LIVING REVIEWS IN DEMOCRACY
democracy.livingreviews.org | 2013
Strong Theories, weak Evidence
The Effect of Economic Inequality on Democratization
Yannick Pengl
ETH Zurich | Center for Comparative and International Studies | [email protected]
First published: November 2013
Most recent version available at http://www.livingreviews.org/lrd-2013-1
This paper summarizes the current state of the theoretical and empirical debate on the
potential effect of economic inequality on the odds of democratization. This debate is
reconstructed by first focusing on the seminal ‘new structuralist’ theories put forward by
Boix as well as Acemoglu and Robinson. Subsequently, pre-existing quantitative studies on
the potential inequality-democracy nexus are reviewed. It turns out that new structuralist
theories are at best weakly supported by the empirical evidence. This may be partially
explained by problems of methodology and variable operationalization. On a more
theoretical level, this paper discusses nine potential problems of the new structuralist
approaches that have been discussed in recent scholarly work on the impact of inequality on
the likelihood of democratization.
Introduction
How does economic inequality affect the emergence and
stability of democratic regimes? This question has kept political
analysts busy for centuries. Aristotle (1962: 173) once wrote that
“where one set of people possesses a great deal and the other
nothing, the result is either extreme democracy (mob rule) or
unmixed oligarchy or tyranny due to the excesses of the other
two.” Alexis de Tocqueville (2004: 266) similarly praised an
“equality of conditions” as the most important precondition for
democracy: "Between these two extremes [very few rich men
and few poor ones] of democratic communities stands an
innumerable multitude of men almost alike, who, without being
exactly either rich or poor, possess sufficient property to desire
the maintenance of order, yet not enough to excite envy.” i
The modern social sciences have also extensively stressed the
importance of a relatively equal distribution of economic assets
for the emergence of democracy. In his classic account of
democratization, Lipset (1959: 75) points at the moderating
effect of a large middle class and argues in almost Aristotelian
fashion that a “society divided between a large impoverished
mass and a small favored elite would result either in oligarchy
(…) or in tyranny.” Robert Dahl (1971), in his seminal book
Polyarchy, spends a whole chapter on the destabilizing effects of
extreme inequalities on democratic regimes. However, it took
several decades until researchers have explicitly formulated
plausible theoretical accounts and derived unambiguous
empirical hypotheses on how economic inequality might affect
democracy.
Carles Boix (2003) as well as Daron Acemoglu and James
Robinson (henceforth AR) have presented path-breaking
accounts of democratization that, for the first time, explicitly
shift economic inequality to the heart of the analysis (Boix 2003,
Acemoglu and Robinson 2000, 2001, 2002, 2006). Due to their
main focus on macro-economic variables, their theories have
been dubbed “new structuralist” (Ziblatt 2006: 319).
The present paper first presents these two most important
contributions to the ‘new structuralist’ literature and then moves
on to an empirical and theoretical discussion of this relatively
new strand of research. In doing so, it summarizes the existing
quantitative studies on the relationship between inequality and
democracy and points to their potential methodological
weaknesses. It turns out that ‘new structuralist’ theories gain at
best limited support when confronted with quantitative empirical
evidence. Subsequently, nine theoretical problems that have
been raised in the on-going scholarly debate on the ‘new
structuralist’ theories are discussed. The final part of the paper
concludes and identifies promising areas for future research.
New Structuralist Theories of Democratization
Both Boix and AR use rational choice theory and formal game
theoretic modelling to exploit the full potential of Dahl’s (1971:
14–16) cogent intuition that regime choice, in its essence,
depends on the relevant actors’ evaluation of the cost of
repressing opposition under pre-existing authoritarian
institutions vs. the expected costs of tolerating the opposition
and/or rule by other social groups under democracy. In both
accounts, the relevant actors are conceived of as antagonistic
social groups engaged in distributional conflict over scarce
resources: “the wealthy” and “the poor” in Boix and “the
citizens” and “the elites”, who are also assumed to be divided
along income lines, in AR (Boix 2003: 22; Acemoglu and
Robinson 2006: 22).ii
Carles Boix’s ‘Democracy and Redistribution’
In Boix’s account, inequality enters on the ‘cost of toleration’
side of the equation as faced by the wealthy. In relating
inequality to the cost of democracy, he heavily relies on the
political economy explanation of the size of government put
forward by Meltzer and Richard (1981)iii, who in turn build on
the median voter theorem (Hotelling 1929; Downs 1957). The
observation that income distributions are usually right-skewed
(i.e. the mean income is higher than the median income), leads
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Living Reviews in Democracy, 2013 | 1
Meltzer and Richards to conclude that under majority voting, the
self-interested decisive voter would have an interest in
redistribution. The amount of redistribution the median voter
chooses increases with the distance between the median and the
mean income, or, put simply, with income inequality within the
voting population. By implication, this can also come as a result
of extending the franchise to people, who earn below-median
incomes (Meltzer and Richard 1981: 924). Boix takes this
insight as the central element of a functionalist explanation of
why or why not democracy is established in the first place. In
more equal societies, extending the franchise only leads to
limited redistribution from the rich to the poor and thus the
wealthy face lower ‘costs of toleration’ than in the case of
democratization in unequal societies. Provided that the expected
costs of redistribution fall below the repression costs needed to
uphold authoritarian rule, the rich will accept a transition to
democracy (Boix 2003). By implication, lower levels of
inequality should ceteris paribus be associated with higher
probabilities of transitions to democracy and lower probabilities
of reversions back to authoritarianism (Boix 2003: 37).
