Austerity and Democracy

This article focuses narrowly on three critical economic issues and their relationship to democratic transitions: economic crisis, economic growth and the middle class, and public expectations for social and economic opportunities. History provides compelling insights. First, short-term economic crises are often the proximate trigger of regime change. Second, economic growth under autocracy does not lead to political freedom, but the robust middle class that generally emerges as countries become more prosperous can prevent backsliding to authoritarianism once democracy is established. Third, the promise of political freedoms raises people’s expectations for material opportunities, so failure to deliver on these expectations makes a return to authoritarianism more likely. The transition from authoritarianism to democracy is notoriously difficult. Many countries that were at one time budding with democratic promise now appear mired in political infighting; others are trapped in downward spirals of poverty and unemployment. Substantive democracy, characterized by majority rule with strong minority and civil rights protections, comes only slowly for most transitioning countries. As reformers in countries around the world struggle to consolidate fragile democratic possibilities, and as the international community tries to support them, gleaning policy-relevant insights from the trajectories of other democratic transitions is now more important than ever. In order to distill practical lessons for policymakers and reformers, this article looks carefully at the statistical evidence and at landmark country transitions that occurred over the past 25 years—Brazil, Mexico, Indonesia, Thailand, Poland, Ukraine, and South Africa—with a diverse range of experiences and outcomes. The evidence from the case studies and the statistical research helps clarify why some democratic transitions have succeeded while others have stumbled, and reveals several important insights. Equity, inclusion, and a strong middle-class are linchpins of an enduring social contract.