WHYDID THEWEST EXTEND THEFRANCHISE? DEMOCRACY,INEQUALITY,AND GROWTHIN HISTORICAL PERSPECTIVE* DARON ACEMOGLU AND JAMES A. ROBINSON During thenineteenth century mostWestern societies extended voting rights, adecisionthat led tounprecedented redistributive programs. We argue that these politicalreforms can be viewed as strategic decisions by the political elite to preventwidespread social unrest and revolution. Political transition, rather than redistributionunder existing political institutions, occurs becausecurrent trans- fersdo not ensure future transfers, while the extension of the franchise changes futurepolitical equilibria and acts as a commitmentto redistribution. Our theory alsooffers a novelexplanation for the Kuznets curve inmany Western economies duringthis period, with the fall in inequality following redistribution due to democratization. I. INTRODUCTION Thenineteenth century was aperiodof fundamental political reformand unprecedentedchanges in taxation and redistribu- tion.Britain, forexample, was transformedfrom an ‘‘oligarchy’’ runby an eliteto a democracy.Thefranchise was extendedin 1832 and thenagain in 1867 and 1884, transferringvoting rights toportionsof the society with noprevious political representation. Thedecades afterthe political reformswitnessed radical social reforms,increased taxation, and theextension of educationto the masses.Moreover, as notedby Kuznets,inequality ,whichwas previouslyincreasing, started todecline during this period:the Gini coefficientfor income inequality in England and Waleshad risenfrom 0.400 in 1823 to0.627 in 1871, but fell to0.443 in 1901. Twokey factors in thereduction in inequality werethe increase in theproportion of skilled workers [Williamson 1985] and the redistributionof income toward thepoorer segments of the society.Forexample, taxes rose from 8.12 percentof National Productin 1867 to18.8 percentby 1927, and theprogressivity of thetax systemincreased substantially (seeLindert [1989]). *Wewould like to thank two anonymousreferees, and Pranab Bardhan, Ruth Collier,StevenDurlauf, Jeffry Frieden, Edward Glaeser,ClaudiaGoldin, PeterLindert, T orstenPersson, Dani Rodrik, John Roemer ,KennethSokoloff, PeterT emin,Erik Thorbecke,Jaume V entura,Michael Wallerstein, and seminar participantsat BostonUniversity ,theUniversity of Chicago,Cornell University , HarvardUniversity ,theNational Bureau of EconomicResearch, Universidad de losAndes, Singapore National University ,andthe World Bank forhelpful commentsand suggestions. r 2000by thePresident and Fellowsof Harvard Collegeand theMassachusetts Institute of Technology. The Quarterly Journal ofEconomics, November2000 1167 1168 QUARTERLY JOURNALOF ECONOMICS Duringthe late nineteenth and earlytwentieth centuries, the franchisewas alsoextended in mostother Western societies. Democratizationwas again followedby increasedredistribution, and inmostcases, by thedownturn of theKuznets curve. Theseevents are hard tounderstand with ourexisting theories.If democratizationis likelyto lead toincreased taxation and redistribution(e.g., Meltzer and Richard [1981]), why should theelite extend the franchise? Our answer is that theelite were forcedto extend the franchise because of the threat of revolution. Weargue that extendingthe franchise acted as acommitmentto futureredistribution and preventedsocial unrest. In contrastto democratization,the promise by theelite to redistribute in the future,while maintaining political power,would nothave been credible. Thesecond contribution of our paper is topoint outthe potentiallink between democratization and theKuznets curve. 1 Rising inequality oftenassociated with industrialization in- creasessocial unrest and inducesdemocratization. Democratiza- tionin turnopens the way forredistribution and masseducation, and reducesinequality .Interestingly,inlinewith this approach, inanumberof Westerneconomies, the peak of theKuznets curve coincideswith theextension of thefranchise. Thethesis that theelite extended the franchise in orderto avoid arevolutionor social unrest is at theheart of our paper . Althoughwe are aware of no other papers in theeconomics literature,a nonformalliterature in political science,starting with theseminal work of Lipset [1960] and Moore[1966], has studied theorigins of democracy .Tothebest of our knowledge, however,noprevious work explained franchiseextension as a commitmentdevice to future redistribution or pointed outthe link betweendemocratization and theKuznets curve, though Ther- born[1977] and Rueschemeyer,Stephens,and Stephens[1992] havestressed the role of social con ict in democratization. 