(This essay was published in Hong Kong Economic Journal on 6 May 2015.)

Studies of democracy are voluminous, but there are still many unanswered questions about the emergence, consolidation and collapse of democracy. Leading researchers have been examining what we do and do not know, and their findings have important relevance for Hong Kong given it is in the middle of a political deadlock whose outcome could well seal our city’s fate.


There are three key questions for Hong Kong. First, is our city ready for democracy since our economy is well advanced and our citizens are well educated? Second, can democracy consolidate after it is introduced or will it collapse, and what happens afterwards? And third, will democracy compromise our future economic growth or promote it?


Let me start with the question of whether our city is ready for democracy. There are broadly-speaking two classes of models – one emphasizing a gradual approach and the other the outcome of political conflict. Both of these are structural models in that they focus on a country’s socioeconomic structures as the necessary conditions for democracy to emerge.


In 1959, Harvard sociologist Seymour M. Lipset advanced a structural model based on the observed strong positive correlation between per capita income and democracy – the “modernization hypothesis.” He hypothesized that urbanization, industrialization, higher education, and the increasing complexity of society that followed economic growth would foster conditions conducive to the gradual emergence of a democratic polity. Gradualism was emphasized in Lipset’s thesis.


The “modernization hypothesis” has been criticized as an extrapolation of the European historical experience to the modern world of developing nations – and is therefore guilty of equating preaching modernization with as Westernization. Nonetheless, it has been the cornerstone of postwar foreign policy in the US and other nations to promote economic development in the developing world.


Despite the criticisms, Lipset’s hypothesis has proved to be incredibly enduring even today on the strength and persistence of the very strong positive correlation that exists between per capita income and democracy. There are of course some exceptions to the correlation, but most of the poor agrarian countries are authoritarian and most of the rich industrial countries are democratic.


In 1966, Harvard Marxist scholar Barrington Moore Jr. challenged the “modernization hypothesis” and depicted three different political paths to economic modernization. He linked political regimes to initial social conditions and the power of the landlords. Whether liberal democracy would emerge in the path of economic modernization depended on the strength of the bourgeoisie (or the middle class). When landlords were not too oppressive, the bourgeoisie would prevail and liberal democracy in a capitalist economy would emerge. This was the path of Britain, France and the US.


When the landlords were fairly oppressive and the bourgeoisie weak, then fascism would emerge. This was the path chosen by Germany and Japan. When the landlords were extremely oppressive and the bourgeoisie extremely weak, then economic modernization would only be possible through a peasant revolution led by the communist party. This was the path taken by Russia and China.


The significance of these two broad structural models is that Hong Kong today should be able to attain democracy without difficulty and peacefully. The socioeconomic conditions are present. Hong Kong is already an economically prosperous modern economy and its middle class is strong. There is no obvious and compelling reason why Hong Kong must pursue democracy through conflict, especially violent conflict.


Lipset and Moore’s structural models have been criticized for being too deterministic and failing to take into account the behavior of political actors. In the wake of many failed democracies in Latin America in the 1960s and 1970s that led to the reemergence of authoritarian governments, there was a change of research focus from democratization to the collapse of democracy.


A new approach based on behavioral models appeared. These emphasized the actions taken by individuals and groups of individuals in political competition to retain the loyalty of their supporters. The key element is how competing political leaders can successfully organize and motivate their loyal supporters.


Political action, like charity fund-raising, can only be successful if it is able to overcome the inherent free rider problem of collective action: why should an individual be willing to contribute his effort to the common interest or goal, if he could free ride on the efforts of others? Successful collective action requires political leaders to develop political instruments for holding the loyalty of their supporters and motivating them to act.


The most successfully organized groups in society tend to be small rather than large coalitions for two reasons. First, the organization costs are lower for smaller groups. Second, the identity of shared interests is also clearer and stronger for smaller groups. The result is that well-organized groups tend to be more homogeneous and, therefore, have more extremist and insistent demands.


In their 1978 study, Yale political scientists Juan J. Linz and Alfred Stepan (now at Columbia) found the collapse of democracy was not determined by socioeconomic structures or conditions, but was a result of the specific choices and actions taken by the relevant pro- and anti-democracy actors in their competition for power. The winners in the political contest were those who could command the loyalty of their coalition of supporters.


