The ways of democracy and robust economies

The ways of democracy and robust economies

Gerard Roland, the E. Morris Cox Professor of Economics and Political Science at Berkeley, was an observer of the situation in Greece during the economic crisis and has been critical of the stabilization programs.

At the same time, in his studies in the field of comparative and development economics, he discovered the deep historical roots of modern civilization in terms of the interaction and dialectic between democracy and the economy in ancient Greece.

In this interview with Kathimerini the Belgian economist refers to ancient and modern Greece, the crisis of democracy both in the USA and globally, as well as the possibilities arising from the intensifying competition of the great powers.

In 2015 you were quite worried about the future of Greece. What would you say now?

From what I can tell from afar, the current situation is rather good in terms of growth, better than the European average. Also, the pandemic has not been managed worse than in other European countries, but even better in some respects. The allocation of EU funds for Greece due to the pandemic is a good thing. One thing that worries me is how far the reform of public sector expenditures has gone. The austerity package that was imposed on Greece implied lots of reductions in welfare payments and also large increases in tax rates. On the side of tax revenues, it seems the country is back to a more normal situation, though tax evasion is still a serious issue, but this is not unique to Greece. On the side of expenditures, there were all sorts of inefficiencies and a lack of serious monitoring of expenditures to avoid abuses and diversion of funds. It is not clear how far reforms have gone in that domain.

According to your research, what was the root cause behind the ancient Greek city-states evolving into entities that protected individual freedoms and rights instead of expansive authoritative imperialist powers?

What I found – and this is not only valid for ancient Greece, but also for most of the Mediterranean and other areas around the world, like in Mesopotamia or the Champa kingdom (Southern Vietnam nowadays), just to give a few examples – there were important geographical variables that played a role. A first one is the heterogeneity of conditions of production. If different regions that are geographically close produce different things, then this will create conditions that are advantageous to trade. Good conditions for trade will foster the role of merchants and demand for legal protection of private property.

And this leads to a well-functioning economy…

Legal protection of property rights in turn facilitates the creation of markets. In antiquity, the market for land and the market for slaves were quite important. A second variable is low transport costs. Regions with large access to the sea also reduce transport costs and facilitate trade. Large access to the sea also favors smuggling of goods and tax evasion, thereby reducing the taxation capacity of government and thus its overall scale. The development of private property and of laws to protect private property rights also fostered the concept of citizenship with its rights and responsibilities. The concept of citizenship is crucial for the development of individualism as a culture, because it takes the individual citizen as the basic unit of the polity, and not the tribe or the clan.

US democracy suffered a blow on January 6. Has it been saved or are the forces that are moving against the current system gaining strength?

Trump and January 6 must be seen in the context of the 2008 crisis. The crisis led poor White Americans to blame immigrants and minorities instead of the excesses of Wall Street. One cannot underestimate the impact of the 2008 crisis in the US. This is what got Trump elected and there may still be consequences in the future. The threat of Trump is still there as he denies he lost the election. If he runs again, and loses as is likely, he will repeat the lie that he won and may mobilize his troops to more violent actions than on January 6. What happened in the US and what is happening is surely one of the biggest threats to democracy in America in the whole of US history. Overall, despite the big danger to democracy represented by the Trump phenomenon, I think democracy will eventually prevail.

Aren’t you worried about racism?

The US has a long tradition of freedom and democracy, despite its dark sides such as racism and inequality. Also, civil society is very developed. The most dangerous thing happening right now is restrictions to voting rights being passed in Republican states. This will be a big fight, but it will not be one between democracy and autocracy. It will be a more limited fight about restricting versus expanding democracy, but it is nonetheless very important too. If by any chance there would be an autocratic coup in the US, it would in all likelihood lead to a civil war where democracy would eventually prevail. That scenario is, however, very remote despite the threat represented by Trump.

China and the West have been locked in competition for quite some time now. Can we be sure that democratic systems based on respect of individual freedoms and rights will always prevail over systems that depend on central planning, or we should expect that the 21st century will end as a “China century”? 

I am very worried by the nationalist fanaticism we see in China among young people today not afraid of going to war to ascertain China’s supremacy. I am also worried by the extreme-right fringes in the US who are ready to assault the Capitol and assault democracy more broadly. Social media throughout the world shows expressions of increasing tolerance and readiness for violence. Nevertheless, while all those threats are real, I am pretty sure that the current decline in democracy across the world is a temporary phenomenon. In the long run, if you look at the past 100 years, democracy has spread very widely. It triumphed over fascism and over communism. Once people have tasted fundamental freedoms, they are rarely willing to accept having them taken away. Freedom and capitalism are fundamental for growth and innovation. They have brought humanity so much progress in welfare, and life expectations have doubled in recent centuries. Capitalism has also generated many problems like inequality, precarity, poverty and plundering of the environment, but that is why democracy, and a well-functioning democracy, is fundamental to correct these problems. Technological progress within an autocratic regime can only deliver us an Orwellian world. Look at what is happening in China now with the use of artificial intelligence to monitor citizens 24/7 and give them social credit scores. This is even more Orwellian than one could imagine 70 years ago.

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