Comprehensive Study Guide on Modern Democratic Principles and Economic Systems

Transition from Absolutism to Modern Civil Society

The shift from absolute monarchy to modern democratic systems was driven by significant ideological changes and social upheaval. During the era of absolute monarchy, the prevailing ideology was the Divine Right of Kings, which posited that a monarch's authority was granted directly by God. This was eventually challenged by the rise of the Bourgeoisie (the citizen class), who demanded the removal of restrictions on economic activities and the recognition of personal rights. This transition was marked by several pivotal historical events: the Puritan Revolution, the Glorious Revolution, the American Declaration of Independence, and the French Revolution. These events collectively paved the way for modern democratic governance.

A distinction is made between a 'Revolution' and a 'Coup d’état.' A revolution involves a fundamental transformation of a country’s political principles and social structure. In contrast, a coup d’état refers to the illegal use of force by internal groups or factions to seize control of the existing government power structure.

Natural Rights and Social Contract Theory

The principles of modern democratic politics are rooted in the concept of natural rights, which suggests that all individuals possess inherent rights from birth. Several key thinkers developed these ideas through Social Contract theories, which describe how individuals agree to form a state to protect their rights.

Thomas Hobbes ($1588$-$1679$), in his seminal work Leviathan, described the 'state of nature' as a 'war of all against all.' To establish peace, he argued that individuals must enter a contract to transfer (surrender) their natural rights to a sovereign state with absolute power.

John Locke ($1632$-$1704$), in Two Treatises of Government, viewed the state of nature as one of 'Freedom, Equality, and Independence,' though it was functionally incomplete. He proposed that individuals 'entrust' (fiduciary trust) a portion of their natural rights to representatives. Crucially, Locke defined the right to resistance and the right to revolution, which applies if the government fails its duty. His thought heavily influenced the American Independence and French Revolutions.

Jean-Jacques Rousseau ($1712$-$1778$), a Swiss-born thinker active in France, wrote The Social Contract. He advocated for governance based on the 'General Will' (一般意思), where individuals remain truly free and equal by participating in the collective sovereignty rather than delegating it to representatives.

These principles were institutionalized first in the Virginia Declaration of Rights ($1776$), which stated in Article $1$ that 'all men are by nature equally free and independent, and have certain inherent rights.' This was followed by the American Declaration of Independence and the French Declaration of the Rights of Man and of the Citizen ($1789$), the latter of which declares in Article $1$ that 'men are born and remain free and equal in rights.'

The Rule of Law and Constitutionalism

The 'Rule of Law' (法の支配) emerged in medieval England as a concept to limit the arbitrary exercise of power by the monarch. It distinguishes between the power-holder and the law itself, asserting that universal laws and justice bind both the governed and those in power. This is closely related to 'Rechtsstaat' or Legalism (法治主義), a principle developed in $19$th-century Germany. While similar, Rechtsstaat emphasizes that all governance must follow laws enacted by the state—often referred to as the 'Rule by Law.'

Constitutionalism (立憲主義) is the tradition of limiting government power to safeguard the liberties of citizens. Article $16$ of the French Declaration of the Rights of Man states that 'any society in which the guarantee of rights is not assured, nor the separation of powers determined, has no constitution.' In the United States, constitutionalism evolved alongside the system of judicial review, where courts serve as the final arbiters of the constitutionality of laws.

Separation of Powers and Representative Democracy

The principle of the separation of powers was developed to prevent the abuse of government authority. John Locke proposed a system dividing power into the Legislative, Executive, and Federative branches, arguing for the supremacy of the Legislative power. Later, Montesquieu, in The Spirit of the Laws, advocated for the tripartite separation of powers (Legislative, Executive, and Judicial), which became a foundational element of the U.S. Constitution.

Popular Sovereignty and Representative Democracy (Indirect Democracy) are cornerstones of modern politics. In this system, citizens elect representatives to handle legislation and executive responsibilities. A defining expression of this principle was offered by Abraham Lincoln in his Gettysburg Address (mid-$19$th century), where he described democracy as the 'government of the people, by the people, for the people.'

Evolution of Economic Systems: From Industrial Revolution to Market Limits

The modern economic system took shape during the Industrial Revolution in the late $18$th century, characterized by the invention of the steam engine and large-scale factory production. This era saw the rise of the Capitalist class, who owned the means of production, and Classical Economics.

Adam Smith, in The Wealth of Nations, argued that productivity increases through 'division of labor' and 'specialization.' He famously suggested that economic activities are guided by an 'Invisible Hand' toward the public interest, advocating for minimal government intervention (Laissez-faire). David Ricardo furthered this with the 'Theory of Comparative Advantage' (Comparative Production Cost Theory), showing that free trade improves the economic welfare of all participating nations.

As market economies developed, issues such as monopolies, inequality, and depressions (market failures) emerged. This led to the birth of Socialism, theorized by Karl Marx and Friedrich Engels. Socialists argued for the public ownership of the means of production and a centrally planned economy to replace the market mechanism. This system was implemented in the Soviet Union following the Russian Revolution but largely collapsed during the $20$th century.

Keynesianism and Neoliberalism

The Great Depression of $1929$, triggered by the New York Stock Exchange crash, exposed the limits of classical economic theory. British economist John Maynard Keynes analyzed the cause as a lack of 'Effective Demand' (有効需要). He advocated for government intervention to stimulate demand through public spending and interest rate adjustments, a philosophy known as 'Modified Capitalism' (修正資本主義). In the United States, President Franklin D. Roosevelt implemented these ideas through the New Deal policy.

By the $1970$s, following the Oil Shocks, economies faced stagnation and reduced production capacity, leading to critiques of Keynesian policy. Milton Friedman emerged as a leading figure for Neoliberalism (新自由主義). This ideology emphasizes individual choice, deregulation, and privatization while minimizing government intervention. This shift influenced the policies of Margaret Thatcher (Thatcherism) in the UK, Ronald Reagan (Reaganomics) in the US, and Prime Minister Nakasone in Japan, who oversaw the privatization of Nippon Telegraph and Telephone Public Corporation, Japan Tobacco and Salt Public Corporation, and Japanese National Railways.

The 21st Century Economic Landscape

Modern capitalist economies are typically 'Mixed Economies' (混合経済), where a competitive private sector coexists with a government sector that manages social welfare. However, the $21$th century has highlighted the risks of a globalized market system. Notable crises include the $2008$ Global Financial Crisis (triggered by the subprime loan issue) and the economic disruption caused by the COVID-$19$ pandemic in $2020$. Additionally, 'State Capitalism' has emerged in countries like Singapore and China, where strong government authority is used to achieve rapid economic growth.

Questions & Discussion

1. Who was the legal scholar in the early $17$th century who advocated for the supremacy of law over the King to establish the 'Rule of Law'? Answer: Edward Coke.

2. Which $13$th-century legal scholar was quoted by Coke saying, 'The King is under no man, but under God and the law'? Answer: Bracton.

3. What is the concept that governance must be based entirely on laws enacted by a legislature, which developed in $19$th-century Germany? Answer: Rechtsstaat (Legalism).

4. Which US President is known for the phrase 'government of the people, by the people, for the people' during the mid-$19$th century? Answer: Abraham Lincoln.

5. Where was the speech 'government of the people, by the people, for the people' delivered? Answer: Gettysburg.

6. Which declaration articulated independence from Britain and included Locke's idea of the right to resistance? Answer: The American Declaration of Independence.