Institutional Design In New Democracies

Eastern Europe And Latin America

Arend Lijphart, Carlos Waisman

• Publisher: Routledge
• Year: 2018
• Topic: Politics & International Relations
• eBook ISBN:
  9780429979415
• Subtopic: Economic Policy
• Index: Politics & International Relations

This volume focuses on the relationship between the tasks of institutional design and the outcomes of the process of economic and political liberalization in Latin America and in Central and Eastern Europe. The contributors emphasize the design of institutions to serve a market economy, the design of electoral laws, and the design of executive-legislative relations. Within this framework each chapter discusses the legacy of the pre-existing authoritarian regime; the range of preferences among various strategic actors with regard to the pace and mix of reforms; and the consequences of final choices for the institutionalization of effective economies and the process of democratization. Countries throughout Latin America and Central and Eastern Europe are moving from semi-closed to open economies and from authoritarian to democratic political systems. Despite important differences between the regions, these transitions involve similar tasks: the establishment of governmental institutions and electoral systems conducive to legitimation of the new and fragile democracies and expansion of the institutional infrastructure of a market economy. This volume looks at both regions, focusing on the relationship between the tasks of institutional design and the outcomes of the process of economic and political liberalization. In particular, the contributors emphasize the design of institutions to serve a market economy, the design of electoral laws, and the design of executive-legislative relations. Each chapter discusses the legacy of the pre-existing authoritarian regime; the range of preferences among various strategic actors (the government, state bureaucracies, opposition parties, and interest groups) with regard to the pace and mix of reforms; and the consequences of final choices for the institutionalization of effective economies and the process of democratization.

CHAPTER ONE

Institutional Design and Democratization

Arend Lijphart and Carlos H. Waisman

A WAVE OF ECONOMIC and political liberalization is sweeping the world. Most countries in Latin America and almost all nations in Eastern Europe are undergoing these transitions simultaneously: from a semiclosed to an open economy and from an authoritarian to a liberal democratic polity. These regions are, of course, heterogeneous internally and different from each other; the institutional characteristics of their economies and polities are different, and so are the mechanisms of transition and perhaps even the outcomes of the changes underway. But at the same time, they are involved in processes of economic and political liberalization whose model (not always the intended end point) is a combination that is characteristic of the core capitalist countries: a market economy highly integrated into the international system and a competitive polity.□

Transitions In Eastern Europe and Latin America

The pervasive nature of these transitions is indicated by the fact that they appear to be independent of the level of development and, especially in the case of Latin America, also of the type of political regime. This is a remarkable aspect of the South American transition: All of the countries in the area, from relatively underdeveloped Bolivia and Paraguay to relatively industrialized Brazil and Argentina, have been moving from military rule to liberal democracy in the past decade. Regarding economic liberalization, we find it in authoritarian Argentina and also in democratic Argentina, under both Radical and Peronist administrations; in both authoritarian and democratic Chile; in state-corporatist Mexico and in social-democratic Venezuela. Cuba appears to be the remarkable, and most likely temporary, exception to these trends. The same phenomenon is also present in Eastern Europe, where the transformation has encompassed all of the former state-socialist regimes—ranging from the relatively “liberal” ones in Poland and Hungary to the solidly Stalinist former states of East Germany and Czechoslovakia, the personalistic dictatorship in Romania, and even the Stalinist regime in Albania.

A comparison of these processes in Latin America and in Eastern Europe shows important commonalities beyond the structural, institutional, and cultural differences between the regions and among nations. Common aspects exist in the nature of the preexisting economic and political regimes, in the cultural and economic environments in which these polities operate, and in the processes by which the transition itself is taking place.

First, the ancien régime combined, in most cases, statized and closed economies (with “medium” levels of statization and closure with respect to the world capitalist system in the overprotected industrial economies of Latin America and “high” levels in the command economies of Eastern Europe) and authoritarian polities, with varying degrees of political participation (military authoritarianism in the Southern Cone and party authoritarianism in Eastern Europe and, to a lesser extent, in Mexico).

Second, the transition is hampered in most of these countries by cultural factors and in all of them by economic ones. Many of the democratizing societies have weak democratic traditions, and thus the legitimacy of the new political institutions is fragile. In some cases the penetration of capitalist economic culture has only reached segments of the upper and middle strata, and much of society still has a communitarian, anticapitalist mentality. Above all, economic conditions are not very favorable. Most of the economies in transition have little ability to compete in world markets (except for the preexisting export sectors in Latin America). Conversion requires not only institutional changes—such as privatization, flexibilization of labor markets, and the opening of the economy—but also large-scale investment in physical capital. Many of these countries also bear the burden of large foreign debts.

Third, in all cases the transition involves what in classical Marxist terminology would be called similar “tasks”: in the polity the design or reestablishment of governmental institutions and electoral systems conducive to the legitimation of the new and fragile democracies; in the economy the establishment (in Eastern Europe) or expansion (in Latin America) of the institutional infrastructure of a market economy, a change that involves privatization, deregulation, and the opening up of the economy.

