Category Archives: Institutions II (Democracy)



M. Olson

The American Political Science Review, Vol. 87, No. 3 (Nov., 1993)

 A Summary

In a Nutshell

No society can work satisfactorily if it does not have a degree of peaceful order. Anarchic violence and theft is not rational for a society. Peace is a public good, and therefore will generally only be provided if the society size is small enough to be a privileged group. If it is a large latent group collective action problems will prevent the cooperation toward the goal of peace. Thus once society moves beyond the clan or family units, no large society has ever obtained peaceful order through an agreement amongst the individuals in that society.

 Thus in a state of roving banditry will eventually be replaced by one stationary bandit who will maintain a monopoly on theft by the way of taxes, although he will only take part of income in taxes. The citizens now do not have to worry about threat of theft from others other than the monarch. This means they are incentivized to produce as they may keep whatever the monarch does not demand in tax. This situation is a rational choice for the bandit who is not challenged by competitors and can make monopoly rents, and for the citizens who are permitted to save and invest, where under competitive banditry they are incentivized to produce nothing. Anarchy has been replaced with government. “Government for groups larger than tribes normally arises, not because of social contracts or voluntary transactions of any kind, but rather because of rational self-interest among those who can organize the greatest capacity for violence.

 This theory largely explains the pre-French Revolution era of history which saw considerable development. The autocrat has an interest in seeing his society develop as he collects taxes on income, but he also levies the monopoly charge on everything. He supplies public goods whilst trying to extract the maximum surplus for himself. He chooses the revenue maximizing tax rate. He will then spend money on public goods up until the point where a $ expenditure on public goods generates a $ revenue.

 For society to reach its maximum income levels it needs to be able to honour long-term contracts and a stable currency. Thus the autocrat has to have a sufficiently long term view to be able to take account of property rights and impartial contract enforcement. If the autocrat is only concerned to get through the next year then he will expropriate more than the revenue maximizing rate. At the margin of horizon he will become once again the bandit who is out to steal as much as he possibly can. He may promise a long-term horizon to the citizens but they can never be sure of his promise and thus he cannot credibly commit.

 The institutions that are needed to protect the rights outlined earlier (impartial courts, respect for law, rights etc.) are exactly the same as those that are needed for democracy. Indeed the only places where rights are long term enough to be guaranteed across generations are stable democracies. In autocracy there will always be worry about succession one the autocrat is gone – meaning he will have a shorter term horizon. Capital flees therefore when there are episodic outbreaks of tyranny.



D. Potter

From T. Allen (ed.), Poverty and Development into the 21st Century pp. 365-382

 A Summary

In a Nutshell

An exploration of the different lines of thought regarding the effect of democracy on development

 Democracy Stimulates Development

  • Liberal market capitalism and liberal democracy were thought to be a virtuous circle (Washington Consensus). This meant that aid agencies used conditionalities in order to stimulate democracy.
  • Objectors did not argue that democracy were irrelevant to development, only that there was an abjection to the notion that there was one neoliberal formula of “right” economic and political policies that could stimulate development at any stage of a countries growth trajectory.

 Democracy Impedes Development in Poor Societies

  • Popular with leaders, particularly from the east (Yew thesis). The idea is that what a poor country needs is discipline not democracy as democracy leads to disorder. This is because in advanced democracies although governments may change, there is little threat to the broad group of established powers that they will be wiped out. No group will commit to the democratic process if it feels it will be excluded by it. Developmental states on the other hand involve a radical and turbulent process of structural change and redistribution. This generates many new political interests. Thus is the state is democratic, as change may only be incremental (as that is all the elites will agree to), development will be retarded. If states are authoritarian they have the strength to make the structural changes necessary for development. [Does this totally ignore the history of the UK?]
  • For example the extreme poverty of India where nearly 40% of people are landless could potentially be solved by land reform, however the democratic process does not allow for reform that would radically change the interests of the powerful. Elections are too blunt a tool for such reform.

 Authoritarian Regimes Perform Better in Poor States

  • This view was popular in the cold war.
  • This view was shown to be nonsense by Przeworski et al. who showed that of the large sample of authoritarian regimes they tested, very few grew economically.
  • There were exceptions of course in Taiwan and Korea. Yet perhaps it could be that these are simply examples of effective developmental states that featured a dedicated developmental elite, relative autonomy of state apparatus, insulated economic bureaucracy, weak civil society, and able to trade off a level of repression with real material benefits.
  • Some then argue that authoritarianism combined with devlopmentalism can work best in poor societies. Others retorted that that type of regime only occurred in East Asia due to a very special and non-transferable set of historical conditions.

 Democracy Unrelated to Economic Growth

  • Prezworski & Limongi found that economic miracles happened in both democracies and authoritarian regimes. Thus is does not seem to be democracy per se that makes the differences so much as something else, not yet identified. Political institutions probably matter for growth but thinking only in terms of regime does not seem to capture the relevant differences.
  • This analysis was based on econ growth, whereas some want to include political liberties and well-being as part of the definition of development (Sen etc.)
  • Others argue that what is important is not the type of regime, but the type of governance (Huntington). Good governance was recognized by the World Bank as important and is central to creating and sustaining an environment where development is possible. [And providing some sort of stability of decision making – people act differently when they are scared (North), and institutional equilibrium is important for regularizing activity by delimiting potential response patterns (O’Donnel). Without that kind of stability growth of any kind should be very difficult. Thus it could be the swings between types of state that are most damaging (Latin America).]



Samuel P. Huntington


A Summary


In a Nutshell 

“Economic development and political stability are two independent goals and progress toward one has no necessary connection with progress toward the other.”

Huntington is arguing that institutions are not a necessary condition for economic growth nor modernization. Economic growth and specifically modernization do not wait to be invited by a set of good institutions, they force themselves on societies and governments without waiting for certain conditions to exist that would enable them to continue in a persistent and sustainable manner. So what role do institutions plays for Huntington? Are they thus non-essential components of society? Quite the contrary: Huntington states that that very stability of society is founded on the institutions in place. Modernization and growth are destructive forces for him, and they have a tendency to rip societies apart if strong political institutions are not in place to mediate the chaos that can ensue. Therefore, although good institutions may not be essential for growth and modernization, an absence of such institutions in the face of the unstoppable tide of modernization will lead to political and social decay, and eventually to failed states, constants coups, political violence and stagnation.

He uses the USA, USSR and GB as counterexamples drawn from Latin America (LA), Asia and Africa. I am going to leave out of this summary a lot of the country specific examples as I think the ideas are more important in this case.

 The Political Gap

“The most important distinction between countries concerns not their form of government but their degree of government.”

In the US/GB/USSR the people and the government share a vision of the public interest and the principals upon which political order is based. There is consensus as to the legitimacy of the rulers. This gives them power to execute policy, collect tax etc. In short, it allows them to govern, and for Huntington nothing is more important than in a complex group of people, there is effective government.

  • In LA government do not govern – the political community is fragmented and institutions have little power. This difference between US/USSR/GB etc. and LA/Africa/Asia is the “political gap”.
  • There is also an “economic gap” but the two are not identical, although they are related. Countries with underdeveloped economies can be highly developed politically and vice-versa.
  • Huntington observes chaos is developing countries: coups (17 from 20 LA countries experienced coup since WWII), revolutionary violence, oligarchic dictatorships (Nicaragua etc.) – i.e. instability. He asks, what is the cause of this instability?
  • Thus the core thesis of his book was that it was caused by rapid social change brought on by modernization coupled with the slow development of political institutions (the political gap).
  • Modernization is increasing political participation before people have learnt how to associate with each other i.e. political and institutional development is lagging behind political participation and the result is instability.
  • Modern aid and overseas development plans are too focused on economic development rather than addressing the promotion of political stability as they assume that the latter follows the former. But this is not the case, as you see in the opening quotation.
  • Indeed it seems that preoccupation even with democratic institutions is folly. American always believe that free elections are the solution but Huntington says that in many modernizing countries they only exacerbate problems and tear down the structure of public authority. “The primary problem is not liberty but the creation of a legitimate public order. Men may of course have order without liberty but they cannot have liberty without order.” Thus in the chaos of competing forces Communism can provide an alternative. It may be no better at creating a prosperous society, but they do provide effective authority. [I am not sure of the extent to which he is approving or even recommending authoritarianism here. It would seem he is at least tacitly saying that authoritarianism is better than chaotic democracy, but then perhaps he is simply stating what appears to be an intuitive truth that we cannot have absolute liberty for all without governing structures to mediate human relationships when they reach out beyond the immediate family or clan level.]

Political Institutions

“The level of political community a society achieves reflects the relationship between its political institutions and the social forces which comprise it.” 

  • Political community and institutions are only needed when societies move beyond interaction merely within their own clan. If all belonged to the same social force, conflict would be resolved through the structure of that social force. In modern, heterogeneous societies no single force can rule without creating political institutions that exist outside of the forces that created them.
  • When communities form outside of the clan or family men relate themselves to something other than themselves, an idea, a myth, a principal or code of behaviour. This is commonwealth – an agreement on the laws and rights that allow all to participate in mutual advantages. This type of complex community is thus ”produced by political action and maintained by political institutions”.

