The Future of Democracy: Superiority is waning and headed for collapse

Visiting Fellow, RIETI

Democracy is ailing deeply. At the beginning of the 21st century, the euphoria over an internet-based grassroots democracy was sweeping the world of politics. However, the reality turned bitter quickly. The Arab Spring of democratization in the Middle East turned out to be a flash in the pan that fizzled out. Fake news, conspiracy theories and political polarization spread by the internet have come to pervade election campaigns, with the result that extreme, populist politicians are cropping up in several countries.

Defeat after defeat for democracy. That is the prevailing perception of what has happened in the first two decades of the 21st century. Has democracy become a liability for the world? Or is democracy merely a victim of coincidence or of factors that have nothing to do with democracy itself?

♦  ♦  ♦

To answer this question, I conducted data analysis with Ayumi Sudo, a Yale University student. We found that since the beginning of the 21st century, economic growth has been slow in democracies, and more so in countries where politics is attentive to public opinion (see Figure 1). Democracies including Japan, the prime example of stagnancy, and others in the West and South America, have remained stagnant. In contrast, non-democracies have achieved remarkable growth. That is true not only for China but also of African and Middle Eastern countries. The "lost two decades of democracies" is a truly global phenomenon, regardless if China and the G7 countries including the U.S., are included in the analysis or not.

Figure 1. Mean GDP Growth Rate in 2001-2019, Figure 2. COVID-19 related Deaths per Million

The "curse of democracy" is a phenomenon that was not seen until the 21st century. From the 1960s through the 1990s, democracies that had already become wealthy were boasting higher growth than autocracies. There was a strong trend of the wealthy amassing further wealth. This trend disappeared around the beginning of the 21st century, and poor autocracies began to rapidly catch up with wealthy democracies.

Upon witnessing the end of the Cold War, Francis Fukuyama, a U.S. political scientist, declared "the end of history" following the victory of democracy and capitalism. Ironically, just around that time, the link between democracy and economic growth started to crumble. A new history began as the relationship between political systems and economic growth underwent fundamental change.

In 2020, the new history dealt a critical hit to democracy in the form of the COVID-19 pandemic. The image of rows of refrigeration trucks used as temporary morgues for the bodies of COVID-19 victims at a New York pier against the backdrop of the Statue of Liberty is still fresh in our minds. In stark contrast to that image, young people in China, a country which succeeded in containing the COVID-19 pandemic early, are devoting themselves to partying with no regard for warnings against the dangerous "3C" conditions (closed spaces, crowded places, and close-contact settings). This contrast between the situations in the United States and China has been extremely poignant in creating the impression that "The Virus Comes for Democracy," as a New York Times article wrote.

Democracy is responsible for allowing the human and economic tolls of the pandemic to rise in 2020. In democratic countries, the numbers of deaths from COVID-19 are higher, and the economic downturn in 2020 compared with 2019 was steeper in democracies than in autocracies (see Figure 2). It appears that democracies are malfunctioning in crises as well as in normal times.

Why is democracy failing to work? Our analysis revealed that in the 21st century, not only have investments slowed, but imports and exports have also decreased in democracies. In addition, democracies have experienced a slowdown in productivity growth in both the manufacturing and services industries. Democracies have also failed to adopt comprehensive, drastic measures to contain the COVID-19 pandemic in 2020.

Major influences on 21st-century societies, including virus infection, the growth of IT business, and the spread of information via the internet share a common trait: they tend to trigger an "explosion" of a speed and scale that is beyond the ordinary person's capacity to understand. In a world where those influences are prevalent, the key to success relies on whether we can cushion severe shocks by making investments and taking damage mitigation measures in advance of the explosion.

In a world where challenges snowball so explosively that they must be resolved at a superhuman speed and scale, democracy, which requires consideration of public opinion, may be destined to yield to the despotism of science and the tyranny of intellect. It appears that half of the world are forced to pay a "political tax" for democracy in the form of their own lives and economic losses.