These complex processes allow for a range of possible outcomes, so that the successful institutionalization of both an open market economy and a competitive polity is only one of the possible end points. Obviously, different outcomes appear more likely in different countries on the basis of their level of development, the degree of competitiveness of their economies, their size (small may be beautiful when it comes to economic convertibility), their geopolitical location, their endowment of human capital, their economic and political culture, and the effectiveness with which political elites carry out the “tasks” mentioned previously. Clearly, Chile and the Czech Republic are stronger candidates for successful institutionalization of the new economic and political structures than is either Peru or Romania.

This volume focuses on the relationship between these tasks of institutional design and the outcomes of the process of economic and political liberalization in Latin America and Eastern Europe. There are many different ways of privatizing a statized or semistatized economy, of deregulating markets, and of lowering tariff barriers; and there are many different ways of institutionalizing competitive politics. In both the East and the South, new constitutions and basic laws with a semiconstitutional status are being discussed and enacted. The authors in this volume look into the causes and consequences, for the process of democratization, of the design of some of these political and economic institutions in different structural and institutional settings. By causes we mean the configuration of structural contexts and the processes of collective action by which political elites are likely to prefer some options rather than others (e.g., parliamentarism rather than presidentialism, gradual rather than drastic economic liberalization, and so forth). By consequences we mean the likely short- and long-term effects of these choices in different settings. In all cases we will look into the ways in which institutional design mediates the relationship between the crisis of the old regime and the consolidation of the new one.

The authors focus on three substantive issues: the design of electoral systems, of executive-legislative relations, and of the institutions of a market economy. In each of these areas, contributors focus on the legacy of the preexisting authoritarian regime, the range of preferences developed by strategic actors (such as the government, other state bureaucracies, the opposition parties, and the important interest groups), the causes of these preferences (i.e., why strategic actors prefer different alternatives), and the consequences of the final choices for the institutionalization of effective market economies and liberal democracies.□

The Logic of the Comparison

Comparative projects, although considered sensible and useful by many people, sometimes evoke reservations that boil down to the argument that “you cannot compare apples and oranges.” The fact that transitions aimed at the same sociopolitical model are taking place at the same time in different regions of the world does not in itself validate a comparative project: The potential value of the enterprise depends on the logic of the comparison.

Three objections to comparative methodologies have been raised in discussions among the contributors to this volume. First, political and economic institutions (the points of departure) are very different. Second, the two regions are at different levels of development: East European societies are industrial, whereas the Latin American ones are underdeveloped or Third World. Finally, many scholars are skeptical of comparisons involving societies whose cultures are very different.

The validity of these objections is questionable for two reasons. There are obvious differences among the regions, but, at a high level of abstraction, there are still commonalities; in any case these arguments are not pertinent in relation to projects based on the “most-different-systems” design.

The validity of the first reservation depends on the level of abstraction of the analysis. Clearly, state socialism was different from the statist and highly protected capitalism that existed in many Latin American countries before the transition, and the types of political authoritarianism were also different from each other (Leninist party authoritarianism in Eastern Europe, military authoritarianism in the Southern Cone, and hegemonic party authoritarianism in Mexico). However, at a higher level of abstraction, similarities are clear: In both cases the ancien régime combined economies that restricted the operation of market mechanisms and integration into the capitalist world economy to different degrees and authoritarian regimes that had variable power to control and mobilize their societies.

The second argument falls before evidence that at the beginning of the transition the most “modern” Latin American societies were industrial (albeit noncompetitive, but so were state-socialist societies) and that several had scores on the Human Development Index that were roughly comparable to those prevailing in Eastern Europe (as Table 1.1 indicates). This does not mean, of course, that no important structural differences existed between the state-socialist societies in Eastern Europe and the most industrialized capitalist economies of Latin America. Most of the former had a larger manufacturing sector, which was based on larger plants and encompassed a larger share of the labor force; a more egalitarian distribution of income; health and educational systems of higher quality; and so forth. But the societies we are comparing were all basically urban and industrial. They were not so different in kind that comparisons among them are meaningless.

Finally, and as far as culture is concerned, we would like to make two points. First, at a high level of abstraction there are, as we have pointed out, significant cultural similarities: In most of these societies, the economic culture of capitalism has not penetrated deeply, and democratic traditions are weak or nonexistent. Second, this argument would also affect the validity of intraregional comparisons. In addition to the manifest cultural differences between the regions, there are substantial intraregional differences. This is obvious in Eastern Europe, where there are major linguistic, religious, and historical cleavages; but it is also significant in the case of Latin America, where cultural homogeneity is often assumed by outsiders. The nations we discuss in this volume share Iberian languages and colonial traditions, as well as Catholicism. But they differ sharply in terms of their ethnic compositions and the degrees of integration among the different components of their societies, and in the twentieth century their economic and political trajectories have shaped very different collective experiences for their populations and have led to different kinds of political cultures.