The strength of the community thus depends on the support for the organizations and the “level of institutionalization” How do we judge institutionalization?

  1. Adaptability/Rigidity – the more adaptable the more institutionalized they are, the more rigid, well, you get the idea. Institutions are set up for a specific purpose. Once the purpose is spent the institution may adapt or die. It must also adapt as new situations come along. Eventually this process of adaptation makes the organisation exist beyond its initial function – it valued by leaders and members for its own sake and it thus “develops a life of its own”.
  2. Complexity/Simplicity – the more complicated an organisation the more institutionalized they are. This involves multiplication of subunits, hierarchy etc. Simple systems are overburdened by modernization and will destroyed, a political system with several different political institutions is more likely to be able to adapt. It is more likely to be a mixed state which is more stable and will not dissolve into tyranny (if pure kingship), oligarchy (if pure aristocratic rule) nor mob rule (if pure democracy).
  3. 3.       Autonomy/Subordination – the more political institutions exist outside of other social groupings the more institutionalized they are. They are insulated from social pressures from particular power groups. “Political organisations and procedures which lack autonomy are, in common parlance, said to be corrupt.” Complexity contributes to autonomy.
  4. 4.       Coherence/Disunity – the more unified and coherent the more institutionalized. Effective organisations require substantial consensus about functional boundaries, conflict resolution etc. and that consensus must extend to those active in the system [rule of law].

 Political Institutions and Public Interests

 “The public interest in this sense is not something with exists a priori in natural law or the will of the people. Nor is it simply whatever results from the political process. Rather it is whatever strengthens government institutions. The public interest is the interest of the public institutions.”

E.g. the public interest if GB might be approximated by the interests of the Crown, the Cabinet, and the Parliament.

  • Representative theory states that government institutions/actions are legitimate if they represent the will of the people. Huntington says this is wrong, rather they are legitimate to the extent that these institutions have distinct interests of their own apart from other groups [I do not fully understand this point. Perhaps it is just an extension of the autonomy criterion].
  • How are institutions related to the culture of a country? One of their key functions is to institutionalize trust that already exists at the heart of society. But they cannot do this without the existence of some trust ex ante the work of institutions. Thus, those societies where there is no trust will have difficulty building good institutions. He gives the example of LA where “self-centred individualism and distrust and hatred for other groups in society have prevailed”. The prevalence of such distrust means societies cannot progress beyond familial boundaries. [Putnam]
  • This problem is compounded by the fact that economic change and modernization erode or destroy traditional bases of association.

 Modernization and Political Decay

  • Modernization involves social mobilization where major clusters of old ties and commitments are broken down. This means a change in values and attitudes. It also involves economic development (however measured). Modernization requires both these factors.
  • This is a disruptive process that can cause instability.

 Effect of Modernization on Politics and Institutions

        I.            Political modernization means replacement of large number of traditional authorities by one single national authority. Government becomes the product of man not of God.

      II.            Political functions become differentiated

   III.            There is increased participation by groups in society. Whether this means greater control of the state by the people or the other way around depends on the general consensus. More people participate and more people are affected by politics.

  • The fact of social modernization (urbanization, industrialization, GNP rise, mass media expansion etc.) does not mean a necessary political modernization. E.g. LA progress toward democracy, stability etc. is “at best dubious”.
  • The effect of social modernization is disruptive to political systems – traditional loyalty is undermined; local chiefs are challenged by elite beaurocrats. Identity is eroded . There is a growth of group consciousness and this has an integrating and disintegrating effect on the social system e.g. it creates prejudices and conflicts between groups due to competition for resources, inequalities of economic development, unequal distribution of power etc.

 “It is not the absence of modernity but the efforts to achieve it which produce political disorder. If poor countries appear to be unstable it is not because they are poor, but because they are trying to become rich. A purely traditional society would be ignorant, poor and stable.” [This refutes the poverty thesis – that countries are unstable because they are poor]. The evidence for this claim is that it was generally low middle income countries that experienced violence and coups, rather than the poorest of the poor.

  • Thus modernization creates instability and the higher the rates of change the greater the instability. This idea explains why when change was spread over centuries in US/GB etc. there was little violent instability, whereas in developing countries “problems of the centralization of authority, national integration, social mobilization, economic development, political participation, and social welfare have arisen not sequentially but simultaneously.”

 Social Mobilization and Instability

  • Urbanization, education, media etc. give rise to increased aspiration which produces tension if the aspirations cannot be met. It will also increase the public’s voice in politics. In the absence of strong and adaptable institutions such increases in participation will cause instability.
  • In general the higher the level of education of the unemployed the more extreme the destabilizing behaviour: “alienated university graduates prepare revolutions”.

 Economic Development and Instability

Economic development provides the capabilities social mobilization demands so it should tend to reduce tension. However, it also leads to social frustration:

  1. Disrupts social groupings
  2. Produces “new money” classes who want power and status to reflect their wealth and are imperfectly assimilated into the social order
  3. Increases geographical mobility which undermines social ties. Increased urbanization can lead to political extremism.
  4. Widens gap between rich and poor and all the tension that goes with that
  5. Relative incomes do not rise for all so there is dissatisfaction
  6. Increased literacy and aspiration levels beyond what can actually be provided
  7. Aggravates regional/ethnic conflict over distribution and consumption
  8. Increases organizational capabilities of groups to make demands on the government which it will most likely be unable to satisfy.


  • There is much evidence in favour of the idea that economic development creates instability (Mexican revolution after 20 years of excellent growth/French Revolution the same), but much evidence against (USSR, Japan, West Germany). The conflicting evidence suggests the link is complicated. It is hypothesized that the relationship varies with the level of development. At low levels of development, economic growth creates instability. The effect is neutralized somewhat for middle development countries, and the link is reversed in highly developed countries.

 The Gap Hypothesis

“Social mobilization…expose the traditional man to new forms of life, new standards of enjoyment, new possibilities of satisfaction. These experiences break the cognitive and attitudinal barriers of traditional culture and promote new levels of aspirations and wants. The ability of a transitional society to satisfy these new aspirations however, increases more slowly than the aspirations themselves. Consequently a gap develops between aspiration and expectation, want formation and want satisfaction…This gap generates social frustration and dissatisfaction.”


  • The reason for the frustration is found in a lack of social opportunity, and a lack of adaptable political institutions.

 Civic and Praetorian Polities

  • Political systems can be distinguished by their levels of institutionalization (INS) and their political participation (PP). The former can be either high or low (for Huntington) and the latter can be highly participatory (populace at large) middle (middle classes) low (aristocratic or other elite). The stability of a system depends on both of these factors. It depends on the ratio, and so a country with similarly low levels of both may be in fact more stable than a country with a highly institutionalized system and an even more highly participatory system.
  • Countries with low INS and high PP are societies where social forces act directly in the political sphere these are “praetorian polities”. High INS and low PP conversely are “civic polities”


Political Participation Ration of Institutionalization to Participation



Low: traditional Organic (Ethiopia) Oligarchical (Paraguay)
Medium: transitional Whig (Chile) Radical (Egypt)
High: modern Participant (USSR) Mass (Argentina)


  • Essentially the difference between civic and praetorian is that one set of systems are law abiding legitimate states, and the others are law neglecting systems where rulers act in general in their own interest.

 Praetorian: fragile, fleeting forms of authority, charismatic leaders, military junta, populist dictator. All forms of government whirl and change in unpredictable manner. Politics and political participation are neither stable nor institutionalized.

  • Civic: recognizable, stable patterns of institutional authority, feudal or centralized, or federal. Parliamentary assemblies etc.
  • “Institutions impose political socialization as the price of political participation. In a praetorian society groups become mobilized into politics without becoming socialized by politics.”

 [Huntington goes on to talk about differences in these types of societies. However, I have no teased out his main ideas and the summary is quite long enough.]




M. Ross

American Journal of Political Science, Vol. 50, No. 4 (Oct., 2006) pp. 860-874

A Summary 

In a Nutshell

Whilst it may be true that democracies spend more money on public goods provision, it is not clear that they have any demonstrable effects on the material wellbeing of the poor, measured by proxy of infant mortality rates. Studies that have shown causal linkages between democracy and development are too often based on unsound empirical techniques, or use too restrictive an interpretation of well-being.

Theories of Regime Type and Poverty

  1. Sen (1) – Democracies allow electorates to punish governments for poor behavior. Political leaders will therefore seek to avoid (for example) famine, as if there is competition and opposition the penalty of famines will fall on the ruling groups and political leaders as well as the starving.
  2. Sen (2) – Democracies are better at transmitting information from poor and remote areas to the central government thanks largely to press freedom.
  3. Democracies help the poor by providing more public goods (Lake and Baum) and income redistribution. This builds on the Meltzer Richard framework whereby as suffrage extends the income position of the median voter downwards in the income distribution, and when his position is lower than the average position he will favour a higher tax rate. In short, democracy brings more people with below-average income to the polls, and they collectively force the government to redistribute income downwards.