This line of research carries an immediate relevance to the situation in Hong Kong today. Linz looked at the success of democratic institutions in Western Europe and their frequent failure in coup-ridden Latin America and saw the contrast as driven more by electoral structure than by culture or economics.


The problem, according to Linz, is too much reliance on presidents or prime ministers. Successful parliamentary democracies are governed by prime ministers who govern with the support of a majority coalition in the parliament. The governing authority derives directly from majority support in the parliament.


When such a prime minister loses his parliament majority, a crisis ensues. Either the parties in parliament must negotiate a new governing coalition and a new cabinet, or else a new election is held. If necessary, the new election will lead to a new parliament and a new coalition. These parliamentary systems are sometimes very stable (see the United Kingdom or Germany) and sometimes quite chaotic (see Israel or Italy), but in either case, persistent parliamentary disagreement leads directly to new voting.


In a presidential system, by contrast, the president and the congress are elected separately and yet must govern concurrently. If they disagree, they simply disagree. They can point fingers and wave poll results and stomp their feet and talk about “mandates,” but the fact remains that both parties to the dispute won office according to the rules laid down in the election arrangements.


When conflict breaks out in such a system, there is no democratic principle on the basis of which it can be resolved, and the mechanisms the constitution might provide are likely to prove too complicated and aridly legalistic to be of much force in the eyes of the electorate. That is when the military comes out of the barracks, to resolve the conflict on the basis of something – nationalism, security, law and order – other than democracy.


It used to seem as though Linz’s theory had one enormous and obvious flaw: the US case. The success of American democracy seemed to show that electoral institutions were not the key. Liberal values can work under both presidential and parliamentary systems. If something was going wrong in Latin America, blame it on Latin culture or economic development.


But Linz has an answer to this objection that he advanced in 1990. He argued that American political parties have a uniquely diffuse character because they are not ideologically disciplined. The parties are able to see political disputes and conflicts as differences over which they can seek compromise and accommodation.


However, today there are now ideologically disciplined parties that are dead serious about delivering their stated policy agendas, whether it be abortion versus pro-birth, self-reliance versus welfare support, and so forth. The two major parties are increasingly held hostage to radical segments that are unwilling to compromise whatsoever. We have seen a government shutdown, a looming debt ceiling breach, and a country in which regular ordered budgeting is an increasingly distant memory.


Obviously, a coup is not going to happen in the US next week or next year. But Linz’s analysis raises the deeper question of what will happen in the next five years or next decade. In a world where broad-based political coalitions are held hostage to rigid ideologically-motivated minorities and are returned through geographical constituencies distorted by gerrymandering, then the conflicts will be unending.


Both sides feel they have an electoral mandate confirmed by elections that return vocal radical minorities. There is no systematic way to resolve their political conflicts. That is very bad news for America, and nobody knows how to stop it.


Hong Kong may not be a democracy yet, but its politics has all the attributes of the sickness that has inflicted Western democracies today. We have a more-or-less formal division between pan-democrats and the establishment. Yet both are coalitions composed of many diverse minority interests. Each minority interest has a small constituency with very vocal narrow interests.


The developments surrounding the 2017 Chief Executive elections tell a tale of the pan-democratic coalition held hostage to radical minority interests capable of only repeating ideologically disciplined positions. It also tell a tale of an establishment coalition where no minority interest is prepared to change.


When a society falls victim to political conflict and public indecision, its economy necessarily suffers because critical policy decisions cannot be made. In 2004, Harvard economist Robert Barro found a very startling result. He plotted the unexplained part of the growth rate of an economy (after holding constant other explanatory variables) against the extent of democratic development in a country. He found that it had an inverted-U shape (see Figure 1).

This nonlinear relation suggests that more democracy enhances economic growth at low levels of political freedom but depresses growth when a moderate level of political freedom has already been attained. These findings are consistent with Lipset’s hypothesis when applied to early stages of modernization, when both economic and political developments are at low levels. They are also consistent with Linz’s hypothesis that when election arrangements vote minorities into power, then political divisiveness will slow down economic growth.


Hong Kong may become stuck in a permanent political deadlock if we fail to have a Chief Executive elected through universal suffrage. This may well be the only foreseeable electoral reform that holds out some promise of changing our politics from its current state.




Robert J. Barro and Xavier Sala-i-Martin, Economic Growth, 2nd edition, MIT Press, 2004


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