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Commentary

If Democracy Is in ‘Crisis,’ We Should Turn to the Marketplace



Recently, catching up on email brought me across several references to a crisis in democracy. Clay R. Fuller had written that “One could fill a library with the books and reports regarding the ongoing ‘crisis’ of democracy.” In most, political democracy is treated as an ideal. Yet it is a seriously flawed ideal. In fact, as F. A. Hayek noted long ago, “all the inherited limitations on government power are breaking down before it ... unlimited democracy ... is the problem today.”

Perhaps the most blatant evidence is the frequency with which policies and candidates claiming majority support advance coercive measures that take from some to give to others. Such piracy violates universal moral and ethical condemnations of theft, so it cannot be an ideal.

There are, in fact, several ways political democracy falls short as an ideal. To be ideal, it would avoid violating individuals’ established rights. It would be responsive; people’s votes would have to matter. It would give people incentives to become well-informed and think carefully about policies. It would require powerful incentives to deter dishonesty and misrepresentation. It would also have to be limited in scope, as no one wants every issue that concerns them subject to majority determination.

It is hard to think of government policies that do not violate some people’s rights. In fact, such violations are often the main driver of policy (e.g., price controls). And those violations eviscerate the central function of a government advancing its citizens’ well-being–defending existing rights.

Despite volumes of democracy-extolling rhetoric, virtually no one’s vote changes the results. Name one time your vote for or against a candidate or initiative altered the electoral outcome. Results are not responsive to individual preferences.

Further, voters face binary yes/no votes on initiatives or A/B votes on candidates representing bundles of policies and promises. That is far from giving voters power to effectively exercise their desires. The least harmful option, not the most preferred, is frequently chosen.

Most voters also face very limited incentives to consider policies carefully, illustrated by vast numbers who don’t even know their political representatives’ names. That is largely because individuals’ market voting with their dollars changes their outcomes—better matching their circumstances and preferences—while public policy voting almost never does, but also because more complex policy issues are more difficult to evaluate than private choices.

Politics also imposes fewer effective constraints on dishonesty and misrepresentation than market arrangements. Beyond greater “customer” ignorance, politics has no truth-in-advertising laws, money-back guarantees or effective warrantees. Politicians’ wares are not easily evaluated. They are primarily plausible-sounding stories about candidates’ intentions, which they cannot accomplish alone, backed with the every-ready excuse that failures represented the best deal actually possible. There is frequently no more than one “electable” competitor to keep you honest, and that is frequently limited only to election season.

In political democracy, a majority can also force its preferences on any issue upon all those who disagree. That is why our founders adopted constraints on majority abuse, such as limited, delegated powers and the Bill of Rights. However, those constraints have largely been undermined today.

In contrast to political democracy, free market capitalism, which reflects democratic self-government, represents a far better ideal.

Its system of exclusively voluntary cooperation based on self-ownership requires that property rights be respected; no majority can violate owners’ rights. Individuals’ dollar votes change their outcomes, even when their preferences are not the majority’s preferences, generating the further advantage of making them far better informed than about politics. There also are more mechanisms providing honesty and accountability.

Holding out democracy as an ideal overlooks the question of whether market democracy or political democracy better serves citizens. A very strong argument can be made that a superior form is to remove virtually all decisions and policies we need not share in common (almost all of them, beyond the mutual protection of our rights) from government dictation, and let people exercise self-government, protected by their unalienable rights.


Gary M. Galles is a Research Fellow at the Independent Institute, Professor of Economics at Pepperdine University, and Adjunct Scholar at the Ludwig von Mises Institute.






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