 That democracies spend more seems to be borne out by the data, but they do not improve infant and child mortality rates. This claim is based on what is supposedly a much more complete data set which unlike many studies controls for fixed effects and time fixed effects.

 Theories Revisited

  • If democracies spend more on health services then why does this have such little effect on child mortality?
  • It seems plausible that the goods such as clean water and health care that keep children alive show highly inelastic demand. In other words families will spend what they have to in order to keep their children alive. This spending is however constrained by income.
  • Now if the state starts to provide those goods they lower the price of them for families. Yet, as demand is inelastic this means that as long as households are not income constrained they would have consumed them anyway. This implies that if the subsidies are received largely by the upper and middle classes there will be no effect on child mortality as those households would have consumed the lifesaving goods regardless of the government provision. The only way such spending can have an effect is if the services are received by the poorest income constrained households.
  • The Meltzer Richards framework may well predict a downward distribution of income, but it does not follow that the median voter will penalize the rich in order to raise the incomes of everyone that exist below the average income level. If he is a member of the middle classes he may well argue for redistributive policies that augment the incomes of the middle classes rather than those in the bottom quintile. Those families that are the poorest will only benefit if redistribution resembles a flat-rate level of benefits.
  • To predict who the government will target we need to know the specific institutional design, the collective capabilities of the lowest quintile, the tendency of the poor to vote along ethnic rather than class lines etc.



Kennedy School of Government Case Program

A Summary 

 The Road to Independence

  • Shona and Ndebele were two main ethnic groups in Southern Rhodesia as it was called after land was colonized and ethnic groups defeated. It became a self- governing colony of Britain in 1923.
  • 1965 independence from Britain – but under white control (PM was Ian Smith). ZAPU (Ndebele) and ZANU (Shona) nationalist parties formed. Formed shaky alliance in 70s as the Patriotic Front.
  • There were clashes with Smith’s army. Mugabe came to head ZANU in 1976 with goal to win control through military victory. Was persuaded to cooperate with British peace talks and elections were held in 1980. ZANU-PF won a solid majority and Mugabe became PM.

 The First Decade

  • Prospects were bright. Diversified economy (tobacco, agriculture, gold, textile) + good health/education services, good financial systems and independent judiciary. However, technical + professional skills were in white hands. Unlike other countries Zim had not been overexploited by colonization, and infrastructure was in good condition.
  • Largely capitalist program and Mugabe was conciliatory toward the whites probably to prevent a flight of skills and capital.
  • White farmers were protected from unwanted buyouts for 10 years. Mugabe has other reasons not to drive them out: they provided 30% of paid work to Zimbabwe’s workers. Economy grew 25% in first two years.
  • Aid was generous, and Mugabe took advantage to invest in health, education, and arms.
  • Soon South African nationalists (whites) launched attacks on Zim. Mugabe lashed out  and by 1982 50% of whites had emigrated. 1
  • Relations between ZANU and ZAPU were increasingly strained. Mugabe began to oust ZAPU members from his power circle, and attacked regions that were thought to be ZAPU supporters. To end attacks ZAPU agreed to the merger of the two parties under the ZANU-PF name.
  • Mugabe declared executive president in 1987.
  • By end of 80s only 52,000 of the promised 162,000 black families had been re-settled on gov purchased land. Some succeeded as farmers but many lacked education and when crops failed they just abandoned the land. Now the best plots of land were often handed out for political favours.

 The Second Decade

  • Floods, droughts, AIDS.
  • Mugabe began to undermine opposition by enriching the elites to gain their support. Corruption and cronyism grew (Mugabe’s friends occupied most posts in the media, state owned enterprises, ZANU-PF’s business empire). Public resources mismanaged and pilfered.
  • Mugabe announced new tax in 1997 to widespread outcry. Tsvangirai  (head of Congress of Trade Unions) then emerged as outspoken critic. He organized strikes against government spending and the tax increases (which were cancelled in response).
  • Mugabe sent troops to DRC to help the president there despite no real interest in the outcome (except it was thought that ZANU insiders were benefitting from business ventures there). The engagement cost $500m.
  • Meanwhile Mugabe seized 841 white farms 1998. This caused IMF to cancel support (it had been trying to institute structural reforms) and donors lost confidence (massive fall in aid).

 The Constitution and Election of 2000

  • Wide calls for constitutional reform. Mugabe preempted this by issuing his own draft that increased executive power and allowing him to run for two more 5 year terms.
  • As a response the groups that had called for change founded an opposition movement, the MDC – movement for democratic change with Tsvangirai at the head.
  • His support was based in urban areas with young workers not concerned about Mugabe’s involvement with the fight for independence. They blamed ZANU-PF for fall in living standards.
  • By 2000 and the constitutional referendum the country was in economic crisis (huge deficit, inflation) and 55% rejected the constitution. This gave MDC more credit and they put forward a program of reform: privatization, an end to communal land ownership, troops recalled from DRC, an end to cronyism, strict measures to put economy back on track (with IMF support).
  • Mugabe delayed the elections, seized more farms and handed out land and bribes to those who would support ZANU-PF. Large salary raises for the military and civil service. He encouraged war veterans in rural areas to squat on white farms and to use the land for themselves. Harassment and rough treatment of opposition increased.
  • Elections were peaceful. ZANU got 48% vote and MDC 47% (MDC most successful in cities and towns).
  • But MDC had little impact on policies of Mugabe.
  • Mugabe seized a further 3000 farms increasing racial tension disrupting production and driving away donors.


  • International censure grew especially by Western leaders at treatment of white farmers (absent South Africa who would not condemn possibly due to fear of aggravating their own racial tensions).
  • Review by African peers in the Commonwealth did nothing and Mugabe then announced he would seize almost all white farms.
  • Mugabe claimed that ZANU was the party of liberation and defeater of colonialism whereas MDC was a stooge for whites and the West, intent on destroying a legitimate black government. (It is true that the MDC backers are white farmers).
  • Some worried the MDC would be unproven and too inexperienced to run the country and would not be stable as it was a coalition based on being against Mugabe rather than united by ideas. Tsvangirai had not provided details as to how corruption etc. would be cleared away.
  • Economic/Social situation deteriorating – high inflation, black market exchange rate at ZIM$400 per US$ where official was ZIM$55. Income per head had dropped 50%. 500,000 in danger of starvation. No more independent media, foreign journalists barred, dismantled independent judiciary, electoral register manipulation.
  • The 2002 election was not thought by international observers to be credible. Mugabe got 56%.




 A Summary

In a Nutshell:

Which is more conducive to development, structuralism or liberalism? Is democracy or authoritarianism the key? Should everyone have access to property or do we need some “cronyism”? This article looks at the two country specific examples of Uganda and Zimbabwe and looks for the reasons for success and failure in those states and concludes that it is context not theory that is important. In other words there are historical, economic and political contexts where different forms of government and institutions will drive growth and development, and as the contexts change in the history of a state, the efficacy of those forms will also evolve. This means for example that structuralism may work in certain contexts but as facts on the ground change its potential to assist development may decline or even reverse. The article focuses on Africa in its approach, but the lessons for thinkers in development seem to be universal. The three words that sum up the whole approach are: CONTEXT IS KEY

 Background Debates

  • 1960s – Socialism (structuralism) vs. liberalism.
  • 1980s – What market models? What prices?
  • 1990s – what types of institutions and governance


  • Right wing policies initially proved better for growth, but fiscal and debt crises in those countries couple with other problems such as limited employment eroded those benefits. In the left wing countries conflict over resource and political control lead to a shift to authoritarian rule. The erosion in both types of state lead to dependence on the international financial institutions (IFIs) which demanded adjustment along liberal lines.
  • IFIs proclaimed that state intervention and inefficient allocation were the cause of the crises and implemented universal market-based reforms – The Berg Report (World Bank 1981)
  • These reforms were unevenly applied and produced uneven results. In the 1990s the reason for this was thought to be the lackluster institutional reform that accompanied the market reforms. Thus institutional reform was included as a condition of aid and.
  • Aim was to overcome crisis by increasing accountability, reducing corruption and inspiring civil service reform.
  • Results were poor. Elections were manipulated, corruption appeared entrenched and populist policies increased ethnic tension. Result: many failed states.
  • “This suggests that formal changes in economic policy regimes or constitutions based on orthodox liberal theory will not solve the African crisis.”
  • Therefore, we need to look at more localized political/cultural variables when implanting institutions as the tools for removing dysfunctional institutional elements (including social norms) may not be available or even known to development planners.

