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LUISS Guido Carli

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Democracy and the market: it's complicated

Professor Raffaele De Mucci has written a series of essays on the relationship between political systems and the free market

Raffaele De Mucci LUISS

To understand whether and how the processes of democratization and economic development influence each other, Professor Raffaele De Mucci, full professor of Political Sociology at LUISS, has edited a series of essays on the topic. The Market Economy and Democracy: A Controversial Relationship, published by Rubbettino, is a book that has been created with the contribution of researchers from LUISS Laps – Workshop on political and social analysis and from other important international scholars that are part of the PRIN 2009 project on the topic Why democratize? The causes of the crisis and the collapse of non-democratic regimes in the third wave.

"Economic development does not always coincide with a market economy,” explains Professor De Mucci. "The more or less exponential and progressive growth of GDP can be achieved regardless of the political regime; it is not a characteristic that is typical of democracy and in particular of liberal democracy."

The framework of globalization offers a fairly broad and multifaceted picture to grasp the complexity and contradictions of this relationship. The essays in the book consider different hypotheses according to whether the market and democracy are seen as the cause or effect of these reciprocal relationships. "In the hypothesis where the market functions as an independent variable, we have discovered that it can directly help or hinder democratic consolidation. For example, in the countries of the former Soviet Union (particularly in Asia), the market of 'oligarchs', which has nothing to do with the free market model, has effectively hindered the consolidation of democracy."

The other hypothesis explored is one where the democratic regime is the independent variable and influences the entrance of the free market. "But there also exists the hypothesis that there is a spurious relationship between the two variables, in which neither influences the other. Here the process is influenced by intermediate variables such as culture, education, religion, or other non-economic and non-political factors.”

Economia Mercato De Mucci

In any case, the very definition of democracy is controversy: "When we discuss democracy, we need to understand what we are talking about. 90% of the regimes represented at the UN define themselves as democratic and each of these has their own idea what that means. The traditional West sees democracy as liberal democracy, with forms of government that have not had simplified transitions from authoritarianism to democracy, but have always had the intermediation of the rule of law."

In this sense, even in the European Union the relationship between the market and democracy is distorted by a sort of centralized government control: "An excessive and anomalous level of democracy, understood as government control, interventionism, big government with respect to the autonomy of free trade brings about that ‘fatal presumption,' as Friedrich von Hayek would say, of being able to regulate the economy: and it is a vice that characterizes even the democracy exercised within the European Union."

The relationship between the two variables, however, is not equal, as revealed by the various case studies highlighted by the research: "Even if it is true that where there is a democratic regime there is always a market economy and that there are no historical cases in which there has been a democracy without a market, the opposite does not always hold true: there can be cases in which opening up to a market economy does not accompany the existence of a democratic regime."

The discussion can be applied to different times and places: from Pinochet’s Chile to today’s China, and can even touch upon more complex phenomena such as the Arab Spring uprisings. "These countries have taken and are taking shortcuts with respect to the rule of law and the culture of liberal institutions, which lead to very different forms of democracy than those we are familiar with. The relationship between the two variables is always an empirical relationship: at the moment, the research tells us that these market economies that have not achieved full-fledged democracy are false, and that those who do not have a real market economy are pseudo-democracies."