What is Democracy? (72): Ineffective Governance by Definition?

Democracies are characterized by high transaction costs: it’s tougher to get things done in a democracy compared to systems where rulers don’t have to consult, discuss, compromise, reconsider and revise. A democracy costs more, in every sense of the word: you need more time, more money and more effort to reach a decision, and the final result isn’t always the best possible one because it’s a compromise between the views of every sector of society, all of which have to be treated with respect. These views are often extremely divergent and yet a decision – a law, a policy, a judicial verdict etc. – has to take into account at least those views that together have majority support. It has to do so either by force of law or because the execution of the decision requires popular support in order to be realistically implemented. Viewpoint divergence can in some cases even mean incompatibility, with gridlock as a result. If it’s impossible to arrive at a decision because of gridlock, then the problem goes way beyond high transaction costs. There is no transaction and hence no cost to arrive at it.

All in all, democracy looks like a very ineffective, confused and slow way of deciding things. If this is true, then even an ideal democracy would be vulnerable to this criticism – perhaps even more so than existing democracies since consultation is typically more important in ideal theory than in reality. If even ideal democracy can’t solve the problem of effectiveness, then we should abandon democracy rather than try to perfect it. Forget about it and replace it by the best possible autocratic type of government, in which a leader or group of leaders can make decisions behind closed doors, without consultation or compromise and without having to revisit previous decisions when the democratic balance of power has shifted.

Defenders of democracy have two lines of defense against “dictator envy”: a normative and an empirical one.

Normative defense of democracy

You could concede democracy’s relative ineffectiveness and at the same time argue that effectiveness isn’t the only value. While it’s important to get things done, it’s equally important to get the right things done. Democracy’s widespread consultation of various groups raises the probability of getting things right. When opposing viewpoints have to struggle for supremacy, the arguments behind them tend to be better. I’ve tried to spell this out here and here.

Moreover, while it’s important to get things done and to get the right things done, it’s equally important to get them done in the right way: consultation and compromise result in decisions that have widespread support, and such decisions, while they may take longer, will also last longer. Popular support, while reducing the effectiveness of making decisions, may increase the likelihood of effective implementation of these decisions.

Empirical defense of democracy

It’s also possible to argue that democracy is in fact not relatively ineffective and that autocratic regimes are much less effective then we tend to assume. For example:

Soviet records show that secretive government has high costs, hidden at the time because of secrecy itself. These costs were of many kinds. Transaction costs arose through two channels – one procedural and the other behavioural. First, leak-proof government depended on costly procedures designed to assure secrecy. Second, harsh penalisation for secrecy violations induced fear and mistrust, causing officials to change their behaviour in costly ways. … [O]fficials had to devote considerable efforts to complying with secrecy rules. (source)

At least the transaction costs and other forms of ineffectiveness are in the open in a democracy. Autocratic states also have these problems, and perhaps even to a larger degree, but as they are hidden from sight, these states can give the impression of being relatively effective.

More posts in this series.


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