In his basic model and several extensions to it, Boix also
considers a host of additional variables conditioning the impact
of inequality on the odds of democratization. The most
important one is what Boix calls “asset specificity” – a concept
denoting the degree to which wealth is tied to a given country
and cannot be moved out in order to avoid taxation (Boix 2003:
38–40). Capital mobility implies lower asset specificity and
makes democracy less threatening for the wealthy. iv If tax rates
were too high, the rich would just exit the country. Anticipating
this, the relatively poor median voter will set a rather moderate
tax rate in order to benefit from the modest amount of
redistribution that is feasible under conditions of capital mobility
(Boix 2003: 24–25). Thus, democratization becomes more likely,
even if inequality is quite substantial. A high income elasticity to
taxation similarly reduces the impact of inequality on
democratization (ibid.). On these grounds, Boix argues,
economic development is conducive to democratization since it
transforms “societies that rely on the exploitation of mines and
agricultural land to economies based on manufacturing
industries and human capital-intensive businesses” and thus
makes capital less taxable. While globalization in the form of
financial integration has similar effects (Boix 2003: 41), the
impact of trade is ambiguous: If labour-abundant economies
open for trade, inequality decreases and democratization
becomes more likely, whereas the reverse holds true for capitalabundant countries (Boix 2003: 170).
Absent extremely low levels of inequality or asset specificity,
repression cost becomes a crucial variable. Boix (2003: 26)
regards repression cost as “a function of population shares, the
economic resources of each class, the extent to which individual
actors have overcome any collective action problems, landscape,
international aid and so son” but does not explicitly model it.
Instead he assumes that the costs of repression can be either
“high” or “low.” According to Boix (2003: 28–30), high
repression costs are often the consequence of information on
“defeats in war, the death of the dictator, or internal struggles in
the ruling elite ... prompting citizens to update their beliefs on
the probability of survival of the existing political arrangement”
and thus facilitating their collective action. In the context of
moderate levels of inequality and asset specificity, high
repression costs can trigger peaceful democratization. With high
inequality and asset specificity, however, the wealthy have too
much to lose and choose repression. Drawing from Fearon’s
Rationalist Explanations for War (Fearon 1995), Boix predicts
revolutions and civil wars if “the poor underestimate the
repressive technology of the wealthy while the wealthy play
down the organizational capability of the poor” (Boix, 2003:
28). Depending on who wins, the result will either be stable
authoritarianism or a communist dictatorship (Boix 2003: 45).
Note that the poor primarily enter the model as a factor that
determines the repression costs on behalf of the rich and thus
affects their cost-benefit calculus of whether or not to grant
democracy. Against this backdrop, Boix’s model has been
criticized as being too supply-centric and neglecting the
“demand side of democratization” (Ansell and Samuels 2010:
1570). Boix assumes the rational poor individual to be always in
favour of democracy due to its expected benefits from
redistribution. Thus the mobilization of the poor, which is by
assumption either absent or present, becomes the crucial factor.
The insights from Boix’s merely verbal discussion of the
informational sources of mass mobilization remains tentative, to
say the least. He neglects the possibility that both mass
preferences for democracy and the ability of the poor to
overcome collective action problems might vary across countries
with similar levels of inequality for other reasons than updated
information (Welzel and Inglehart 2008: 36). Even worse, both
factors might be systematically linked to key variables of his
model.
Acemoglu and Robinson’s ‘Economic Origins of
Dictatorship and Democracy’
Acemoglu and Robinson partially circumvent this problem. Just
as Boix, they assume inequality to make democracy more costly
for the elites due to higher levels of taxation (Acemoglu and
Robinson 2006: 36). However, they also argue that elites will
only make democratic concessions if they are faced with an
effective revolutionary threat from below – “the spark that
ignites” the whole process (ibid.). In order to pose such a threat
“the masses need to solve the collective action problem
necessary to organize themselves, they need to find the
momentum to turn their organization into an effective force
against the regime, and the elites – who are controlling the state
apparatus – should be unable to use the military to effectively
supress the uprising” (Acemoglu and Robinson 2006: 25). AR
expect this mobilizational capacity of the citizens to increase
with inequality, since they have more to gain from revolution or
democratization the more redistribution is possible. In other
words, a certain amount of inequality is required to spur the
demand for democracy in societies under authoritarian rule.
(ibid.: 36) Combining these two opposing effects of inequality,
AR predict it to exhibit an “inverted U-shaped ... relationship”
when plotted against the probability of transition to democracy
and conclude that “democracy has the best chance to emerge in
societies with middle levels of inequality” (ibid.: 37).
Apart from this theoretically more elaborate treatment of
inequality, the AR model offers further innovations. First,
instead of looking at a static picture, as Boix does, AR take
inter-temporal dynamics into account. They regard the “de facto
political power” that citizens must have accumulated to be able
to mount a revolutionary threat to be transitory in nature. Being
aware of this, citizens do not only claim redistribution, which is
the actual policy change they are fighting for. In order to also
secure redistribution in the future, when their de facto political
power may be gone, citizens push for more permanent “de jure
political power” through the installation of democratic political
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Living Reviews in Democracy, 2013 | 2
institutions (ibid.: 21-26). In fact, AR argue that democratic
concessions represent the only way for elites to credibly commit
themselves to “future pro-majority policies” (ibid.).
with inequality, which should therefore exhibit a linear and
negative correlation with democratic consolidation (Acemoglu
and Robinson 2006: 37–38).
Second, AR explicitly model not only transitions to democracy
but also democratic consolidation (Acemoglu and Robinson
2006: 221–253). Their account of consolidation is basically
their democratization model with reverse sign. Now, the citizens
have de jure political power and the elites from time to time
accumulate sufficient de facto political power to mount an antidemocratic coup and change political institutions back to
authoritarian rule (ibid.: 30–31). As coups are a rather unilateral
affair – no one has to ask the citizens to ‘grant’ a coup – their
likelihood merely depends on the elites’ calculus of their costs
vs. their benefits.v Quite clearly, the benefits of coups increase
Third, the structure of wealth is not only assumed to influence
the odds of democratization through the channel of capital
mobility but also through its impact on repression costs. The
costs of repression and coups increase the more an economy
relies on physical and human capital instead of agricultural land
(ibid.: 31–32).