 State Capacity

  • Both liberal and structualist theory recognizes the need for a strong state.
  • Structuralists give a great power to the state to control and allocate resources. This power was used wisely in some states (Europe and East Asia) but in Africa lead to widespread misallocation and inefficiency.  Liberals thought this would be solved by a transfer to private hands but didn’t realise that weak states would not be able to manage the transition from pre-capitalist to capitalist society.
  • Now we must therefore examine the political and contextual variables that will allow this transition to occur.
    Under capitalist system the state can only exist in as much as private producers exist and are willing to pay taxes and recognise its legitimacy.  Additionally there must be impersonal rules, politicians operating under the law, no corruption, and producers that respond to market not government signals
  • “These are demanding conditions that have only recently been met in developed countries where possessive individualism and strong capitalist economies emerged before competitive democracy was introduced. In Africa, however, the attempt to create democratic capitalist states is taking place before most people have adopted the individualistic value systems required by free political and economic markets and where modern capitalist firms hardly exist.” This means the processes adopted will not cause the desired outcomes [changing the rules of the game does not change the players if the players have not internalized those rules].


  • Africa still depends on patronage (of employers/landlords etc.) and so democratic accountability is hard to find. This means that political and social actors cannot behave as liberal theory predicts as they are in a “dual” system where formal aspects have been transferred from developed countries (i.e. institutions) but these are penetrated by aspects of the indigenous social system (Price is the academic here). So the institutions are at best “hybrids” (Price).
  • The individualistic demands of capitalism are inconsistent with the systems of patronage found in Africa, and that underpins the power of political elites. He calls this “contradictory institutional multiplicity”. E.g.  Sudan, Somalia.

 Rent Seeking

  • This relates to the transfer of assets from one set of owners to another including the granting of licenses.
  • This is a process that all capitalist states have gone through as in order for private firms to finance the state by tax, those firms need to exists. Thus the state had to “manufacture manufacturers” (Marx) to support modern liberal capitalism. These state transfers depended on clientalistic politics.
  • This process is still prevalent in Africa – tribal identities used etc.
  • Democracy cannot exist in such circumstances as access to the state is seen merely as a means of elite enrichment. Donors want to end this, but they can’t until a genuine bourgeois capitalist class has emerged as it did in Europe.
  • Brett calls this process “primitive accumulation”.
  • This is not necessarily a negative point. This process may be “ugly” but it also helps create the necessary conditions for capitalism. But the ultimate success depends on the appropriate means of transition being in place otherwise the system of nepotism continues indefinitely. “Primary accumulation can produce a successful capitalist class that will eventually recognise the need for a strong and honest state.”


  • He goes on to use the case of Uganda and Zim to make the main point of the article: “Political and economic relationships in societies characterized by contradictory institutional multiplicity generate political, administrative and economic stresses that interact with each other to produce unanticipated structural changed that can, sometimes, produce progressive as opposed to regressive results as we have seen in Europe and Asia.”


  • [Rather than go through the rather long histories provided of both Uganda and Zimbabwe I am going to go straight to his conclusions and try to illustrate using snippets of the history. If you want to fully understand his ideas one should grasp the history, but I am coming at it from a more general application to our studies.]

 From Colonisation to Independence

  • Past regimes have profound implications for the transition paths available to countries when they begin to consolidate their democracies (Linz and Stepan). For example the state that Zim inherited was far more advanced than Uganda, it had a good education system, there was large scale industrial and agricultural productive capacity but it was controlled by Europeans.
  • Both Uganda and Zim had to incorporate their populace into the new state whilst retaining immigrant capital (which was the bulk of available capital). They both used structuralist policies with success, and growth was extensive.
  • But the “ability of each regime to exercise its authority in a responsible, as opposed to predatory, way depended on its political stability”. Thus as the threat to the government increased the well managed structuralist policies dissolved into populist policies. In Uganda this was the “move to the left” in the 60s meaning privatization of financial sector, allocation to elites of farm land (they did not know how to cultivate), price controls, replacement of experienced European civil servants with inexperienced Africans, and a strengthening of patronage politics. In Zim the story was different. The structualist policies were well implemented and much public investment was made. However, by the end of the 80s there was a large deficit and voluntary structural adjustment policies were entered into with the help of the IFIs. The results were mixed (short term): reduced employment and job security, closure of industry. The process also reduced the opportunity to political patronage and as sum consequence, political support for Mugabe waned. Therefore it too introduced populist policies. These were often based on illegal land seizures as well as intimidation of political supporters, a strong re-emergence of patronage politics. This alienated donors, the currency crashed as well as confidence in industry.
  • The threats that caused the implementation of these policies were associated with the need to win elections and therefore we need to “question the simplistic equation of democracy, accountable government and development that dominates current donor thinking”. Brett quotes Kohli in saying authoritarian capitalist states can be “cohesive” and impose progressive but unpopular reforms on the country.
  • Brett (and Kohli) however, both recognise that long term, authoritarian regimes behave worse than democratic ones. [I think the argument is really one of timing i.e. authoritarianism can work at a certain stage of a country’s development (even think about England here), but long term success depends on the apparatus being present to transition from authoritarianism to capitalism. All of this is in the spirit of context is key.]
  • Ultimately Kohli is quoted as saying “it is also important to distance oneself from the fantasy that all good things can be had together, that democracy, equality, free markets and rapid economic growth can all be achieved simultaneously in the contemporary developing world.” (Kohli)

 From Structuralism to Liberalism

  • In a similar strand of argument there is a tension between structuralism and liberalism and it is not clear based on a priori theory, which is better for development.
  • The structuralist periods in both countries were ones of successful growth, but the model was not sustainable. The process continues nevertheless as it was thought of as important to “Africanize” the economy. However, long term this discouraged foreign investment, lead to inefficient allocation and clientalistic politics.
  • These failures seem to point to the conclusion that stronger markets would have produced better results. However, the results of the structural adjustment policies in Zim (outlined above) and the resulting chaos from the populist policies thereafter enacted shows the political cost of ignoring the calls for Africanisation. Structuralism had produced reasonable growth but a real focus on pro-poor services. Liberalization eroded this, and also punished the political elite, previously protected in guarded industries. “These costs and their political consequences could have been significantly reduced with greater donor support”.
  • Contrastingly, Uganda had basically lost its ability to deliver any services by the mid-point of Amin’s rule. After years of civil war etc. by the time structural adjustment policies were implemented in the 1990s there was really no one to oppose the plan, no one really stood to lose a large amount [as there was almost nothing to lose]. Here the structural adjustment and aid that came with it generated widespread benefits and consolidated (rather than opposed as in Zim) the legitimacy of the government as exemplified in the NRM victories in the 1996 elections.




J. Sachs (1989)

Summary etc.

In a Nutshell

Although democacy may be a key part of the devlopment porcess, perhaps its benefits are context dependent. For example, when looking at Latin America we see that the extreme inequality in the context of democracy led to economic populism which eventually imploded and hurt the very people it was aiming to help. The following summary is from EH451, but it shows how inequality was  a root cause of populism, and it was the political avilability and mobilization of the urban poor that led to the rise of the populists by democratic means.

High income inequality in Latin America causes widespread calls for redistribution via policy that increases the incomes of the worst off, and this leads to over-expansionary policies that pay little heed to inflation and BOP concerns and thus contribute overall to weak economic performance.  Thus there is a linkage between social conflict and poor economic performance. Unlike the countries of northern Europe, LA has institutions that cannot properly mediate these social conflicts – bitter economic/distributional conflict is part of everyday life and this is reflected in a battleground type environment for making economic policy, with all the policy instability that implies. These conflicts are evinced in the extreme inequality that pervades the region; it is especially marked when compared with the East Asian countries, and this difference may explain the instability of the former as opposed to the stability of the latter. It also helps to understand why certain economic policy choices are made: austerity provokes unrest and so cannot be chosen even in high inflationary periods; trade policies are inward oriented so as to boost urban wages and to prevent landed elites and commodity exporters gaining excessively; necessary devaluations are delayed as they hurt the wage earning poor the most, and the delay further exacerbates the problem. In other words, because of the societal demands, over-expansionary macro policies are enacted which lead to BOP and inflation crises.

NB: this paper is not anti the motives of the populists (addressing inequality), nor pro the reactive orthodox measures that come after populism derived crisis. If anything it is the swings between these two positions that does the most damage. A middle ground needs to be sought.

Economic Populism and Inequality

  • Sachs found a significant correlation between inequality and the need to reschedule debt repayments. Unequal countries are prone to excessive foreign borrowing to redistribute, promote exports (raising urban wages), destabilizing labour militancy, enhancing elite power to evade taxes.
  • LA governments have rapidly increased budget deficits, often through borrowing. Big spend policies are needed to address serious inequalities. Such policies are particularly attractive for governments based on urban and working-class constituencies, such as the populist governments in LA which arose in response to the urbanization that occurred in the 30s and 40s. These governments were particularly sensitive to the needs of gov. employees, urban proles, public sector workers and the informal sector.
  • Politically populism is a multiclass movement based on state activism (Coniff), universal suffrage and charismatic leadership. They were generally distributive rather than redistributive [from a political science point of view one wonders why this form of government would be chosen over and above a purely redistributive government given the nature of poverty and inequality in the region].

