Chapter 7: Developed Democracies

Defining Developed Democracies

What is a “Developed Democracy”?

• Developed democracy: a country with institutionalized democracy and a high level of economic development
• Formerly referred to as “First World”
• Developed democracies are contrasted with “communist and postcommunist countries” and “developing countries.”
• These terms are also falling out of favor: In 2016, the World Bank began phasing out “developed” and “developing” as classifications.

Developed Democracies Around the World

• Predominantly Europe and the Americas, but an increasingly diverse category.
• Grouping countries by institutional similarities is a useful way to compare and study political systems.

Key Characteristics of Developed Democracies

• Strong economic and political liberties
  • Liberal democracy, private property, free markets
  • Service-based industry
• Higher or upper-middle income ratings
• Very high or high levels of human development (HDI)
• Postindustrial societies

Mexico’s Transition to a Middle-Class Society

• Dramatic socioeconomic shift over past twenty years
• Has become a developed democracy
• One of the world’s most open economies
• Dependent on trade of manufactured goods
• Reduced its heavy dependence on oil trade
• Experienced an unprecedented period of political stability and economic growth
• Allowed many Mexicans to ascend to the middle class and move to more urban areas
• Not everyone has benefitted equally
  • Millions of small farmers have been driven out of business due to competition from US imports
  • Economy unable to produce enough jobs
  • Thus, many poor Mexicans seek employment north of the border

Freedom and Equality in Developed Democracies

Balancing Freedom and Equality

• Developed democracies reconcile freedom and equality differently.
• Often relates to their political-economic systems
  • Liberal systems emphasize freedom.
  • Social-democratic systems emphasize equality.
  • Mercantilist systems focus on development rather than freedom or equality.

Freedom and Equality: Political Differences

• Differences in liberty (freedom)
  • Different civil rights and liberties
  • Differences in constitutional court strength and activism
• Differences in participation
  • Voter laws: eligibility, registration rules, and compulsory versus voluntary voting
  • Referenda and initiative use
• Differences in competition
  • Electoral systems
  • Campaign funding rules
  • Executive power and type (“separation of powers” or not)

In Focus: Political Diversity in Developed Democracies

Freedom and Equality: Economic Differences

• All promote economic freedom through capitalism
• Differences in promoting equality:
  • Wealth redistribution (taxation; welfare spending)
  • Provision of public goods
  • Job protection and/or unemployment insurance

Contemporary Challenges for Developed Democracies

Modern and Postmodern Politics

The value transition: from modern to postmodern

• Modern: characterized as secular, rational, materialistic, technological, and bureaucratic, and places a greater emphasis on individual freedom
• Postmodern: characterized by a set of values that center on “quality of life” considerations and give less attention to material gain

Big questions

• What does this transition mean for politics?
• How much change is really occurring?

Modern vs. Postmodern Values

Modern

• Prioritizes
  • Rationality and science
  • Individualism and autonomy
  • Progress and material obtainment
• Rejects the obedience and collectivism of traditional values

Postmodern

• Prioritizes “quality of life” issues
  • E.g., environment as public good
  • Equality and social justice
• Skepticism regarding
  • Science and technology
  • Nationalism and patriotism
  • Authority and hierarchy

Political Institutions: Sovereignty Transformed?

Two Modern Trends Challenging the State System

• International integration
  • Process by which states pool their sovereignty, surrendering some individual powers in exchange for political, economic, or societal benefits
  • Increases power and authority of international and regional organizations
• Devolution
  • Process of devolving, or “sending down,” political power to lower levels of government
  • Increases the power and authority of subnational governments

The Origins of the European Union

• Post WWII: Goal to prevent another European war
  • 1950 Schuman Declaration
• 1951: European Coal and Steel Community (ECSC) created
  • Six countries: France, Germany, Italy, Belgium, Netherlands, and Luxembourg
  • Functional cooperation on coal and steel

