The Democratic Deficit Jayati Ghosh

The latest Human Development Report (HDR) from the UNDP raises some important questions about true democracy and voice, but does not go far enough in identifying some of the major obstacles to democracy in the world today, or the means to achieve it.

The Human Development Reports annually published by the UNDP, over the years, have tended to provide at least some kind of counterbalancing analysis to the oppressively neoliberal and often misleading publications of the World Bank and the IMF. They have also managed, each year, to identify a theme that is not just topical and relevant, but quite crucial to the interests of a significant majority of the world’s population.

This year’s Report, which is entitled ‘Deepening democracy in a fragmented world’, deals with an issue that is ever more important because, even as formal democracy has extended in many parts of the world over the recent period, substantive democracy — in terms of more equal opportunities and the power of the people’s will — currently seems under greater threat. The HDR makes a similar observation: “Economically, politically and technologically, the world has never seemed more free — or more unjust.”

The HDR elucidates this statement at three levels. First, while there is more formal democracy than ever before, in terms of the majority of the world’s regimes now being electoral democracies, this is still a long way from comprehensive civil and political freedom for the citizens or accountability of the governments. Second, there are many more economic opportunities across the world, but a huge share of the world’s population is still denied access to them. In fact, in the developing world, the seemingly intractable problems of persistent income poverty and high rates of child mortality point to the absence of international economic democracy. Third, while wars between nations are less frequent, civil conflicts of various kinds are on the increase.

The HDR also makes the point that the link between democracy and human development of the citizens is not automatic: in fact, when a small elite dominates economic and political decisions, the link with democracy can be broken. Most significant of all, the Report recognizes what is probably the greatest symptom of ‘democratic deficit’ in the world today: “Citizens often feel powerless to influence national policies … subject to international forces that they have little capacity to control.”

This, indeed, is the real rub — the absence of genuine political voice and the inability to control especially economic policies on the part of the majority of the people, which has become such a standard feature of almost all democracies, old and new, across the world. But while the HDR identifies this problem, it does not take the further step of asking what has caused this, or addressing the issue of what can be done about it.

It must be accepted that the perception of lack of genuine people’s power is not new. Some would argue that the distinction between formal and substantive democracy itself indicates that we are living in more luxurious times, politically speaking, than before through most of history. Yet, there is an important sense in which people across the world feel — and actually are — less genuinely empowered than they were, say, at the middle of the last century, or even two decades ago.

This greater sense of powerlessness is not an accident. It is the result of a large process whereby it is truly the case that democratic processes have much less control over the policy decisions that are so critical in shaping people’s social and material lives. The most important shift that has taken place in practically all the countries of the world over the last two decades, is that the balance of social, political and economic power has shifted comprehensively in favour of large capital vis-à-vis all other groups.

This shift in power is both assisted by and reflected in the various forms of liberalization and deregulation that have fed into the current process of globalization. This has contributed greatly to the enhanced mobility of large capital and also to its bargaining power, and has been associated with the greater fragility and vulnerability that other sections of societies — and particularly workers — feel. And this process is not confined only to poor and developing countries; rather, it is widespread across the developed industrial world, where the common people increasingly feel alienated from the governing political classes and unable to influence policies in ways that they desire.

More and more empirical studies (except for those blatantly funded by and subservient to the interests of large multinational capital) argue quite convincingly that global deregulation of trade and capital markets have increased inequality and reduced economic democracy. This is because they have reduced the power of national governments to meet the social and economic needs of people in terms of basic physical and social infrastructure spending, limited serious efforts at poverty reduction and universal provision of basic services, and increased the vulnerability of ordinary people to sharp income shocks and other such fluctuations.

And yet, no one seems to be able to do anything to persuade, force, or otherwise influence governments into changing these policies and the associated international structures and institutions that push them. The problem is now an intense one, at both national and international levels — how do people in general gain influence over major policies which affect them dramatically, but seem designed to dominantly cater to large and often multinational capital?

In India, for example, it is quite clear to anyone who cares to see it, that the strategy of neoliberal economic reform has not found favour with most of the electorate, for the simple reason that they have not gained — and many have even lost — because of it. Yet successive governments that have replaced those thrown out by the electorate have come in and done more of the same, disregarding all the signals that voters send out. The causes are obviously complex and depend on the specific political economy context. But it could be argued that in India (as indeed in several other developing countries), a substantial section of the elites and middles classes now see their interests as more closely tied to those of international capital, than with the rest of their own country’s population.

The problem is probably evident in its starkest form in Latin America today. Across the region, people have done everything they possibly can to indicate their distress at the effects of neoliberal economic policies and their rejection of these policies. They have demonstrated peacefully (if noisily) night after day on the streets in Argentina; gone on massive nationwide strikes in Peru; voted for the man blacklisted by the US for his support for cocaine growers in Bolivia; rioted in Paraguay; indicated their intention of voting in alternative government in Brazil; and so on. Nevertheless, the chronicle of even further neoliberal reform, of budget surpluses to add to the woes of depression, of further cuts in workers’ wages and pensions, of more job losses as part of ‘necessary’ belt-tightening, continues.

Sometimes the blatant disregard of popular will, often due to external pressure, assumes obscene proportions. In Argentina, a law which allowed foreign banks to be charged for illegally transferring large amounts of money out of the country in the midst of the crisis, had to be repealed after the IMF insisted on it. In Bolivia, the dissident native candidate who came second in the election, receiving more than one-third of the vote despite the open displeasure of the US government, has been denied any voice in the government and in important policy matters. In Uruguay, the government has frozen bank deposits of local residents for three years and allowed foreign financiers to take their money out.

In Brazil, the popular leftwing candidate Luis da Silva (Lula) — the frontrunner in the presidential elections to be held in September — was forced to declare his acceptance of a largely IMF-determined policy stance after persistent speculative attacks and capital flight demolished the value of the real and even threatened his candidature. Now the IMF has come up with a carrot after the stick has played its role. It has just promised the next government $30 billion over fifteen months, so long as the new government promises to continue the economic policies of the current one, which have absolutely no popular support.

But again, the problem is not confined to developing countries. Across Europe, supposedly left-of-centre governments that found themselves following rightwing economic policies because of supposed economic or financial compulsions, have already been thrown out of power or are on the verge of it. Even so, the chances are that the new government will not offer relief to the people in terms of changed economic strategy; if anything, they are likely to enforce even harsher conditions on the economic security of most of the citizens. In the United States, the popular legitimacy of both the political and economic institutions of capitalism has never been weaker; yet, the US administration continues to pursue policies that strengthen large capital at the expense of others.

So, if we really are concerned about genuine democracy, clearly, the most important item on the agenda must be to restore to ordinary people some degree of control over the economic policies that are causing great instability and potentially wreaking havoc over most of their lives. The other issues pertaining to democracy, as highlighted by the HDR, are critical, of course, and much in need of attention. But the real democratic deficit at present is reflected in the greater power, nationally and internationally, of large capital in various forms. It is curbing that power which must the primary goal of all true democrats today.