A Macro Framework for Populism

  • Exchange rate is fixed by central bank using accumulated reserves (in many cases these were surpluses earned during WWII when capital imports virtually suspended from the core). A monetary expansion policy is undertaken (e.g.). Demand expands. As ex-rate is fixed imports and export prices are not changed. This pushes up demand for non-tradable, and in turn for labour leading to higher wages. Price of exports fall relative to non-tradable, and to the extent they are used to produce exports, the profit margins of exports are squeezed (so the policy is in favour of urban workers, and against exporters – and hence why it is so attractive to populist governments). This leads to lessening export production at the same time that demand thus imports are rising leading to a trade deficit. The deficit is financed by exchange reserves or foreign credit. Once these run out the party is over.
  • A BOP crisis hits. There is no capacity to peg the ex-rate, so a real depreciation occurs that lowers wages and restores export profitability and reduces internal demand. The real depreciation may be bigger than the initial appreciation since in the expansion stage, forex is lost and export capacity is less due to de-capitalization.
  • If the process is not reversed states are left with expansionary policy with a floating ex-rate and the result is inflation. Populist govs do not want to reverse the initial gains and may try to put in ex-rate controls, nationalize the banks (Peru 1987, Mex 1982).
  • It is the environment of unresolved social conflict that spurs this kind of populist policy cycle. Such policies would not be possible if the export sector was diversified out of the hands of a small elite, or agricultural holders were many and had political voice. The fact that LA was characterized by oligopoly meant the policies were feasibly enacted by governments with close ties to labour.


Argentina 1946-49, Juan Peron

  • Juan Peron replaced landowner focused conservative gov with a nationalist gov focussed on rapid industrialization. As labour secretary he was a big friend to urban labour: collective bargaining, social security, min wage increases etc.
  • Monetary policy and fiscal spending highly expansionary. Ex rate fixed and thus highly overvalued in PP terms. Wages rose due to backing of unions and economic expansion. High protection to build industry. Explicit aim to improve urban wages at expense of agricultural oligopoly. Real wages grew by 52% in three years.
  • Crisis hit when forex ran out.


Chile 1971-73, Salvador Allende

  • Similar mould to Peron, but more socialist aims (nationalisation, land reform etc.)
  • 1st year – fiscal expansion. Deficit grew from 2.7% GNP to 10.7%. Growth was 9% and real wages grew by 17%
  • Crash came in 1972 – inflation reached 163%


Brazil 1985-88, Jose Sarney

  • Cruzado plan – real wage increases, overvalued currency, large deficit. Early success, as in the above two cases was outstanding.
  • The plan did not last long without strain as external debt was already very high. With a new constitution on the horizon Sarney wanted office for as long as possible and maintained the populist policies even in the face of the cracks beginning to show.

Peru 1985-88, Alan Garcia

  • Created their own forex reserves by limiting debt servicing to 10% export values. Ex-rate and price freezes, with increase in public sector wages.

Common Features

Urban based governments intent on raising the living standards of the urban workers. In Arg, Braz, Peru, all took over after long periods of conservative rule i.e. lots of pent up conflict. All see initial explosion of growth and real wage increases with stable prices followed by late phase of falling GNP, wages and hyperinflation.

The turning point is when governments run out of forex or foreign credit so it cannot maintain the overvalued exchange rate. Peron had wartime reserves. Chile had little reserves. Garcia created his own, and Brazil had none and did not emulate Garcia hence why the Cruzado plan was so short lived.


Many problems in LA are external: IR rises, oil shocks, commodity collapse etc. But fiscal laxity at home is also responsible especially where drastic fiscal expansion was funding growth.

Populist measures follow from several factors: economic conflict, inequality, political instability leading to short tenures and thus horizons, and a deep cleavage in sectoral interests between the urban working classes and the primary commodity exporters.

Why did they choose such risky paths? – hard to say. Popularity? This doesn’t seem too satisfactory.




R.H. Bates


A summary 

In a Nutshell

Antony Downs’ theory of the median voter suggests that politicians should be sensitive to the policy preferences of the median voter. This suggests that in developing countries the government should be working for the poor given that the likelihood of the median voter being amongst the rural poor is very high. Yet we do not always observe this. If democracy does not help the majority of citizens then this suggests that the power of democracy for good may be less pronounced than Sen etc. believe. Thus we need to know why this phenonemon persists.

 One answer is alluded to in the Lake and Baum piece – the costs of participating in the political process may not be distributed evenly throughout the population. This means that it may be far easier for a small group to participate and make demands of the state than for the majority. The small group benefits not only from their status as a privileged group (Olson), but also from cheaper access to government. The more democratic is the democracy, the more evenly spread are the costs of participation, and yet even in advanced democracies some groups have much cheaper access to government (e.g. Rupert Murdoch). Thus in developing countries which are often characterized by strong presidents (Sub Saharan Africa/Latin America), or whose system is characterized as a delegative democracy (O’Donnel), this effect can be many times greater and leave much of the population excluded from the political process.

 Another issue may be the development rationale which has emphasized the superiority of industry over agriculture. As agriculture often is the dominant economic activity in the developing world policies that argue for industry at the expense of agriculture implicitly are arguing for a small group of favoured industrialists over the large majority of agricultural workers.

 This is a characteristic of the states that Bates examines in this book. They adopted policies in line with developmental economics at the time which argued for a suppression of agricultural commodity production in favour of industry and manufacturing. This was initially effected through the surpluses earned by monopsony marketing boards who bought agricultural goods at a cost below the international price level, exported those goods and used the surplus to fund development projects, meaning investments in industry. These marketing boards eventually became the faithful servants of government that effectively taxed the agricultural poor in order to benefit industrialists. This redistribution of income was partly due to the equation of industry with modernity, and partly for political economy reasons of influential industrial elites seeking to maintain their power and obtaining rents. Another beneficiary is the bureaucracies that administer the system, as they set the prices they could afford to be corrupt and inefficient and simply pass on the cost to the agricultural producers.  The bottom line is that governments in Africa were willing to sacrifice the interests of farmers in order to promote the formation of industrial establishments.

 Often the redistribution was wasted as investments were made in industries for which there was no comparative advantage, no synergies with local businesses and no native expertise.

 Whether the key motive for these policies was developmental thinking or simply elite preference promotion is unimportant. What is important is that the mix of policies chosen for development permitted the entrenchment of hugely powerful private interest and this has been the source of the durability of those policy commitments. The value of the rent (from underpaying then selling at world price) could be appropriated in bribes, or used to win clients by supplying the commodity cheaper than it was otherwise available. Indeed the ability to ration the goods meant that political coalitions could be built in order to sustain the system. This was later seen in import licensing. The protected industries were stuffed full of employee friends of those in power as the noncompetitive rents meant all costs could be passed on whilst clients could be won by the provision of secure employment. In sum, the rents generated by the system of development were both economically valuable to those who could control them, and politically useful to those who could distribute them. A network of self-interest was created.

 But why would the rural poor stand for such a system? The answer is that they were politically marginalized. Obvious problems of education, geographic dispersion, large group organizational challenges (Olson) etc. were impediments. But they were also deliberately excluded from politics. Organizations and parties that sought to represent them were banned and prohibited from operating often by coercive means. The governments could also fragment rural opposition by making it the private interest of certain individuals to cooperate in programmes that are harmful to producers as a whole (by distributing certain rents conditional upon support). These benefits could then be used to construct political allies. Another tool was the ability of the government to allocate public spending in order to ensure acquiescence.

 Thus there was no sensitivity to the policy preferences of the rural poor. Through violence and coercion organization was prevented. They bought off some members of the producing population and encouraged others by strategically location public works. This is the story of how individuals are marginalized into accepting policies that hurt agricultural producers as a whole.

 [Latin America makes an interesting comparison. The ISI policies were targeted at industrialization. This was at the expense of agricultural producers, although that market was characterized by oligarchies rather than independent producers. Thus industrial policy is always pursued at the expense of another sector. However, in LA the median voter was almost certainly an urban dweller. I think there is an interesting point here but I’m not yet sure what it is….]



A. Sen


 This is a very early summary, so is rather less methodical than the others…


  • Development is the process of expanding real freedoms vs. narrower version e.g. expanding GDP.
    • This perspective bridges the gap between a focus solely on economic wealth and the focus on the lives we can lead.
    • Wealth is not the good we are seeking it is only useful for the sake of something else (Aristotle) it is useful in helping us achieve other freedoms. This may seem like an obvious point but it might be a good place to start the discussion as the repercussions are pretty drastic. I.e. if we imagine a country where many people are unlimitedly wealthy but prisoners of the state, then what good is their wealth?
    • DAF goes beyond wealth accumulation and growth
    • Development should focus on enhancing lives and freedoms

 Put another way development is the process of reducing “unfreedoms”.