In short, we see that although starting from very similar
premises, Boix and AR arrive at fundamentally different
conjectures when it comes to the impact of inequality on
democratization. With a clear understanding of these competing
hypotheses and their theoretical derivations, we can now take a
first look at which model fares best when confronted with
empirical evidence.
Study
Inequality data
Democracy data
Effect of inequality
Russett (1964)
Land Gini
Lipset (1959)
Negative effect on ‘stable democracy’
Rubinson & Quinlan
(1977)
Income quintiles and Gini
Jackmann (1974);
Cutright (1963)
Negative effect on levels of democracy
Bollen & Jackmann
(1985; 1995)
Income quintiles and Gini
Bollen (1980)
No effect on level of democracy
Muller (1988)
Income quintiles, income Gini
Bollen (1980)
No effect on transitions. Negative effect
on consolidation
Midlarsky (1992)
Land Gini, agricultural density,
income quintiles
Freedom House
Positive effect (land) on level of
democracy; income inequality without
effect
Muller (1995a; 1995b)
Income quintiles, Income Gini
Bollen (1985)
Negative on level of democracy
Burkhart (1997)
Income quintiles
Freedom House
Inverted U-shaped influence on level of
democracy
Barro (1999)
Income Gini, income quintiles
Freedom House
Negative on levels of democracy (weak)
Przeworski et al. (2000)
Income Gini
Przeworski et al.
(2000)
Negative effect on both transition and
consolidation
Easterly (2001)
Income quintiles
Freedom House
Negative on levels of democracy
Boix (2003); Boix &
Stokes (2003)
Income Gini; % of familiy farms,
index of knowledge distribution
Boix (2003)
Income (land) inequality has negative
(positive) effects on transition,
inconsistent (negative) effects on
consolidation.vi
Cervellati, Fortunato &
Sunde (2012)
Income quintiles
Persson and Tabellini
(2004)
Negative on level of democracy
Houle (2009)
Capital share
Przeworski et al.
(2000)
No effect on transition, negative effect on
consolidation
Soifer (2009)
Income Gini
Boix (2003)
If interacted with state capacity, negative
effect on transition
Ansell & Samuels (2010)
Income Gini, % family farms
Boix (2003) and
Polity IV
Income inequality has positive effect, land
inequality negative effect on transition
Teorell (2010)
Income Gini
Freedom House and
Polity IV
No effect on transitions or reversions
Freeman & Quinn (2012) Income Gini
Polity IV
Center for Comparative and International Studies, ETH Zurich and University of Zurich
Positive impact on transitions in
financially closed economies, inverted U
shaped impact on transition in closed
economies
Living Reviews in Democracy, 2013 | 3
Quantitative Studies and their Problems
As far as quantitative evidence is concerned, Table 1 lists 17
studies that have been conducted over the past decades and
gives information on the respective operationalization of
inequality and democracy as well as the basic thrust of their
results. In total, Table 1 reveals an inconsistent picture. Income
inequality has been found to negatively (9 studies), positively (2
studies), curvilinearly (2 studies) not at all (3 studies), or only
conditionally on a third variable (2 studies) affect democracy.
Land inequality also fails to produce consistently negative
correlations with various measures of democratization. In this
sense, the quantitative evidence on a potential inequalitydemocracy nexus is similarly mixed as the evidence on the
relationship between inequality and political conflict (cf.
Lichbach 1989).
out, individual- or household-level inequality data might
miss the theoretical target of their analysis. Instead, intergroup inequalities, for which almost no systematic data is
available are more relevant. viii Using more indirect proxies
for economic inequalities, like e.g. the percentage of
family farms or capital shares is a viable alternative
strategy but requires careful theoretical justification and
should be in line with the causal mechanisms one
postulates.
3)
Choosing the right indicator for democracy is also not
straightforward. The existing measures differ quite
substantially when it comes to conceptual questions
regarding which definitional attributes to include, how to
aggregate various indicators and whether democracy is a
dichotomous or a continuous concept (Munck and
Verkuilen 2002; Bollen and Paxton 2000). Moreover, the
decision to analyze democracy levels, transitions to or
reversions from democracy should be in line with the
theoretical predictions of the respective model. For studies
of democratization, the latter are usually preferable, since
democratization is about temporal dynamics in democracy
levels and thus about As cited in Russett (1964: 442) the
presence of transitions and absence of reversions (i.e.
democratic consolidation).
4)
The older studies mainly use mere cross-sectional designs
with a limited number of countries, whereas the newer
studies resort to time-series- cross-section analyses, in
which they are able to capture temporal dynamics and
actual regime changes. This further reduces the
comparability of results.
5)
Finally, the form of the relationship between inequality and
democracy matters. Before Acemoglu and Robinson
published their book, most studies only tested for a linear
relationship but neglected the possibility of a nonmonotonic correlation (e.g. an inverted U). ix Only recently,
scholars started to take this possibility into account,
however with quite ambiguous results. Houle (2009) finds
no and, if anything, U-shaped effect of income inequality
on the odds of transition, Ansell and Samuels (2010) report
a monotonically positive effect, whereas Freeman and
Quinn (2012) find an inverted U, but only in financially
closed autocracies.
The ambiguity in results is not the only drawback of these
quantitative studies. Upon closer scrutiny, most quantitative
studies on the potential inequality-democracy nexus suffer from
severe limitations in terms of methodology and/or data quality.
Following Wucherpfennig and Deutsch (2009), let me point to
five common pitfalls in the quantitative study of
democratization and their specific implications for estimating
the role of inequality.vii
1)
2)
Most studies might be subject to selection bias. Data on
income inequality usually covers only limited numbers of
countries and time periods. Data availability is usually not
randomly distributed. Houle (2009: 600) shows that the
sample of observations included in the most popular
inequality dataset is systematically biased towards rich
democracies. This might bias any estimation results
derived with such data: if e.g. authoritarian states
exhibiting intermediate levels of inequality – many Middel
Eastern countries share these characteristics – are
systematically underrepresented in the data, any finding of
an inverse-U shaped relationship between inequality and
democratization looses credibility (ibid.).
