this dynamics. Imagine in America if Black Lives Matter start demanding 25% of all federal & State jobs for African Americans, Feminists start demanding 33% of all judicial & court appointments and university positions reserved for women, LGBT starts demanding 10% of all private sector jobs reserved for gays and lesbians, Red Indians demanding 15% reservation in all employment & universities. These senseless agitations will upend the whole country. But such conflictual, destructive and idiotic policies are common in India and quite complex (and equally foolish) legislation are created in this direction.
Then there are religious fundamentalists, the Hindu militant organizations who exercise their power in politics. Since Hindus are majority in population, democracy on religious lines translates into abuse of minorities (Muslims, Christians etc). A Muslim can be lynched by Hindu extremists just on suspicion that he is consuming beef (cow is regarded as holy mother in Hinduism). Similarly, religious massacres of minorities and communal riots are common in India lead by political entrepreneurs who cultivate these religious militant organisations to establish their political dominance.
This phenomenon of majoritarian politics also exists in Iran where democracy forces women to wear a Hijab & establish a patriarchal society and in Pakistan where Muslim majority oppresses minorities like Hindus. But don’t be surprised by religious fundamentalists enforcing their reactionary ideas on society through democratic means in third world and poor nations. Isn’t similar thing happening in America recently where politics influenced by Christian nationalists & evangelicals are rolling back women rights & abortion laws in America?
The point being, while oligarchical overreach over political system is bad, it doesn’t mean that overreach of social groups in political democracy will be any better. In fact, one of the reason why liberal economics (the philosophy of markets, positivism and economic rationality) was introduced in third world nations was due to the optimism that market economy will displace these destructive & divisive social groups & their regressive ideologies. But that never happened while few benefits of market economy that did materialize also fizzled out in paralysis and dysfunctional politics of third world. In most of third world nations especially with muti-ethnic demography, democracy translates into battle royale of political forces out of which no political solutions & competent policies can ever emerge.
In conclusion, while control of economic/industrial lobbies and oligarchical overreach on Democratic political system was bad in first world nations, the control of social groups and populist factions over democratic political systems in third world nations turned out to be worse. It’s not just balance of power among Capitalists and Social groups that’s important for healthy democracy but also the maturity and sensibility of these power factions that matters. In third world nations, the power factions - Oligarchs and Social groups - do have certain balance of power but that doesn’t produce a healthy democracy.
In developed liberal & social democracies, the power factions are mainly economic industrial lobbies but in third world nations, the power factions in democracy include religious fundamentalists, bellicose sub-nationalists, farmers and criminal Mafias. Why is it so? The answer may be in technological determinism. The political and economic structure is shaped by technological condition of society. Since developed nations are technologically advanced, their power factions are obviously capitalist and industrial in nature. Since third world nations are technologically backward, their power factions are reactionary, primitive and rural.
If industry & entrepreneurship is a constructive way of making wealth, another way to make wealth is the old fashioned way; stealing, exploit & extortion. Thus in backward society without industry & entrepreneurship, organized crime & anti-social elements exercise strong influence in politics. The phenomenon of gangster capitalism is well known to describe post Soviet Russia and similar is case in other Potemkin democracies where gangsters have become oligarchs by looting national assets to build business empires.
Democracy in flux
The four categories of democracy I discussed are by no means an exhaustive approach to analyze democracies of the world because of vast disparity in culture, politics, sociology, economy and other factors among various nations of the world. I haven’t concluded where I should put Democracies of Asia Pacific (Japan, South Korea, Singapore etc). Even Europe which appears politically united has different variations of democracy which cannot be pigeonholed and categorized simply. But one thing that’s common to all democratic nations in the world is their basis in market economy.
Another thing about democracy is that it’s always in flux, changing in structure & governance with time. For example, Democracy of a particular nation that you see today wasn’t necessarily the one it was few decades ago. Post war UK from 1950s to 1970s was social democracy and this didn’t last with arrival of Thatcher. The transformation of Greece in last two decades is a more extreme example. Even democracy of my country India is different from what it was two decades ago. A major transformation may be happening in America post 2016. Democracies can also break down as it happened in age of catastrophe (two world wars & great depression) in Europe.
Sometimes changes can be sudden and drastic, and sometimes they are gradual & slow. Drastic changes are more common in third world nations where military dictatorships overthrow Democracy overnight (Pakistan & Egypt recently) or slow like Hindutva-fication of India that took several decades or America’s transformation after 2-3 decades of golden years. But one unchanged characteristic about Democracy of modern developed nations is that despite significant transformations in their political democracy they have fundamentally NOT abandoned the concept of democracy or even thought about it.
The question today is not just what kind of democracy will there be in near future in so & so countries. Another relevant question today is whether democracy can produce solutions for 21st century. All the shortcomings and contradictions of democracies, not just in third world nations, but also in some developed nations have gotten so grave that these systems no longer produce solutions for society today.
Suggested reading
Parallels of mainstream political theory and mainstream economic theory
Concept of political legitimacy and theory of Democracy
Politics, Democracy, Invisible hand and Equilibrium
Classical theory of Democracy and its fatal consequences
India - Economic liberalism, Socialistic Populism and Democracy
India, Democracy and Political future