    • What are these? Lack of opportunities of health care, education, economic participation etc.
    • E.g. liberty denial + lack of civil rights: Whilst some argue in favour of harsher political systems as a means of promoting development, Sen argues that inter country comparisons do not confirm the Lee thesis, Rather econ growth is a matter of friendly econ climate no a harsher political agenda.
      • Famines do not occur in democracies
      • Political freedom is important on its own and does not have to be justified in relation to GDP growth or other variable, such that that question “do political freedoms increase development” becomes non-sensicle as political freedom is a constituent part of development.

 There are two main components of freedom

  1. Processes – institutional and social framework that allows freedom of action/decision
  2. Opportunities – the opportunities that actually accrue to people of different parts of society.
  • DAF says both 1 and 2 are important.
    • o Liberals are only concerned with 1 i.e. it is the theoretical framework of freedoms that is important and thus if all the processes of freedom are fair or in place, then it is unimportant if some people are actually denied the opportunities afforded others. Here inequality is a natural component of the market/capitalist system, and it is justified as necessary to maintain the freedoms of market we enjoy. Lord Turner made the point last night in his speech that wealth creation is necessarily unequal due to the fact that absolute wealth is valueless; it is only relative wealth that is important.
    • o Consequentialists including the utilitarians, and presumably Marxist/Socialist thinkers are only concerned with 2 i.e. as long as the outcomes are fair then the processes are unimportant. Sen is as interested in that which makes us different as humans as that which makes us the same and thus any focus solely on outcomes (especially aggregate utility) is against his thought. “Maximizing the sum of utilities is supremely unconcerned with the interpersonal distribution of that sum”.
    • o DAF says both are important and its stance is thus anti liberal and anti-utilitarian His argument seems to pave the way for a strong state and potentially market regulation – a libertarian may stop his enquiry once he learns that the market is free and liberalized whereas DAF looks at the consequences of that market as well and will seek to improve the outcome distribution amongst the population.

 Freedom is central to development in two ways:

 The Evaluative Reason

  • The success of society is evaluated primarily by the substantive freedoms that society enjoys.
    • Thus distinguished from purely economic determinants of success/ from the utilitarian focus on aggregate mental satisfaction (including vehement rejection of the idea that some poor people take pride in their poverty or hardship and are thus maximizing utility)/ from the liberal preoccupation with progress.
    • Not denying the link between lack of capabilities and low income, but low income can cause poor health/illiteracy and poor health/illiteracy can be a cause of low income. We need to look further than the obvious correlations. I.e. the role of low income has to be integrated into a broader picture.
    • In this view poverty becomes a deprivation of capabilities not just a wealth index, and thus analysis needs to be tailored.
      • E.g. high unemployment in Europe is missed on income p.c. analysis but captured by DAF. The inequality is not improved by social security transfers as DAF recognizes that employment is something that cannot be made up for by state transfers as employment is empowerment in the home, social inclusion, self-reliance etc.
      • E.g. African Americans much richer that developing world counterparts but have lower life expectancy. This inequality is highlighted by DAF and the causes can be seen to be the social arrangements and community relations as they pertain to AA.
      • Markets:
        • Denials of freedom to transact are an unfreedom as free exchange has value above and beyond the power of the market to produce economic development. This is in no way an argument relating to efficiency.
        • E.g. imagine two countries that achieve the same GDP and efficiency but one is authoritarian. Take one individual that exists in both societies and imagine they have the same job, same pay, same consumption bundles etc. except in the authoritarian country all that is dictated. Are they of equal worth? Sen argues that person would still prefer the scenario of freedom of choice. Therefore markets are no good only for their capacity to generate more efficient outcomes. Do we agree with this? Is it inconceivable that someone would choose a life under the latter regime, let’s assume it is a benign state/dictatorship focused on e.g. equality among communities Syndicalist etc?
        • E.g. freedom to sell one’s labour. Slaves:
          • Life expectancy relatively high + goods consumed were competitive with free labourers yet they ran away and did not return to work post abolition for greater wages. This is because freedom to work is a +ve freedom which is a measure of how well society is doing.
          • FAD sees this freedom as separate from having to show that a free workforce increased agricultural productivity.
          • E.g. Tradition: Some argue that development destroys tradition/culture.
            • If tradition has to be sacrificed it is the individual who must decide not the “guardians of culture”. The people decide which traditions to following and this can include freedom restricting traditions if the people have information about those that do not wish to follow that tradition/access to education etc. They should not choose in ignorance. The burka in France.


“The process of development is the not essentially different form the history of overcoming these unfreedoms.” – there is no precise criterion of development. DAF is not a method for ranking countries absolutely.

 The Effectiveness Reason

  • DAF is against the idea that democracy, social safety nets etc. are a “luxury” that only developed countries can afford and are thus started as social programs after the process of development has begun. This is because freedom is
  1. A.     The primary goal of development. This is the constitutive argument i.e. development consists of freedom, and relates to the evaluative reason (above) i.e. how do we know whether or not a country is developed.
  2. B.     The principal means of development. This is the instrumental argument i.e. freedom brings about development and this is the effectiveness reason. Freedom inspires freedoms, as freedoms interrelate.

 Sen focuses on five freedoms;

  1. 1.      Political freedoms – who governs and under what principles.
  2. 2.      Economic facilities – opportunities to utilize economic resources
  3. 3.      Social opportunities – health, education etc. (this aids in participation of 1 and 2)
  4. 4.      Transparency guarantees – openness, anti-corruption etc.
  5. 5.      Protective security – social safety nets.
  •  These freedoms enhance people’s capabilities and reinforce each other.
    • E.g. econ growth allows increased protective security
    • E.g. education enhances econ growth – human development is not a “luxury”.
    • E.g. China vs. India
      • Social freedoms influenced by social safeguarding of tolerance etc. but also by public support in provision.
      • China: more success in trade liberalization than India. Why? Social preparedness.

                                            i.            More literate

                                         ii.            Better educated

                                       iii.            Healthier

  • All three of the above due to state provision, meant that China was better placed to seize the opportunities that market liberalization gave. Thus health and education were related directly to GDP
    • Not all rosy: China had famine due to lack of political freedoms argues Sen.
    • E.g. Life Expectancy
      • Observed to increase with income, but we need to go beyond this as the income effect operate through a) the rise in income specifically of the poor and b) public expenditure on health.
      • Life expectancy and inequality removal can happen in two ways

                                            i.            Growth mediated – result of fast and broad economic growth

                                         ii.            Support led – result of state provision of health care education etc.

  • The support led methods do not wait for growth e.g.??? has low GNP but high life whereas Gabon has high GNP but low Life (see book).

“The people have to be seen in this perspective as being actually involved – given the opportunity – in shaping their own destiny and not just as passive recipients of the fruits of cunning development programs.”

 Chapter 8 Women’s Agency

  • No longer focused solely on “well-being” of women. Women are seen as agents of change. Agent/Patient distinction nice talking point despite the overlap between welfare and agency. Rather agency creates welfare etc.
  • Limited role of female agency affects the lives of all people.
    • Increased agency in turn removed inequalities that depress well-being e.g. independent income enhances social standing of women and their standing in the household. Outside employment has educational benefits. The income gives more power and thus household agreements can be made that redistribute the common benefits shared in the family.

 Perception of contributions plays a part in a family’s benefit distribution

    • Independent female agency can correct iniquities vis-a-vis men.
    • Can also reduce child mortality
    • Lower fertility rates
    • Sharing in the family in part based on cultural heritage but also related to the standing of women especially in times of shortage (famine) as they are not seen as contributing financially to the family.
    • Freedom in one area (work) has knock on effects for other freedoms (from hunger, illness, relative deprivation). As it expands vision it can also reduce fertility rates (education is another factor).

 Child Mortality Rates

  • When empowered, women can have more influence on family decisions and they naturally tend toward child welfare. However, if saddled with double burden or housework and wage work the effect on mortality can be ambiguous. Literacy however, is statistically significant in reducing infant mortality even when given male reluctance to share the household duties.
    • Labour force and literacy freedom have the effect of reducing gender specific child mortality rates and that rate is unaffected by general development/modernization rates. (Sen: missing women).

 Fertility Reduction

  • High birth rates reduce freedoms not sure all women would agree. Religious duty etc.
  • Educated women less likely to be shackled to continuous child rearing. Wider horizons + family planning etc.

 Economic Activity

  • Women have a relative lack of access to economic resources but given the opportunity they are no less successful than men in utilizing opportunities.
  • This generates independent income + social benefits (reduced fertility, mortality). They are a “major influence for social change”.
  • E.g. Bangladesh – BRAC lending to women.