Timeline of European Integration

• 1950s-1960s: increasing integration
• 1970s: Membership expansion; EU parliament directly elected
• 1980s: Former nondemocracies join
• 1990s-early 2000s: EC becomes EU; euro introduced; massive expansion in membership
• Late 2000s-present: EU in crisis (euro economic crisis, Brexit)

Major EU Institutions: The European Council

• Sets the “general political direction and priorities” of the EU
• Heads of government/state of EU member states
• Meets four times a year at European Summit
• Elects the EU president
  • President serves 2.5-year terms

Major EU Institutions: The European Commission

• Led by 27 members plus a president of the commission
  • 27 members: one per member state
  • President chosen by the European Council and approved by European Parliament
  • Oversees a very large bureaucracy
• Most powerful EU institution
  • Initiates proposals
  • Manages EU agencies
  • Monitors implementation of EU treaties

Major EU Institutions: The European Legislature

• EU is a bicameral legislature.
  • For EU policy to pass, it needs approval from both “houses.”
• European Parliament (EP)
  • Directly elected by EU voters using PR rules
  • Serves for 5-year terms
• Council of the European Union (“The Council”)
  • Appointed ministers of member states

Major EU Institutions: The European Court of Justice

• 27 judges; led by a president
  • Serves for 6-year renewable terms
• Highest court
  • Decides whether states are complying with EU laws.
  • Adjudicates between member states, EU, and citizens.
• EU law supersedes national laws.

The European Union: Integration, Expansion, and Resistance

• The EU: the path toward supranational governance
• Intergovernmental system: a system in which two or more countries cooperate on issues
• Supranational system: an intergovernmental system with its own sovereign powers over member states

Major Challenges to EU Integration

• “Democratic deficit”
  • EU as an elite-driven project
• Euro crisis
• EU enlargement
  • Immigration, jobs, and the Brexit pushback

The Euro: the Hopes, and What Worked

• The hopes
  • Common prices would stimulate trade and cross-border investment.
  • One currency would foster a single European identity.
  • Increase the EU’s international power
  • Euro as a “reserve currency” for other countries
• What worked
  • Expanding international economic power by becoming a reserve currency

The Euro: What Didn’t Work

• The problems created
  • Economic dependencies
  • Trade deficits
  • Debt crises
  • An increasing North-South divide

EU Expansion and the Rise of the Far Right

• The hopes
  • Spread democracy, promote economic transitions
  • Increase EU influence: economics, politics, and population
• What worked: economic and political reform
• The problem: emerging tensions over immigration and jobs
• The response: Brexit and rise of far right

Devolution and Democracy

• A second challenge to state (national) sovereignty: devolution
  • The challenge “from below”
• Political trend toward greater power for subnational government
  • Motivation comes from an in-public mistrust of the state (central government)
  • Devolution is seen as a way to bring government closer to the people.

In Focus: Means of Devolution

• Transfer of policy-making responsibility to lower levels of government.
• Creation of new political institutions at lower levels of government.
• Transfer of funds and taxation powers to lower levels of government, affording them more control over how resources are distributed.

Arguments For and Against Devolution

• In favor:
  • Improves trust in government
  • Represents marginal communities
  • Improves citizen engagement and ability to shape politics
• Against:
  • Undermines state capacity and autonomy
  • May destabilize ethnic relations and empower separatists

Societal Institutions: New Identities in Formation?

An Evolution of Means

• Traditional: obedience and authority
• Modern: rationality and science, individualism and autonomy
• Postmodern: challenged modernism from multiple angles

Why the Transition to Postmodernism may be Overstated

• Religious/cultural heritage shapes societal values irrespective of a state’s level of development.
• Progress to postmodernism is not a smooth transition.
  • Economic development (stagnation or inequality) can lead to value “backsliding.”
  • Traditional and survival values are prioritized in times of economic hardship.