2 In 1.Other theoriesof the Kuznets curve includeKuznets’ [1955] original conjecturethat the curve wasgenerated by the dual economy dynamics generated bythe switch fromthe agricultural to the industrial sector; Lindert’ s [1986] hypothesisthat the curve resultedfrom the falling importance of income from the land;Williamson’ s [1985]argument that technological change increased wages relativeto capital income; and Aghion and Bolton’ s [1997]model where accumula- tionby therich eventuallypushes down the interest rate sufficiently to allow the poorto invest and catch up. 2.In a differentcontext, North and Weingast [1989] have argued that the introductionof theEnglish Parliament in the seventeenth century wasa commit- mentto low taxes in the future. Our paperis also related to models of political WHY DID THE WEST EXTEND THE FRANCHISE? 1169 SectionIV below,weoutline three alternative theories and discuss whetherany oftheseappear togivea betterdescription of thehistorical events than ourpreferred story .The rst,which we referto as theEnlightenment view ,is that theelite extended the franchisebecause their social values changed. The second theory is that political competitionwithin theelite led tothe extension of thefranchise when one of thefactions, in an attemptto increase its support,brought new groups into the political system(see Himmelfarb[1966] and Collier[1999]). Thethird, whichis akinto thefamous thesis of Moore[1966], isthat themiddle class was the driving forcebehind theextension of thefranchise, in part hoping toshift thefuture balance ofpower. Although all threestories are likelyto have contributed to democratization in Europein the nineteenthcentury ,especiallyto the extension of thefranchise to women,our interpretation is that in Britain, France,Germany , and Sweden,the threat of revolutionwas themajor factor in the extensionof thefranchise to the poorer segments of thesociety . II. A MODEL OF DEMOCRATIZATION In this sectionwe developour main model of democratization. Wepostpone a discussionof alternative models of franchise extensionuntil SectionIV . Weconsider an innite horizon economy with acontinuum1 ofagents. A proportion l ofthese agents are ‘ ‘poor,’’whilethe remaining 1 2 l forma rich‘ ‘elite.’’ Throughoutthe paper superscript p will denotea pooragent and r will denotea rich agent(or member of the elite). We will treatall pooragents as identical,and all membersof the elite will alsobe identical. Initially,political poweris concentratedin thehands oftheelite, 1 but l . 2,soif thereis full democracy,themedian voter will bea poor agent. Thereis auniqueconsumption good y with pricenormalized tounity ,and auniqueasset h (which should bethought of as a combinationof human and physical capital and land). Webegin ouranalysis oftheeconomy at time t 5 0whereeach poor agent p r p has capital h0,and eachmember of theelite has h0 . h0 $ 1. In this sectionthese stocks are exogenous, so we drop timesub- scripts.Accumulation is investigatedin SectionIII. conict andrevolution, including Roemer [1985], Grossman [1991, 1995], and Ades andV erdier[1993]. 1170 QUARTERLY JOURNALOF ECONOMICS Thereare two methods of producing the nal good,both m m linearin capital. The rstis amarkettechnology , Y t 5 AH t , m where H t istheamount of capital devotedto market production. h Thesecond is an ‘‘informal,’’ orhomeproduction technology , Y t 5 h h BH t , where H t is theamount of capital usedin homeproduction. h m i Naturally,wehave H t 1 H t 5 H ; e h di.Weassume that A . B;thus,market production is always moreproductive. The only roleof homeproduction in ouranalysis is toensure an equilibrium tax rateless than 100 percent,because while taxes can beimposed onthemarket sector, home production is nottaxable. A high value of B impliesthat onlylimited taxes can belevied on income. All agentshave identical preferencesrepresented by alinear indirectutility functionover net income, and adiscountfactor b [ i i (0,1). Posttaxincome is givenby yˆ t ; (1 2 t t)Ah 1 Tt, for i 5 p, r, where t t isthetax rateon income,and Tt $ 0is thetransfer that theagent receives from the state. We assume throughout that taxesand transferscannot be person speci c— hence Tt and t t are notindexed by i.Thegovernment budget constrainttherefore m impliesthat Tt 5 t t AH . The l pooragents, though initially excludedfrom the political process,can overthrowthe existing government and takeover the capital stockin any period t $ 0.We assume that if arevolutionis attempted,it always succeeds.Revolution provides a window of opportunityfor a large-scaleredistribution of assets away from therich to the poor ,sothe poor take over control of the capital stockof theeconomy ,but afraction1 2 µt ofthecapital stockgets destroyedin theprocess. 3 Therefore,if thereis arevolutionat time t,eachpoor agent receives a per-periodreturn of µt AH/l in all futureperiods: total income in theeconomy is µtAH and is shared between l agents.We assume that