  • On what grounds do these freedoms rest? Is it obvious that there is something inherent in human beings that means we have a universal right to exchange goods? What does it mean to be free to live to a certain age? And what age should that be? Perhaps we should disregard such problems as ivory tower nonsense. We can all agree that a person should be able to live as long as possible, so who cares on what philosophical basis the notion of a freedom is based? Perhaps the argument would be better couched in terms of abilities?
  • Not a complete theorem. i.e. no concrete mechanisms for change.
  • Not clear that authoritarianism is not conducive to development. Perhaps what really matters in the quality of governance, not the mode of government? What role of the state does Sen’s argument envision, and does a strong perhaps even dictatorial state become a necessary part of his method?



D.A. Lake & M.A. Baum

Comparative Political Studies Vol. 34, No. 6, (Aug., 2001)

 A Summary

In a Nutshell

Democracies provide a higher level of public services when compared with authoritarian regimes. Thus democracy has a profound effect on the daily lives and well-being of people around the world. This is argued theoretically and supported empirically and thus represents a step forward in democratic theory, as the causal link between democracy and growth has been tested many times without a consistent pattern emerging. There is no argument that democracy produces the socially optimal level of public services, only that democracy will produce more.

 An Economic Theory of the State

  • Traditionally it is assumed that politicians want to maximize their chances of re-election and thus they derive their preferences for policy from the preferences of the electorate. This electoral connection is only half the story. The departure point for this article is that politicians want to maximize the rents earned from using the monopoly power of the state. Whereas the electoral connection cannot apply to authoritarian rules that are insulated from the demands of the citizens (at least up until a revolution is looming), this rent maximizing motive is consistent across democratic and authoritarian rulers. The only distinction is that authoritarians can get more rents as the state monopoly is stronger.
  • States are like firms that produce public goods (to correct market failures) in exchange for revenues from taxes. They are able to do this as they have monopoly power of the use of force. When barriers to exit and costs of participation in government are low, the state will produce as a regulated monopoly, whereas if exit and participation is high they produce as an unregulated monopoly. Clearly more public goods are provided in the former case.
  • In a contestable market where monopolist is constrained by the threat of new entrants, they do not have the same market power.
  • Barriers to exit in democracy is low, the losers go home. In autocracies by contrast the exit could involve execution or exile.
  • Also important are the costs of participation for the citizen, and particularly the median citizen. Societies have different cost distributions, meaning that participation for some citizens is much cheaper than for others. If costs are skewed such that the median voter faces costs significantly higher than the average cost, then only a few citizens will be able to participate. This small group will be better able to organize (Olson) to capture rents from the state (Bates) whether directly, or through lower taxes. The ability of the median voter to punish politicians will be low, whilst the favoured few will argue for increased monopoly power of the state. In democracies the cost of participation is low (a free vote), whereas in autocracies it is high and potentially dangerous to participate.
  • The rent earning may come in the form of corruption (with the problems associated with hiding that corruption – see Shleifer) or budget manipulation.
  • These theories are borne out by the data which suggest that there is a large increase in the provision of public services when countries move from autocracy to democracy.


  • The recognition of the importance of democracy and an effective state was recognized in the shift of thinking of the development institutions and is characterized in the World Development Report of 1997 from the World Bank. This was the result of the new institutional arguments of North and AJR that began to seep into the development thinking.
  • This article is partially about feedback mechanisms that exist under democracy, and how they can have a positive effect upon conditions in a country. Another example is given by Sen in his essay on famines where he shows that a famine never occurred in a democracy. Famine, he argues, is not about a lack of food, but a lack of entitlements. Democracy allows for feedback to be given to the government through the press and other networks of accountability, and acts as an early warning system when a famine looks set to occur. Additionally, if the state is not responsible to its citizens, meaning it can lose elections, or more generally it has protected monopoly rents, then there is no motive for government to prevent famines.

 This article argues that democracy is instrumental to development, but it could also be definitionally part of what it means to develop – see Sen Development as Freedom.]



G. O’Donell

Chapter 2 Modernization and Bureaucratic-Authoritarianism: Studies in South American Politics

A Summary 

In a Nutshell

It seems that most of the criticism leveled this thesis is based on a reading of it that defines BA regimes as a necessary tool for achieving industrial deepening (vertical) at the end of the “easy” phase of ISI. Serra etc. note that attempts at deepening had occurred before the BA regimes were implanted. Whilst it may be the case that deepening is an integral part of the thesis, I would suggest it is broader than this. The argument seems to be as follows: Populism in its promotion of horizontal industrialization meant that the societies of LA, particularly Argentina and Brazil, were modernized, and following on from the “gap” thesis proposed by Huntington, it was the inability of the populist regimes to moderate between the increased demands by the urban popular sector as against the industrialized and landed classes that lead to a coalition that sought to exclude the urban classes from politics. The external bottlenecks of development created by populism, the forex problems, and the continued dependency upon foreign firms meant that a continuation of the populist agenda as it stood was not economically feasible. However, the popular sectors’ demands were ever increasing beyond possibility of satisfaction, and the only way to solve the political deadlock that was caused by too many competing demands being made of the state, was to exclude those actors in favour of a strong coercive regime.

 Thus whilst the main goal of BA may have been industrial deepening, such deepening was not possible under populism because of the strong urban classes that benefitted from populism and were sure to lose under stabilization and BA. The need to deepen the industrial base was the core economic policy desired by supporters of the BA regimes, but the reason that such deepening had to occur under BA as opposed to democracy was the gaps between demands and realities that were caused by the period of popular demand expansion and modernization that preceded BA.

 The key feature of these regimes is that they were “excluding political systems”, meaning that they sought to exclude from politics an already activated urban popular sector. This meant denying power to leaders of the urban sector, and refusing to meet their political demands. This policy could be achieved both by coercion and the shutting of channels of political access. This feature is contrasted with the “incorporating political systems” of populism which sought to explicitly activate the urban classes.

 Argentina and Brazil: From Incorporation to Exclusion


  • Prior to ISI the politically powerful sectors were the agrarian and resource sectors producing exportable goods through largely foreign owned export intermediaries. The crisis of the 30s started domestic industrialization and the emergence of an urban working class. This change in class structure changed the basis of political power and allowed for the formation of populist alliances.
  • These populist alliances stood against the traditional oligarchies, foreign owned firms, and free trade. They stood for industrialization and the expansion of the domestic market. Industrialization would insulate the states from international crises and end the political dependence that was must maligned.
  • Peron in Arg, and Vargas in Brazil were successful in benefitting urban workers, raising consumption and employment etc. However, the oligarchies were not fully de-politicized as they continued to be the sole owners of forex and were as such key for carrying out the populist expansion policies.
  • The type of industrialization that occurred was “horizontal” i.e. in import substitution finished consumer goods. This means a heavy dependence upon importing capital and intermediate goods and technology without which the domestic industry could not function. Horizontal industrialization had progressed much further in Arg and Braz due to large internal markets.
  • Vargas and Peron encouraged unionization to provide alliances and as it fostered government control over new industries. So whilst labour was denied an autonomous base, it did develop strong organizational networks.
  • The process was generally exulted.

 The End of Expansion

  • The “easy” phase of ISI was exhausted. Horizontal diversification could not proceed any further. Poor productivity in exporting sectors combined with declining terms of trade meant poor earnings in the forex earning sectors that had to pay for populist policies. Together with intense importing of capital goods etc. led to a severe forex crisis.
  • ISI left a consumption pattern overly reliant on luxuries and small producers, whilst horizontal industrialization could not be effected. Costs were high; there was much inefficiency and a poor result in terms of income distribution.
  • It became clear that painful policy innovations were needed.
  • Vertical industrialization is a very different beast from horizontal. The populist ideal of decreasing outside dependence proved to be fallacy and the urban masses now had consumption expectations modeled after highly developed countries. The persistent technology transfers from abroad meant an increasing penetration of technocratic roles.
  • The forex problem combined with big consumption demands caused severe inflation.
  • It was clear that stabilization was needed. However this meant restrained monetary policy, demand suppression and the elimination of marginal producers which were unfortunately political impractical due to the enormous social tensions they created (as the marginal producers were labour intensive, and the beneficiaries of a freer economy were sure to be the large companies many of which were US owned). It came to be thought that such policies could only be enacted given a postponement of power participation demands.
  • Other problems were that due to the technology intense industrialization that purchased overseas technology where the factor mix was very different, the new industries could not absorb much labour. Growth stagnated in the years period to the Braz and Arg Coup (1964, 1966)

Political Actors after Populism

  • Demands of urban sector hard to satisfy in the eyes of the other sectors, but the demands were institutionalized into well-organized unions created under populism. Plus the urban sector was using threats and strike action to disrupt in order to achieve their political goals. Political activism grew markedly.
  • This activation was achieved by high modernization. The activation caused a tension between the urban classes and other sectors that saw a threat to the survival of the social arrangements particularly the class structure, the power distribution and the international alignment of countries. This was particularly the case given the climate of fear in the post Cuban revolutionary period. The US was making policy based on fighting socialism in the South, and the technocratic links that were formed under technology importing in ISI meant that there were significant linkages with the USA.
  • The threat of social unrest led to a redefinition of the role of the military as national security now encompasses the achievement of socio-economic development, and the suppression of internal enemies.
  • The salaried middle classes saw their incomes decline as growth stalled, and the agrarian sector reasserted their dislike for mass politics as populism had specifically excluded development of the agricultural sector. This meant that the urban classes were politically isolated. They lacked their previous populist allies, direct political access and so they opted for increased political activism.


