05 June 2012

Markets or Democracy First?

In the new American Conservative Martin Sieff relates how Russia's experience with post-Soviet democracy proves the Russian think-tanker Andranik Migranian's theory of of democratic evolution. When the Soviet Union fell, Migranian opposed rapid democratization on the not-novel basis that democracy could not flourish in the absence of free markets. The important corollary of his theory, Sieff says, is that free markets can't be created from nothing by a democratic regime. As Sieff explains:

First, you cannot create a successful democracy if a successful free market and a large middle class enjoying basic property rights and the rule of law do not already exist. Second, the system of checks and balances in any democratic society allows existing interest groups to prevent a free market from emerging. So there is no free market to generate the overall rising levels of prosperity and optimism across society that any democracy needs to survive and flourish. Third, it takes a tough, centralized authoritarian government or a strong, self-confident oligarchy to create the conditions for a free market to emerge. Only a strong central government can impose a free market and prevent the less efficient members of society from blocking it.

While Boris Yeltsin's democracy lapsed into oligarchy and evolved into Putin's authoritarianism without developing either free markets or real democracy, the Weimar Republic also seems to prove Migranian/Sieff's point, if you accept that post-WW1 Germany had no free-market preparation for proper middle-class democracy. But it could just as easily be argued that all Weimar proves is that new democracies will fail in conditions of economic privation. Sieff doesn't claim that Weimar democracy caused or exacerbated Germany's pre-Hitler economic crises; he argues only that Weimar's ineffective answers to these crises discredited democracy among Germans. He goes further, however, to say that pre-democratic Germans wouldn't have given Hitler the time of day, while adding that Hohenzollern Germany under the Kaisers was "largely democratic." What does democracy mean to Sieff, exactly? We know this much: to him, democracy isn't worth a damn if there aren't free markets, and if democracy gets in the way of free markets, a country is better off without it until it has a middle class that knows how to use democracy right, as opposed to the "less efficient" elements that might otherwise exploit the system to save themselves from markets. Sieff estimates that it might take "one or two generations -- from about 20 to 100 years" for proper middle-class, free-market democracy to take root in new soil, citing South Korea and Poland as successful examples. He recommends patience to democratizing nations and is probably unmoved by any argument for democracy as a moral imperative -- he is, after all, a big critic of the neocons. But all this theorizing makes me wonder. If democracy is only worthwhile under free-market conditions, and only authoritarian regimes can create free markets where they don't already exist, what are your options if you're convinced that your democracy has undermined free markets by pandering to entrenched interest groups or empowering the inefficient? What if you believe that free markets need to be re-established where they've been uprooted by democracy? Do you go about it democratically, or do you decide that democracy has to be set aside for a generation or three? If free markets matter more to you than anything else, even if for the heartfelt reason that prosperity is possible only with those markets, do you decide that under certain circumstances you have to roll back or end democracy where it already exists? If Sieff hasn't considered this possibility, I wonder if others have.... 

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