The choice of the most appropriate indicator for inequality
is difficult. The most commonly used Gini index comes
with a whole bunch of problems, even beyond data
availability. Most inequality datasets combine information
from different sources that may be problematic in terms of
comparability. Sources differ with respect to whether data
on income or on spending is collected, whether the
household or the individual is the unit of observation,
whether net or gross income is reported and whether the
data stems from one particular region or is representative
for the whole country (Gradstein and Milanovic 2002: 10);
Houle 2009: 597). The use of net or disposable income
data for testing hypothesis relating to democratization is
particularly questionable. This data captures income after
redistribution through taxes and government has taken
place (Milanovic 2009: 3). Provided that democracies
indeed tend to redistribute more than non-democracies, a
finding that lower inequality is statistically associated with
the odds of democracy would risk being tautological.
Moreover, as Acemoglu and Robinson (2006: 35–36) point
In sum, therefore, neither Boix (2003) nor Acemoglu and
Robinson (2006) receive overwhelming empirical support from
the pre-existing quantitative studies. Neither is income or land
inequality systematically linked to lower levels of democracy,
nor do they consistently increase the probabilities of democratic
transition and/or consolidation. The inverted U-shaped
relationship postulated by Acemoglu and Robinson also does
not appear to hold in general.
Theoretical Problems and their Empirical
Consequences
While the weak evidence for Boix’s and AR’s theoretical
predictions may to a large part be traced back to the
methodological and data problems just outlined, the possibility
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Living Reviews in Democracy, 2013 | 4
remains that theoretical misspecifications bear their share of the
brunt. In the following paragraphs, I discuss the plausibility of a
series of implicit or explicit assumptions underlying the game
theoretic models of both Boix and Acemoglu and Robinson and
how problems with these assumptions might explain the weak
fit between the theoretical models and empirical data.
Inequality, the demand for democracy and costs of
repression
Above, I have praised AR for partially integrating the demand
for democracy in their model. A certain level of inequality is
needed to confront the elites with an effective revolutionary
threat that sets the democratization process in motion
(Acemoglu and Robinson: 120–126). Below that threshold
level, autocracy is assumed to be stable. However, as Houle
(2009: 594) points out, the intensity of protest might be
assumed to vary continuously with inequality in such a way that
even at low levels of inequality, the regime needs to deal with
some sort of low-scale protest implying non-zero repression
costs. In order for AR’s predictions to hold, one has to further
assume that at low levels of inequality, maintaining autocracy is
always cheaper than redistribution under democracy. This might
not necessarily be the case. In a very equal society,
redistribution might as well be Iess costly than repression of
low-scale protest that fails to reach the revolution threshold and
thus result in Boix-style democratizations at low levels of
inequality (ibid.). Both repression and redistribution need to be
financed through taxation. Hence, it is a priori unclear, which
one comes at a lower cost.
AR’s conceptualization of protest or threat intensity is not only
problematic at low levels of inequality. If protest intensity was
assumed to systematically increase with inequality, which does
not seem implausible, repression costs would most probably
also rise with inequality. If this is the case, the relationship
between inequality and democratization crucially depends on
the positions and slopes of both the cost of redistribution and
the cost of repression curve plotted against inequality. In order
to arrive at an inverted U-shape, one has to implicitly assume
the redistribution cost curve to ‘start’ below the repression cost
curve and to have a higher slope in order to ensure that both
curves cross at some point.x Only under such circumstances it
can be argued that at high levels of inequality, elites prefer
repression to democratization, whereas at medium levels the
reverse holds true. Furthermore, one has to conceive of a
threshold level of inequality below which no substantial
repression costs accrue in order to rule out Boix-style
democratizations at extremely low levels of inequality. Those
are indeed rather strong assumptions. Quite evidently, one could
easily come up with constellations of repression and
redistribution costs implying democratization to be most likely
at low and/or high or even at all or no levels of inequality,
without necessarily being less plausible than Acemoglu and
Robinson.
Hence, the demand for democracy and its effect on the
repression costs faced by the elites could be better specified not
only in Boix but also in the more sophisticated AR model.
The same criticism however does not apply to AR’s theory of
democratic consolidation. As coups are a rather unilateral affair
– forceful seizure of political power by the elites – it is their
cost-benefit calculus that matters. Citizens are not in a position
to ‘grant’ the elites a coup. xi Therefore, the ‘supply side’ of
coups is negligible. This makes it less ambiguous to gauge the
effect of inequality on the likelihood of democratic breakdown.
Inequality unequivocally increases the benefits the elites draw
from the re-establishment of authoritarian rule, since
democratic redistribution is more severe than in equal societies.
On these grounds, Houle (2009) hypothesizes that inequality
does not affect the likelihood of democratic transitions but only
hinders democratic consolidation. These hypotheses are borne
out in his dynamic probit analysis covering 116 countries
between 1960 and 2000 (ibid.). In this sense, Houle confronts
the theories by Boix and AR with the same sort of criticism that
classic modernization theory has been confronted with by
Przeworski and his co-authors.xii
The mystery of collective action
On a more general level, but still on the demand side of the
equation, both Boix and AR regard collective action on behalf
of the masses as crucial element. Yet both accounts have been
criticized for largely failing to explain why, when and under
which circumstances citizens manage to mobilize and kick-start
the process of democratization (Keefer 2009; Houle 2009: 595;
Haggard and Kaufmann 2012: p. 513). To be fair, Boix (2003:
28–30) and AR (2006: 36) briefly discuss the role of
information and inequality in citizens’ mobilization. Moreover,
AR (2006: 123–128) discuss three standard economic solutions
to collective action problems – ideological indoctrination,
providing selective private benefits and excluding nonparticipants from benefits – and some empirical examples,
where they have been put into practice in the context of
revolutions. Nonetheless, things appear to be more complex.
Haggard and Kaufman (2012) point at three potential factors
that might determine the degree to which citizens can overcome
barriers to collective action and should therefore be seen as
preconditions for inequality to affect the odds of
democratization.