Diversity, Identity, and the Challenge to Postmodern Values

• New realities: Unprecedented wave of immigration to developed democracies
• Different developed democracies, different immigration populations
  • United States: Latin American immigrants
  • Canada, Australia, and New Zealand: Asian immigrants
  • Europe: North African and Middle Eastern immigrants

Reactions to this Immigration Wave

• Rising xenophobia
  • Fears that immigrants compete for scarce jobs and depress wages
• Debates over national identity and societal inclusion
  • Should states promote multiculturalism or assimilation?
  • Fear of identity shifts reinforces xenophobia and racism, undermines postmodern values.
• Cultural shifts and growing divergence in developed democracies
  • May undermine secular, postmodern values

Economic Institutions: A New Market?

Postindustralism in Developed Democracies

• Twentieth century: Manufacturing and industry
  • Focus on tangible goods
  • Examples: cars or computers
• Twenty-first century: Service sector
  • Focus on intangible goods
  • Examples: finance, insurance, real estate, education, retail sales, transportation, communication, high technology, utilities, healthcare, and business and legal services

Main Reasons for the Postindustrial Shifts

• Lower labor and production costs in developing countries
  • Trend accelerated by globalization
• Technological innovation
  • Reduces need for low-skill labor (and some high-skill labor)
  • Requires more education for entry-level positions
  • Result: Less economic opportunity and labor mobility

The Opportunities and Challenges of the Tech Economy

• Some new economic opportunities
  • Programmers, developers
  • “Gig labor”
• Significant economic damage
  • Manufacturing job loss
  • Many new jobs offer less pay and less economic security

Major Consequences of Postindustrial Economies

• Rising inequality
  • Challenges the balance of freedom and equality
• Increasing demands for policies that may reduce economic freedoms
  • Raises demands for trade barriers
  • Greater demands for income redistribution
  • Limitations to immigration and globalization
  • Linked to xenophobia and rejection of postmodernism

The Welfare State: The Benefits

• Less extreme poverty
• Lower infant mortality
• Increased life expectancy
• Improved literacy and education
• Big picture: better economic opportunities

TWS: Controversies and Challenges

• Increasingly expensive
  • More programs require more money
• Trends magnified by a growing demographic crisis
  • Working age population aging and shrinking
  • Less taxes paid in, more expenditures paid out
  • Higher wages = higher labor costs = less business profit = less businesses = fewer jobs

Potential Policy Solutions and Their Problems

• Increase labor force size (immigration; increased retirement age)
  • Significant public backlash
• Cut welfare benefits
  • Less spending on health and education undermines long-term growth.
  • Rising frustrations may trigger protests or riots.
• Increase government debt.
  • Unsustainable (see Greece; Japan)
• Raise taxes
  • Voters do not like this.
  • Firms or wealthy individuals may leave the country to avoid taxes.
• Technical fixes
  • Require effective political oversight

In Sum: Developed Democracies in Transition

• Developed democracies are countries with institutionalized democracy and postindustrial economies.
• These countries prioritize freedom and equality but differ in how they find the balance between each other.
• These countries have long been dominated by modern political values, but may or may not be transitioning to postmodern values.
• Developed democracies face a number of recent challenges.
  • Sovereignty has been challenged by international integration and devolution trends.
  • Societal institutions are challenged by postmodern shifts and increasing diversity brought on by immigration.
  • The traditional economic status quo has been uprooted by postindustrial development and rising social welfare costs.
• Overall, these countries are characterized by the greatest freedom and best quality of life in the world, but they also are facing a number of challenges that can improve or undermine this prosperity.

Key Terms

1. Developed democracy - a country with institutionalized democracy and a high level of economic development
2. Intergovernmental system - a system in which two or more countries cooperate on issues
3. Modern - characterized as secular, rational, materialistic, technological, and bureaucratic, and places a greater emphasis on individual freedom
4. Postmodern - characterized by a set of values that center on “quality of life” considerations and give less attention to material gain
5. Supranational system - an intergovernmental system with its own sovereign powers over member states