  • Populism generated a “gap” between the demands of the urban sectors and the performance of the economy. This gap led to increased activism, increased demands on the government and an inability to accept the solutions to the development bottlenecks that had developed. More demands brought forth more actors and eventually formal political behaviour gave way to naked power strategies. The conflicting demands on the state lead to a stalemate whereby unrestrained conflict and differences in demands prevented the governments from implementing any policies other than short term placation of the most threatening actors with no concern for long-term problem solving.
  • Coalitions were formed with the goal of ending this stalemate by implanting regimes that were effective decision makers. As Huntington suggests after a period of “praetorian” government [see Huntington] the tendency is to define the situation as requiring the placement of severe restraints on the political activities of those who are outside of the winning coalition i.e. authoritarianism.
  • This conceptual moment was reached in Brazil and Arg first and foremost as the level of modernization was much greater than that seen elsewhere in LA.

 Technocratic Roles

  • Advances in modernization are evidenced by increased technocratic roles at all levels of decision making and industry. The complexity of society creates management needs in which technology plays an important part. Thus technocrats further penetrate society as modernization increases. [Thus technocracy is a logical and essential component of the authoritarianism post expansionary modernization.]
  • These technocrats become frustrated from a failure of the context to match their expectations. They desire to reshape society in line with their learning experience, and their reward aspirations. They are convinced that they can remodel the social context to both better suit them, and improve society, and this is how they rationalize their actions.
  • In Brazil and Arg business and military academies became meeting places for incumbents at the top of large businesses and the military thus creating strong linkages between the technocrats and those in power.
  • They have a technical problem solving approach focused on efficiency and rationality. Thus they are far more likely to be interested in indicators such as GDP, growth etc. rather than “noisy” social indicators such as poverty, income distribution, lack of political institutions etc. 


  • Given the demand performance gap, excessive demands had to be blocked. This meant the elimination of parties and elections, the cooption of the leaders of the unions (by coercion). Bargaining and interest representation would be limited to those at the top of large organizations.
  • The proponents of the system saw that the exclusion of the popular sector and a conversion of the socio-economic structure would stimulate growth, increase efficiency etc. and then political democracy and a wider wealth distribution could be initiated.
  • BA lacked mobilizational force and an ideology which separates it from European fascism for example. There is no interest in indoctrinating the population – in fact they prefer political apathy.
  • “Bureaucratic” suggests organizational strength of certain sectors, government control over career patterns and power-bases of technocratic roles, and the pivotal role played by large bureaucracies.
  • As growth and wages had been declining in the previous period there were few economic benefits to be distributed to the losers and this led to unrest and a reversion to coercion.
  • Once in power there were certain strains: the military was to a certain degree nationalist, as were the populations of Brazil and Argentina. This led to a conflict between efficiency and nationalism, as many of the “margin” producers to be eliminated were domestic entrepreneurs, with the majority of the efficient technology holding firms being foreign owned. To try to solve the problem there were attempts to increase the size of the public sector as alternative means of employment etc. but this too met with calls from big business for further liberalization and reduction in state intervention.
  • As a result many of the initial middle class supporters found themselves outside the winning coalition as domestic industry declined, and the public sector growth was insufficient to absorb their expectations.
  • Economic performance was at best mixed.
  • As the indicators preferred by the technocracy as hard in terms of facts, consolidation of such a regime is only possible if those indicators show progress, otherwise rationalization of rule cannot take place. This perhaps indicated why Argentina was allowed to move back to democracy earlier than Brazil as the failure of the regime in Argentina was blatant whereas in Brazil performance was satisfactory for a while.



  • Different levels of coercion based upon labour supply – Brazil was able to totally deactivate its popular sector by using coercion whereas the sector retained some power in Argentina. O’Donell hypothesizes that this is because the peripheral states of Brazil always supplied a huge amount of excess labour which was destabilizing to the union activity. In Argentina there was often full employment so the unions were much stronger. Thus a much greater amount of force would have been needed to deactivate that sector in the same way.
  • Different levels of coercion based upon “levels” of popular activation – Brazilian popular activation was at a lower level than Argentina, but it was increasing at a much greater pace, thus the threat appeared more serious and required a more coercive response.



G.A. O’Donell

Journal of Democracy, Vol. 5 No. 1, (Jan., 1994) pp. 55-69

A Summary 

In a Nutshell

Although democracies in the then recently transitioned Latin American states was representative (based on popular elections) they were “delegative” rather than truly democratic. This was largely because of crisis both social and economic that they inherited from the authoritarian governments before them which gave rise to certain practices and conceptions about the proper exercise of power.

 The transition to democracy opens up the possibility of a second transition from government to democratic regime. Nothing guarantees that this will happen, but in order for it to do so a set of institutions needs to be built which enable the social and economic problems inherited to be dealt with in a regularized way. Delegative democracies lack these institutions and governmental effectiveness.

 [This argument is very much related to the executive isolation argument examined by Schamis as well as Armijo & Faucher in as much as it posits a policy/reform process characterised by a lack of horizontal accountability, a large electoral mandate and subsequent belief by the president that he has the authority to rule the country by decree at whim.]

 The Importance of Institutions

Institutions are regularized patterns of interaction that are known and accepted by social actors who consider that they will continue to act in the same way for an indefinite time period. The characteristics of a functioning institutional setting include:

  1. Institutions that incorporate and exclude – they determine the basis upon which resources, claims etc. are accepted as valid participants in the decision-making and implementation process.
  2. Institutions shape the probabilities of outcomes – certain rules fix the range of feasible outcomes and their likelihood within that range e.g. democracy precludes the use of force.
  3. Institutions aggregate – the rules lead individuals to make decisions about which level of aggregation of preferences is optimal for them.
  4. Institutions induce representation – following on from 3 the aggregation of preferences leads to the transformation of the potentially many voices into only a few that speak for many.
  5. Institutions stabilize expectations – leaders and representatives expect a narrow range of possibilities from interactions, and expect that deviations are likely to be counterproductive. It is at this point that an institution is in equilibrium.
  6. Institutions lengthen the time-horizons of actors – stabilization of behaviours implies that interactions are set to continue. This together with high levels of representation is the foundation for the “competitive cooperation” that characterises democracy. Thus one shot prisoners dilemmas are overcome by bargaining. The alternative to institutions is a colossal prisoner’s dilemma. 

Characteristics of Delegative Democracy

  • Rest on the premise that whoever wins the election may govern as he sees fit as they are the embodiment of the nation. The promises of his campaign need not be met (Menem, Fujimori). They are above organized interests.
  • A large majority must be won to sustain such claims, and as such often run-offs are used. The majority is used to sustain the myth of legitimate delegation.
  • [This is largely related to neo-populism: presidents campaign on personal charisma, they can restore the health of the nation etc. They and their technical advisers are initially infallible. In terms of policy however they behave in a delegative rather than populist fashion.]
  • The president isolates himself political institutions and interests. And this is main difference between DD and representative democracy: in representative there is vertical accountability (between the president and the people) but also horizontal accountability (president accountable across a network of relatively autonomous powers that can call into question and punish if necessary, improper ways of discharging the responsibilities of office. In DDs only the former type of accountability exists. Indeed horizontal accountability is a headache to be avoided for DD presidents. 


  • First democratic government of Uruguay (Sanguinetti) saw the implementation of incremental economic policies, whereby inflation slowly dropped whilst investment and wages slowly rose. Most of the policies were explicitly negotiated within congress and with participation from various interest groups.
  • By contrast Argentina (Austral Plan), Brazil (under the Cruzado plan, things were different under the Plan Real) and Peru (Inti Plan) all opted for drastic and surprising stabilization packages. The packages were disastrous [for O’Donell] and solved very few of the problems inherited from the B-A states.
  • What is interesting is that Uruguay inherited no less severe problems than did Argentina or Brazil, but it chose an incremental path rather than a shock doctrine. Why is this the case? O’Donell says it is because Uruguay was a case of re-democratization with working institutions of government. The president had to negotiate with congress and congress had to consult various interested parties. Consequently, even though preferences at the top may have been for stabilization [a supposition not backed up with evidence] they were “condemned to incrementalism”, and limited to modest goals.
  • “This is the drama of countries bereft of a democratic tradition”.

 [This thesis should be read in conjunction with those pieces that state that executive isolation played only a minor part in many liberalizations. For example the Brazilian Plan Real was negotiated, and evidence of coalition building is seen in many countries indicating that domestic support was important (although it should be conceded that that the coalition building was often extra-institutional) – see Schamis as well as Armijo.]