First,
economic
development
and
modernization, especially in the forms of industrialization and
urbanization, may be at the basis of collective organization, e.g.
in the form of organized labour movements (Haggard and
Kaufman 2012: p. 513).xiii Second, institutional preconditions of
the respective authoritarian regime may matter (Geddes 1999).
Previous experiences with democracy or other forms of
“institutionalized opportunities for collective action” (Haggard
and Kaufman 2012: 513) as well as the existence and
organization of political parties (Keefer 2009) or trade unions
(Collier and Collier 1991) are likely to play a role. Third, nonrationalist accounts rooted in the literature on ‘social
movements’ and ‘contentious politics’ stress more sociological
aspects and political resources such as cultural reference
frames, nationalism and ethnic identities (Haggard and
Kaufman 2012: 513; McAdam, Tarrow and Tilly 2003). Against
this backdrop, the inconsistent empirical findings might spring
from the authors’ failure to properly specify the appropriate
collective-action-related scope conditions under which
inequality may exert its influence.
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Living Reviews in Democracy, 2013 | 5
Are unequal democracies really that threatening?
Why democracy and not mere redistribution?
The theories of both Boix and AR crucially rest on Meltzer and
Richard’s proposition that greater inequality leads to more re-
If citizens rise up mainly for material gain, why do they fight
for democracy and not only for the specific redistributive
policies they want in the first place? Acemoglu and Robinson
regard democracy as a credible commitment to present and
future redistribution. Under authoritarianism, they claim, elites
would face an extremely salient incentive to renege on any
promise made in the face of a revolutionary threat as soon as
the de facto power of the citizens fades away. Anticipating this,
the citizens will thus regard any such promise as cheap talk and
require a more credible commitment to redistribution. In this
framework, democracy is the only incentive-compatible
solution, since it permanently equips the citizens with de jure
political power and therefore deprives the elites of any
opportunity short of a military coup to reverse their agreement
to redistribution (Acemoglu and Robinson 2006).
distribution under majority voting and thus makes democracy
more threatening for the elites. While this appears intuitively
plausible, whether it holds empirically, is debated quite
controversially. Some studies do find that inequality is
associated with higher redistributive spending (Milanovic 2009;
Gradstein and Milanovic 2004), whereas others fail to find a
statistically significant relationship (Moene and Wallerstein
2001, 2003; Perotti 1996).xiv If this key relationship does not
hold, the models of Boix and AR are very unlikely to be of any
empirical value.
Soifer (2009) argues that, at the very least, the effect of
inequality on redistribution and thus on the odds of
democratization appears to be conditional on the respective
state apparatus’ capacity to effectively collect the taxes needed
to finance redistribution. Thus, he posits, democracy should be
less threatening in states with weak extractive capabilities,
regardless of the level of inequality. xv In his empirical analysis,
Soifer uses the state’s ability to conduct a national census as a
proxy for its capacity to tax. As expected, he finds a negative
effect of inequality on the chances of democratic transition in
administratively strong state, but no effect in states with weak
extractive capacities (Soifer 2009).
Who acts?
The “new structuralist” theories of Boix and Acemoglu and
Robinson have been deservedly praised for combining the
strengths of modernization theory’s focus on macro-structural
socio-economic variables with an explicit specification of
political actors and political dynamics that have been stressed
by rather process-driven accounts.xvi As Ziblatt (2006: 322) puts
it, “their accounts improve upon the agentless structural
functionalism implicit in modernization theory by reasserting
the primacy of collective actors' resources, preferences, and
strategies.” However, Ziblatt (2006) criticizes the
conceptualization of the relevant actors as “the rich, the poor,
and the middle class” as not sufficiently justified in terms of
empirical relevance. With these abstract categories of actors,
Ziblatt (2006: 322) fears, the ‘new structuralists’ “risk suffering
precisely the same absence of agency that mars modernization
theory.” In this respect, scholarship in the tradition of
comparative historical analysis might have an advantage by
focussing on actor categories that are more concrete in terms of
historical substance: Be it landholders and the rising
bourgeoisie in Moore’s (1966) classic account, or landowners
and organized labour as argued by Rueschemeyer, Stephens,
and Stephens (1992). On the downside, however, these social
classes are likely to be more context-bound and it is far more
difficult to make any general claims about their preferences and
interactions than it is the case with the mere income-based actor
categories employed by Boix and AR (see Huntington 1991:
39).
Is democracy really the only solution? Smith (2008) argues
otherwise and claims that authoritarian rulers can sometimes
employ strategies of redistribution that are sufficiently credible
to buy off revolutionary threats. He illustrates his point with the
example of Singapore, which for Acemoglu and Robinson
(2006: 44) represents a country in which wealth is distributed
so equal that no effective revolutionary threat ever emerged.
First, Smith (2008: 19) demonstrates that Singapore exhibits
consistently higher levels of economic inequality than
Argentina during its democratic transition in 1973. In AR
(2006: 5–8), Argentina is portrayed as an extremely unequal
society oscillating between democracy and autocratic coups.
Second, Smith (2008) shows that upon Singaporean
independence, economic inequality was substantial. He argues
that high inequality indeed spurred Socialist revolutionary
challenges to the ruling PAP. Instead of granting democratic
concessions, however, the PAP resorted to large-scale and longterm spending on housing, education and health policies. These
policies sharply reduced inequality and successfully staved off
revolutionary threats. From this, Smith (2008: 19) concludes
that “authoritarian ruling parties can often provide a credible
commitment to social actors sufficient to retain their support for
long periods of time.”
