Political Economy Concepts, Systems, and Democratic Transitions
Key Concepts in Political Economy
Understanding the foundational terms in political economy is crucial for analyzing global systems and development.
Definitions of Core Terms
- Illiberal Democracy
- A governing system where, despite elections, citizens lack access to information about those in power due to the absence of civil liberties.
- Political Economic System
- The intricate relationship between economic and political institutions, including the policies they create and their resulting outcomes.
- Institutions
- Humanly devised constraints that structure political, economic, and social interaction. These are the “rules of the game,” whether formal or informal, legal or not, and may or may not be backed by organizations.
- Welfare State
- A system where the government undertakes to protect the health and well-being of its citizens, particularly those in financial or social need, through grants, pensions, and other benefits.
- Colonialism and Imperialism
- A system in which a state extends its power beyond its borders to control other territories and their populations.
- Export-Oriented Industrialization (EOI)
- A trade and economic policy designed to accelerate a country’s industrialization process by exporting goods in which the nation holds a comparative advantage, thereby creating an international market.
- Import Substitution Industrialization (ISI)
- A trade and economic policy advocating the replacement of foreign imports with domestic production. ISI is based on the premise that a country should reduce its foreign dependency through local production of industrialized goods, fostering a home market.
- Comparative Advantage
- The ability of an individual or group to perform a particular economic activity (such as manufacturing a specific product) more efficiently or at a lower opportunity cost than another activity.
- Globalization
- The process by which people, ideas, and goods spread throughout the world, leading to increased interaction and integration among global cultures, governments, and economies.
- Foreign Aid
- The international transfer of capital, goods, or services from one country or international organization to another for the benefit of the recipient country or its population.
Competing Political Economic Ideologies
Different ideologies propose distinct approaches to economic and political organization, shaping national and international policies.
Major Ideologies
Capitalism and Liberalism
Characterized by the ownership of the means of production, distribution, and exchange (and the returns from these activities) by private individuals or companies. It emphasizes a free market and individual freedom. Advanced economies are typically based on capitalism and free trade principles.
Communism (Socialism)
Advocates for the ownership of the means of production by the “public” or the state, often through central planning, with a primary focus on achieving equality.
Social Democracy
Draws principles from both liberalism (free market) and communism (equality). It seeks to achieve greater equality:
- Through progressive taxation and wealth redistribution.
- Through monitored trade and protection of workers’ rights.
- Through regulation and government ownership of key industries.
Comparative Analysis of Political Economic Systems
This table outlines the key characteristics and differences among various political economic systems.
| Characteristic | Neoliberalism and Capitalism | Social Democracy and Neo-Corporatism | Communism and Socialism | Neo-Mercantilism |
|---|---|---|---|---|
| Role of State | Little, minimal welfare | Some state ownership, welfare state | Total state ownership, extensive welfare state | Much state ownership or direction, minimal welfare |
| Role of Market | Paramount | Important | None | Limited |
| State Capacity & Autonomy | Low | Moderate | Very high | High |
| Importance of Equality | High | High | High | Low |
| How Policy is Made | Pluralism | Corporatism | State/Party | State |
| Possible Flaws | Inequality, monopolies | Expense of welfare state, inefficiency | Authoritarianism, inefficiency | Tendency toward authoritarianism, distorted markets |
| Notes | Free market dynamics, laissez-faire, reward for investment, private property | Welfare state, balance of free market and equality | No private property, central planning over markets, nationalization, full employment | Roots in colonialism, examples: Japan, China |
Development Strategies in Low-Income Countries
Effective development in low-income countries often requires a multi-faceted approach involving governmental action and international cooperation.
- A significant role for government in economic planning and regulation.
- Building and maintaining robust political and economic institutions.
- Vigorous efforts to combat corruption.
- Incorporating the informal economy (e.g., street vendors) into formal structures.
- Leveraging international aid effectively.
- Establishing Special Economic Zones (SEZs): areas that are more economically liberal than the rest of the country, serving as laboratories for reforms. The first SEZ was established in Ireland.
Michael McFaul’s Conditions for Democratic Breakthrough
According to Michael McFaul, several critical conditions must align for a democratic breakthrough to occur, particularly in semi-autocratic regimes.
Key Conditions for Democratization
Semi-Autocratic Regimes
All autocratic regimes are vulnerable to collapse at some point. McFaul examines whether semi-autocratic or “competitive authoritarian” regimes are more susceptible to democratization than full dictatorships, or if they can actually hinder genuine democratic change by deflecting societal pressures.
Unpopular Incumbent Leaders
A second necessary condition for democratic breakthrough in these countries is the declining popularity of the incumbent leader.
United Opposition Movements
A united opposition—or at least the perception of one—is a third crucial factor for democratic breakthrough, though the degree of unity varies. In cases like Serbia and Ukraine, pre-election unity was critical for success.
Independent Electoral Monitoring
A fourth critical condition in Serbia, Georgia, and Ukraine was the capacity of NGOs to provide an accurate and independent tally of the actual vote quickly after polls closed.
Independent Media Presence
A fifth critical element in Serbia, Georgia, and Ukraine was the existence of independent media capable of relaying news about falsified votes and publicizing mounting popular protests. Such outlets and brave journalists had reported misdeeds for years, remaining vital in triggering change despite incumbents’ last-ditch efforts.
Mass Mobilization
A sixth critical factor for democratic breakthrough in Serbia, Georgia, and Ukraine was the opposition’s ability to mobilize significant numbers of protestors to challenge falsified electoral results.
Splits Within Security Forces
A seventh and final necessary condition for success is a split among the state’s military, police, and security forces. A segment of these forces must distance itself sufficiently from the incumbents to indicate that violent repression is risky, if not untenable. Such a split developed in all three cases, though its size and the threat of violence varied.