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The Political Economy of Liberal Democracy

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Listed:
  • Sharun Mukand
  • Dani Rodrik

Abstract

We distinguish between three sets of rights – property rights, political rights, and civil rights – and provide a taxonomy of political regimes. The distinctive nature of liberal democracy is that it protects civil rights (equality before the law for minorities) in addition to the other two. When democratic transitions are the product of a settlement between the elite (who care mostly about property rights) and the majority (who care mostly about political rights), they generically fail to produce liberal democracy. This is because the minority has neither the resources nor the numbers to make a contribution to the settlement. We develop a formal model to sharpen the contrast between electoral and liberal democracies and highlight circumstances under which liberal democracy can emerge. We show that liberal democracy requires quite special circumstances: mild levels of income inequality as well as weak identity cleavages. We provide some evidence consistent with this result, and also present a new classification of countries as electoral or liberal democracies.

Suggested Citation

  • Sharun Mukand & Dani Rodrik, 2017. "The Political Economy of Liberal Democracy," CESifo Working Paper Series 6433, CESifo.
    • Handle: RePEc:ces:ceswps:_6433
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    References listed on IDEAS

    as
    1. Arthur Blouin & Sharun W. Mukand, 2019. "Erasing Ethnicity? Propaganda, Nation Building, and Identity in Rwanda," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1008-1062.
    2. Baldwin, Kate & Huber, John D., 2010. "Economic versus Cultural Differences: Forms of Ethnic Diversity and Public Goods Provision," American Political Science Review, Cambridge University Press, vol. 104(4), pages 644-662, November.
    3. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, October.
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    JEL classification:

    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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