Inequality of what? The differences between land and
capital income
Both Boix (2003) and Acemoglu and Robinson (2006) argue
that land is less mobile and easier to tax than physical and
human capital. Hence, landed elites are expected to be
especially wary of redistribution under democracy. However,
they do not systematically test the implications of this argument
for the inequality-democracy nexus.xvii Boix’s interpretation of
his empirical findings suggests that, if anything, land and
income inequality have similarly negative effects on the odds of
transitions and consolidation. While a closer look at some of his
regression models yields a somewhat more inconsistent pattern
– land inequality surprisingly appears to be related with higher
chances of transition – Boix at no point reflects on the
possibility that land and income inequality could be
theoretically expected to have different effects. xviii
Center for Comparative and International Studies, ETH Zurich and University of Zurich
Living Reviews in Democracy, 2013 | 6
The notion that land inequality is particularly inimical to
democracy can be traced back at least to Gerschenkron’s
(1989[1943]) Bread and Democracy in Germany, in which he
attributes the concentration of land ownership in the hands of
the Prussian Junkers as a key obstacle to democratization.
Moore (1966) as well as Rueschemeyer, Stephens and Stephens
(1992) also regard a landed aristocracy, controlling large shares
of agricultural land, as detrimental to democracy.
Ziblatt (2008) tests the potentially differing effects of income
and land inequality in an innovative quantitative analysis of a
Prussian parliament vote in May 1912 on a proposal to replace
the inegalitarian three-class voting system with a more
democratic alternative. He finds that “representatives from
electoral constituencies marked by high levels of landholding
inequality were more likely to vote against democratic
reforms”, whereas income inequality had no effect (Ziblatt
2008). Do these results hold beyond the case of pre-WW I
Prussia? Ansell and Samuels (2010) develop a formal model, in
which not the poor masses, but instead a disenfranchised yet
economically rising bourgeoisie à la Moore is the key driver of
democratization. Referring to Douglass North (1990) and
Mancur Olson (1993), they argue that for disenfranchised elites,
autocracy is more costly than democracy, since they fear the
constant threat of being expropriated by the authoritarian
leaders.xix In their view, disenfranchised elites push for limited
extensions of the franchise in order to secure a credible
commitment from the incumbent elites not to violate their
property rights. Elites grant democratic concessions if they face
a realistic possibility of loosing a potential revolutionary
confrontation with their so far disenfranchised competitors.
How is this possibility related to inequality? Assuming that a
landed elite is in power, land inequality is detrimental to
democratization. It decreases out-groups’ motivation to
mobilize for the protection of property rights, as they control
less property in need of protection. In addition, land inequality
lowers the out-groups’ chances of winning in a confrontation
with the well-equipped incumbents. As a result, no substantial
demands for democratization arise (Ansell and Samuels 2010:
1553).
Open or closed economies?
While AR’s basic model assumes a closed economy, they later
extend their analysis and model the effects of international trade
and financial integration (Acemoglu and Robinson 2006: 321–
348). They argue that the effect of trade depends on its impact
on the income distribution. In labour-abundant countries, trade
can be expected to reduce inequality, whereas the reverse holds
true for capital-abundant economies. The effect on the odds of
democratization thus ultimately depends on where the
respective country is on the inverted U between inequality and
transition probability (ibid.: 41). As far as financial integration
is concerned, AR postulate a similar effect. In labour-abundant
countries, capital inflows reduce the returns to capital and
increase the returns to labour, thus attenuating income
inequality. Moreover, the increased ease at which capital can be
moved across borders sets a limit on the levels of taxation that
are possible in a financially open democracy. In sum, economic
openness is argued to make democracy in labour-abundant
countries less threatening for the elites (ibid.: 338–343). Given
that inequality is sufficiently high to motivate citizens to
demand democratization, this should increase the odds of
transition.
With respect to financial integration, Freeman and Quinn
(2012) argue otherwise. They claim that free capital flows
increase income inequality, but still foster democratization.
They base their argument on three interrelated mechanisms:
1)
In open autocracies, elites as rational profit-maximizing
investors would construct an internationally diversified
portfolio of assets, regardless of whether democratic
redistribution is a realistic threat or not. With only a part of
their wealth remaining in the country, the introduction of
democracy is less costly and coups do not tend to be worth
the effort (Freeman and Quinn 2012: 62).
2)
Extensions of the franchise only become an option if the wealth
of disenfranchised industrial elites is growing. This increases
their need for property rights protection and their chances to
prevail in a violent confrontation with the incumbent landed
elites. The latter grant democracy in order to avoid a likely
defeat. Ansell and Samuels (2010) argue that the rise of
industrial elites and a bourgeois class is typically associated
with higher levels of income inequality and thus hypothesize a
positive correlation between income inequality and democratic
transitions.xx These expectations are confirmed in their
empirical analysis.
Substantial parts of the respective country’s capital stock
will be owned by foreigners, who also hold diversified
portfolios and have only small stakes in the domestic
politics of one out of many countries in which they are
invested. In addition, financial openness allows domestic
owners of immobile assets to sell these to foreign investors
seeking diversification. This implies that even landowners
have less to fear from democracy, since they can trade their
possessions into more mobile forms of wealth. As a
corollary of these asset sales and the higher returns of
diversified portfolios, the income gap between native
capital-owning elites and citizens can be expected to
increase (ibid.).
3)
Midlarsky (1992), who surprisingly finds a positive relationship
between land inequality and democracy tries to rationalize this
finding by arguing that inequality provided a basis for
selectively allocating political rights that were later gradually
extended. He further speculates that inequality might spur the
demand for democracy and revolutionary violence or that it
even sets in motion processes of urbanization, which then
fosters democracy (Midlarsky 1992: 457–462).
As in AR, international capital mobility is assumed to limit
the feasible level of taxation but not to such an extreme
extent that citizens would prefer revolution to
democratization (ibid: 61).
In their empirical analysis, Freeman and Quinn (2012) find that
inequality positively affects the probability of transitions in
financially open autocracies, whereas in financially closed
autocracies the relationship resembles the inverted U as
postulated in AR.
Center for Comparative and International Studies, ETH Zurich and University of Zurich
Living Reviews in Democracy, 2013 | 7
When is inequality politically salient?
