Economists and political scientists have debated the question “Is it democracy that leads to development or development that leads to democracy?” Economic histories of various countries suggest that democracy and development are both causes and affects each other.
Definition of terms minimises chance of misunderstanding. We must, therefore, first define democracy and then development. After that, we proceed to arguments which bolster the view that one phenomenon can be the cause of or the effect of the other.
Democracy in the original Athenian sense is out of question these days. Instead of all citizens taking part in political discussions and decision making, they all take or are free to take part in electing representatives. The first clue to whether a society or State is democratic, is if those who hold top government positions such as prime minister or president are elected.
There are two types of democrats: Process democrats who enquire whether the leaders are elected in a free and fair election. The other group principle democrats look to the rights of the individual. They say it is not enough that leaders are elected individuals must enjoy freedoms of assembly, choice, conscience and freedom from what.
The principle democrats say a society does not enjoy full democracy unless interest or pressure groups operate freely. These include trade unions, chambers of commerce faith groups and so on.
There are those who equate democracy with a development market system with a class of business persons called bourgeoisie. When England was on agricultural country political power was shared between landlords and the work of manufacturers and industrialists. These agitated for a share in political power.
In 1832, the British constitution was reformed to include these wealth creators.
Later workers successfully organised themselves into trade unions and pressed not only for better conditions of work but widening of the franchise. What we see is that industrialisation took place in England when there was exclusive rather than inclusive democracy. With the growth of industrialisation, democracy also grew.
Development takes place when the economy achieves higher growth rates in agriculture, industry and service or the tertiary. This development is reflected in widespread literacy and health as human dignity and freedom.
For development to take place there must be savings and these savings through financial intermediaries like banks should be available for investment.
Savings are made either by individuals or the state, usually by both. Do savings grow higher under an authoritarian regime or democracy? Individuals save if they earn more than is needed for necessities and when their propensity to save is higher than their propensity to consume. In ordinary parlance we may prefer to save some of their money than to spend all of it
Where incomes are very low the state can be main source of savings. We learn this from stories of the Far East such as Singapore where compelleu save as much 20 or 25 percent annually.
This is possible under an authoritarian regime where presidents can be voted out of office by the electorate they refrain from imposing higher direct or indirect taxes. Instead they incur budget deficits. In The Economist dated 1st to 7th March 2014 in the article headed “What’s gone wrong with democracy” we read “And within the west democracy has too often become associated with debt and dysfunction at home and over react abroad”
During the one party era, the Agricultural Development and Marketing Corporation (Admarc) was used by the State as an agent of the savings function. It was the sole buyer of peasant cash crops, offering lower prices than could have prevailed under a free market system. The difference was saved. Admarc had surpluses those days which it invested in parastatal from the development point this was good policy.
Democrats spoke against the monopoly and demanded that private buyers be allowed. It was believed that under such market structures, rural poverty would diminish because peasants would be paid higher prices for their crops. More than 20 years have passed since Admarc lest its monopoly, whether smallholders are now better off needs investigation. What is clear is that Admarc is no longer self-supporting and no longer acts as a state agent for savings.
Political parties have already hinted the will restructure Admarc without indicating how. In democratic countries, political parties usually promise the electorate more than they actually deliver. Short-term thinking is the enemy of sustainable development.