Table 1.1 Industrialization and Social Development in Selected Countries, 1990

In conclusion, at a high level of abstraction, there are some significant commonalities between the regions we are comparing. However, the reservations discussed earlier refer exclusively to the feasibility of what has been called the “most-similar-systems” design. This type of comparative design, which is based on John Stuart Mill’s “method of difference,” matches units of analysis that are as similar as possible, except in relation to variables whose causal effects are being studied. In any case, these objections are irrelevant in connection with the most-different-systems design, whose purpose is to test propositions that are valid across units of analysis. For this reason, the objective of the design is to compare societies that are as different as possible.¹

Our study fits this latter design. It is, however, exploratory rather than confirmatory. Our purpose is to examine the extent to which common patterns exist in processes of economic and political transition that aim at similar outcomes but that take place in relatively different structural, institutional, and cultural environments.□

The Design of Electoral Systems

Part One of this volume discusses the adoption and operation of electoral systems, with a special emphasis on the origins of the new electoral arrangements and their consequences for party systems and effective government. Chapters 2 and 3 are multicountry comparisons, focusing on Eastern Europe and Latin America. Chapters 4 and 5 focus on individual countries—Poland and Chile—within those two regions.

Barbara Geddes, in Chapter 2, analyzes the adoption of new democratic institutions in four East European countries—Bulgaria, Hungary, Poland, and Romania. Her theoretical point of departure is the rational-choice assumption that constitution makers pursue their own individual interests above all else and that these interests center on furthering their political careers. This political self-interest predisposes them to favor some institutional arrangements and oppose others; for instance, leaders of small or declining parties tend to prefer proportional representation over majoritarian electoral laws. This approach has worked very well in explaining institutional change in Latin America, but it is more difficult to apply to Eastern Europe because of the extreme volatility of the party system in the latter region. However, this problem can be overcome when timing is taken into consideration. In the four East European countries Geddes describes, the design of both the electoral laws and executive-legislative relations was the result of the perceived strength and bargaining power of the Communists and their successors (which gradually declined) on the one hand and of the opposition groups on the other and also of the increasing fragmentation of the opposition parties.

In Chapter 3, Dieter Nohlen’s wide-ranging examination of the electoral systems used in Latin America finds a large number of common features: (1) They tend to employ proportional representation (PR); (2) however, most of these PR systems deviate significantly from proportionality, in the direction of discouraging small parties; (3) in most systems votes are aggregated, and seats are distributed at the district level, often in fairly small districts; and (4) most use closed-list systems that do not allow the expression of voters’ preferences for individual candidates. The argument that proportional representation, in combination with a presidential system of government, produces deadlock and ungovernability in Latin American democracies is shown to be incorrect: Slightly more than half of the thirty-nine legislative elections in fourteen countries during the 1980s produced lower-house majorities for the president. Electoral reform debates in Latin America have focused on two themes: (1) the issue of proportionality versus government effectiveness, and (2) the related issues of party versus personal votes and of the ties between voters and representatives. Nohlen recommends several incremental reforms—in particular, the possibility of single-member district elections within an overall PR system (inspired by the German model), as in the new Venezuelan electoral system.

In Chapter 4, Stanislaw Gebethner traces the history of the fragmentation of the political party system in post-Communist Poland since 1989. He takes issue with the view that the extreme multipartism in the lower house of the Polish Parliament following the second parliamentary elections in 1991—twenty-nine parties were elected—was caused by the electoral law that prescribed an extreme form of proportional representation. A careful analysis of the election results shows that (1) the PR system was not really an extreme one; (2) it is an exaggeration to say that twenty-nine parties were elected, since many of the so-called parties were in fact the same party operating under different labels or independent candidates; (3) a system with a large number of parties had already developed before the election; and (4) the Senate was similarly fragmented, although it was elected by plurality. The true reason for multipartism in Poland is the great diversity of political opinions, which even a plurality system would be unable to convert into a two-party system. The same is true for the other Central and East European countries. Hence, Gebethner argues, PR is the most appropriate electoral system for the entire region.

Chile is a notable exception to the pattern described by Nohlen in Chapter 3. As Peter Siavelis and Arturo Valenzuela show in Chapter 5, the electoral reform dictated by Chile’s military regime as it left office entailed majoritarian election rules that encouraged a two-party system (instead of the multiparty system of the pre-1973 democratic regime) and that favored the minority of the political right (by discriminating against the majority of the center and left). Although this system has largely accomplished the.second objective, it cannot succeed in transforming Chile’s traditional multiparty system. Parties adapt to the new electoral law by creating coalitions to maximize their votes and seats without reconfiguring the party system. Moreover, the new electoral sys...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• Tables and Figures
• Acknowledgments
• Acronyms
• CHAPTER ONE Institutional Design and Democratization
• PART ONE The Design of Electoral Systems
• PART TWO The Design of Executive-Legislative Relations
• PART THREE The Design of Market Economies
• About the book
• About the Editors and Contributors
• Index