Furthermore, the reasoning of Boix (2003) and Acemoglu and
Robinson (2006) as well as all cross-country studies on a
potential link from inequality to democracy may be subjected to
a more sociologically oriented criticism, concerning the
question under what circumstances economic inequality
emerges as a politically relevant factor in democratization
processes. Critical levels of inequality from which on the
demand for democratic reforms is sufficiently strong or the
supply is denied are likely to vary across spatial and temporal
contexts. Different societies might show different levels of
toleration when it comes to economic inequalities. Bollen and
Jackman (1985: 152) argue that some societies might emphasize
“equality of results”, whereas others are more concerned with
“equality of opportunity”. In short “the political interpretation”
of inequality matters (Bollen and Jackman 1995: 984). Ziblatt
(2006: 321) makes a similar point in claiming that revolutions
might occur at levels of inequality that are relatively
unsuspicious in cross-country comparison, provided that there
are rapid changes in inequality. Hence, longitudinal withincountry comparisons might be more appropriate than mere
cross-country analyses. In sum, it appears that “what matters
just as much as any ‘measurable levels’ of inequality are the
perceptions and possible misperceptions of real individual and
collective actors embedded in changing social structures”
(ibid.).
Notwithstanding the intuitive validity of this line of reasoning,
it is not without plausibility to assume that inequality as
perceived by the relevant actors is somehow systematically
linked to objective underlying fundamentals. Hence, this point
provides and insufficient basis for a wholesale rejection of the
‘new structuralist’ theories. At the very least, however,
economic inequalities seem to be particularly relevant for
democratization processes if they reinforce what Tilly (2003)
dubs “categorical inequalities”.xxi This term refers to “organized
differences in advantages based by gender, race, nationality,
ethnicity, religion, community, and similar classification
systems” (Tilly 2003: 37). In Tilly’s account, the reduction of
such categorical inequalities is a crucial precondition for
democracy. By stressing the importance of “inter-group
inequality” and at least verbally allowing for other than incomebased cleavages, Acemoglu and Robinson (2006: 35, 42) appear
to partially acknowledge this.
Many roads may lead to democracy
One of the main strengths of the new structuralist theories is
that they use a parsimonious framework build on clear
assumptions to derive testable hypothesis that may hold across a
variety of cases. On the other hand, however, their generalist, if
not universalistic aspirations have also been criticized as their
main weakness (see e.g. Haggard and Kaufman 2012, Houle
2009). It might well turn out to be an illusionary endeavor to
search for an explanation that covers most or even all instances
of democratization. This point has been raised before by
scholars such as Linz, Stepan and (1978), O’Donnell and
Schmitter (1986), Huntington (1991), Collier (1999) and
Przeworski et al. (2000).
Huntington (1991: 35) sees one of the main reasons for this in
the simple fact that democratization is a complex phenomenon
involving “(1) the end of an authoritarian regime; (2) the
installation of a democratic regime; and (3) the consolidation of
the democratic regime. Different and contradictory causes may
be responsible for each of these three developments.” The
potentially differing effects of inequality on each of these stages
have been empirically illustrated by Houle (see above).
Huntington (1991: 38) further argues that:
1)
No single factor is sufficient to explain the development of
democracy in all countries or in a single country.
2)
No single factor is necessary to the development of
democracy in all countries.
3)
Democratisation in each country is the result of the
combination of causes.
4)
The combination of causes producing democracy varies
from country to country.
5)
The combination of causes generally responsible for one
wave of democratisation differs from that responsible for
others.
6)
The causes responsible for the initial regime changes in
one wave are likely to differ from those responsible for
later regime changes in that wave.
While recent scholarship has definitely made progress and the
state of the art of democratization studies today arguably looks
somewhat less sobering than back in 1991, a basic insight
remains: The problems of potential equifinality and
conjunctural causation remain a formidable challenge for every
student of democratization.
Haggard and Kaufman (2012) propose categorization schemes
for both transitions to and reversions from democracy. First,
they distinguish between distributive and non-distributive
transitions. Distributive transitions conform to the new
structuralist theories and require the
“mobilization of
redistributive grievances on the part of economically
disadvantaged groups” as well as “authoritarian withdrawal” in
response to increasing costs of repression (Haggard and
Kaufman 2012: 500). Non-distributive transitions come in one
of three main forms: They may be the results of (1)
international pressures and/or interventionxxii (2) intra-elite
rivalries;xxiii or (3) elite-driven reforms, implemented in the
belief that control over the process can be maintained (ibid.).
Then, Haggard and Kaufman classify democratic reversions
according to whether they are distributive or non-distributive in
nature. Among the distributive reversions, they distinguish
between “elite-reaction reversions”, in which elites intervene in
order to restrict redistribution as predicted by Acemoglu and
Robinson and “populist reversions”, in which the incoming
authoritarian ruler promises more instead of less redistribution.
Among non-distributive reversions, there are cross-cutting
challenges exploiting “wide disaffection with the performance
of democratic incumbents and invoke broad valence issues,
Center for Comparative and International Studies, ETH Zurich and University of Zurich
Living Reviews in Democracy, 2013 | 8
such as economic performance and corruption” and intra-elite
reversions such as military coups with no clear distributive aims
(Haggard and Kaufman 2012: 508).
In order to empirically assess which types of transitions and
reversions exhibit the greatest empirical relevance, Haggard and
Kaufman have compiled a qualitative dataset including causal
process observations of all transitions and reversions between
1980 and 2000. They show that depending on which democracy
measure they use, only 55 to 58% of democratic transitions
have been distributive in nature. Even worse, they do not find
any systematic relationship between the level of inequality and
the probability of distributive transitions – they appear to occur
at any level of inequality (ibid.). When it comes to democratic
breakdown, they find that 63% of reversions are nonredistributive and that among the remaining 37% that are
distributive reversions, even 16% are populist and thus
contradict AR’s predictions (ibid.). While reversions indeed
tend to be more likely at medium and high levels of inequality,
the reason for this pattern does not seem to be explained by new
structuralist theories. Along the lines of Huntington (1991: 39),
these theories and more generally, income inequality might fare
better in explaining instances of democratization in the first
and/or second wave. However, this proposition has still to be
substantiated by systematic empirical evidence.