♦  ♦  ♦

What should be done to keep democracy, which is deeply ailing, alive in the 21st century? Let us consider two possible solutions: "struggle with democracy" and "flight from democracy."

The struggle with democracy refers to efforts to look democracy straight in the face and make adjustments and improvements so that the curse of democracy can be resolved. If politicians are to be nudged to focus on achieving results rather than paying attention to public opinion, one option may be to introduce a reelection guarantee for politicians that is linked to performance indicators, such as GDP growth, or a performance-based pay system.

Setting a fixed term or a retirement age for politicians may also be a useful option. That is because setting a deadline that cannot be extended may allow politicians to concentrate their efforts on achieving results without overly concerning themselves with public opinion. In addition to political governance reform proposals like these, there are also many proposals for redesigning the electoral system.

However, prospects are dim for the realization of those proposed reforms. How could politicians who have attained political status by winning office under the existing electoral system be made willing to go ahead with the reforms? Making that happen seems obviously all but impossible.

If so, the struggle with democracy may be an endeavor that is preordained to fail. In that case, how about abandoning this struggle and fleeing from democracy?

Escaping from national boundaries is already common for some people. One example is the cross-border transfer of financial assets held by wealthy individuals and corporations. Assets shifted between tax havens, such as Luxembourg, the Cayman Islands and Singapore, in pursuit of laxer tax enforcement and asset tracking, are said to account for 10% of the global total value of financial assets.

As I mentioned earlier, a democratic political system imposes a political tax on citizens—that is, it forces them to endure the failure after failure of a democracy. If so, creating a "democracy haven" may be worth considering.

Imagine a world in which new independent states and cities that have abandoned the existing concept of state and redesigned political systems from scratch in their own ways are inviting people and companies to apply for citizenship and are selecting successful candidates. It is a world in which new states compete with each other, just as companies do.

You may think that this vision is a product of wild fantasy. However, a project to realize this vision is already on the horizon.

The project, planned by the Seasteading Institute, aims to create new autonomous states floating in the high seas, the Earth's last remaining frontier that is not under the control of any existing state. The project is the brainchild of Peter Thiel, a billionaire known as a self-professed Trump supporter, among other people. A concrete plan for a future in which people may flee to autonomous ocean states that are able to experiment with political systems of their own choice has been put on the drawing board.

Fleeing to the frontier is human. Recently, Amazon founder Jeff Bezos made a space flight. Speaking at a press conference after the flight, Bezos invited a storm of controversy by commenting: "I want to thank every Amazon employee and every Amazon customer, 'cause you guys paid for all this." Before the flight, anti-Bezos petitions (which aimed to stop Bezos from returning to the Earth) are said to have attracted signatures from hundreds of thousands of supporters. Throwing the gauntlet to Bezos and other rich people engaging in spacefaring ventures, one of the petitions stated: "Billionaires should not exist ... on earth, or in space, but should they decide the latter they should stay there."

Behind this statement appears to be the complacent assumption that even for the world's richest, relocating to outer space on a permanent basis would not be a realistic option. However, what would become of our society if an exodus of the wealthy class to outer space or other new frontiers happened?

Sometime later in this century, upper-class citizens who have fled to a new life above or under the oceans, in the skies, or in outer space may create "states of the winners, by the winners and for the winners" that have been liberated from a malfunctioning system that is democracy. Elections and democracy could become nothing more than symbols of the inefficiencies and irrationalities that the people left behind are stuck with—symbols that may elicit nostalgic feelings and condescending smiles from the "winners."

Flight from democracy is a scenario for a politico-economic revolution of the 21st century, following the French and Russian revolutions of the previous centuries. This scenario forces us to confront the question of how we can deal with a flight from democracy.

>> Original text in Japanese

* Translated by RIETI.

August 20, 2021 Nihon Keizai Shimbun

October 7, 2021