At any rate, the theories of Boix and Acemoglu and Robinson
are unlikely to hold in general. Thus, we can conclude that the
effect of economic inequalities, if they affect democratization at
all, is likely to depend on a host of conditioning variables as
well as on specific spatial and temporal contexts. The further
specification of plausible scope conditions and alternative
routes to democratization remain promising avenues for further
research.
Conclusion
As the present literature review has revealed, economic
inequality has recently emerged as one of the most prominent
structural variables in the study of democratization. The
potential detrimental effects of inequality on the odds of
democratization have been frequently stressed and
distributional conflict has long been an important element in the
classic accounts of democratization from Lipset and Moore to
Dahl. However, it needed the groundbreaking contributions of
Boix and Acemoglu and Robinson to shift economic inequality
to the centre of analysis. Based on clear assumptions and
parsimonious theoretical frameworks, these accounts have
derived plausible, empirically testable hypotheses. In this
respect, new structuralist theories represent a quantum leap in
terms of theoretical rigour.
When it comes to the empirical relevance of these theories, the
picture looks less benign. The predictions of Boix and
Acemoglu and Robinson have only found limited support in
quantitative studies. This may in part be explained by
difficulties in appropriately measuring both inequality and
democracy. Future research should therefore focus on collecting
better data on inequality. A particularly promising point of
departure can be seen in pioneering datasets on inter-group
inequalities. Apart from issues of data quality and empirical
methodology, recent research has highlighted some theoretical
problems of the new structuralist theories.
These problems include a neglect of the demand for democracy,
a lacking explanation under which circumstances barriers to
collective action can be overcome, a potentially too abstract
conceptualization of political actors, a possible overstatement
of the redistributive consequences of democracy, a possible
overstatement of commitment problems, an overly simplistic
treatment of economic openness, potentially differing effects of
land and income equality as well as a neglect of the question
how political actors perceive inequality. On a more general
level, new structuralist theories might be overly ambitious in
terms of external validity and fail to take the problems of
conjunctural causation and equifinality into account. A whole
bunch of more recent articles has raised these issues, specified
additional variables that condition the effect of inequality on the
odds of democratization, and empirically demonstrated the
relevance of such scope conditions. Continuing along these
lines provides ample opportunities for both theoretical and
empirical innovation in the fascinating study of
democratization.
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i
ii
As cited in Russett (1964: 442)
In both books, the analysis is later extended to models that include the middle class as a third actor. The basic
insights, however, remain unaltered.
iii For prior yet not as fully developed accounts see Romer (1975) and Roberts (1977)
iv Boix uses „asset specificity“ and „capital (im)mobility“ interchangeably. The latter would be the more
unambiguous term, since the concept of asset specificity has already been defined by Williamson (1981: 555) in a
somewhat different context (the transaction-specificity of an investment).
v See also Houle (2009: 595–598)
vi However, effects not significant and consistent across all of Boix’s models (see e.g. models 1A and 2A in Boix (2003: 79),
where inequality remains insignificant or positively affects consolidation). For the results of land inequality, see p. 91.
vii Wucherpfennig and Deutsch themselves losely base their 5-point list of problems on Przeworski and Limongi
(1997) as well as Sirowy and Inkeles (1990).
viii For recent and pioneering data collection efforts on economic inequalities across ethnic groups see Cederman,
Weidmann and Gleditsch (2011) and Alesina, Michalopoulos and Papaioannou (2012)
ix Burkhart (1997) is a rare exception.
x See Houle (2009: 594) for a similar criticism.
xi Or, as Huntington (1996: 9 as cited in Houle, 2009: 596) puts it ”With only one or two possible exceptions,
democratic systems have not been ended by popular vote or popular revolt.“
xii Przeworski and Limongi (1997); Przeworski et al. (2000). Their refusal of „endogenous democratization“
approaches has however convincingly been criticized as resting on dubious premises and erroneous interpretation
of their own results: see Boix and Stokes (2003), Welzel and Inglehart (2005), Epstein et al. (2005).
xiii See also Rueschmeyer, Stephens and Stephens (1992); Collier (1999)
xiv Iversen (2006: 4) even claims that the hypothesis that „inegalitarian societies redistribute more ... has been soundly
rejected by the data“
xv Or vice versa: “the stakes of the regime outcome are much higher when the state is able to enforce and administer
the policies chosen by its leaders.” (Soifer 2009: 27).
xvi See Kitschelt (1992) for a distinction between structure- and process-oriented approaches in the study of
democratization.
xvii Boix (2003: 75–97) uses an income inequality index for his analysis of the post-war era and a land inequality measure for his
longer-term analysis. However, he never enters both measures in the same regression and is not concerned with potentially
diverging effects of land and income inequality.
xviii See especially Boix (2003: 90–92)
xix “History provides not even a single example of a long and uninterrupted sequence of absolute rulers who
continuously respected the property rights of their subjects” (Olson 1993: 572). North (1990: 51) sees democracy as
a tool to “eliminate the capricious capacity of a ruler to confiscate wealth, and to develop third-party enforcement
of contracts.” Both cited in Ansell and Samuels (2010: 1547)
xx In an extension of their argument, Ansell and Samuels (2010) show that under certain circumstances, the rising bourgeoisie has
an incentive to ally forces with the excluded masses and push for full democratization. The main implications with respect to
different types of inequality remain the same.
xxi The coincidence of economic inequalities and cultural differences also plays a major role in Michael Hechter’s (1975, 1978)
work on the “cultural division of labour“ and “internal colonialism”
xxii See Boix (2011) or Gleditsch and Ward (2006) for recent accounts of how international factors influence democratization.
xxiii Schmitter and O’Donnell (1986: 19) claim: “There is no transition whose beginning is not the consequence – direct or indirect
– of important divisions within the authoritarian regime itself.” Llavador and Oxoby (2005) present a formal model of how
intra-elite competition can drive democratization.