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Inequality and Democratization: an Elite-Competition Approach

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Inequality and Democratization: An Elite-Competition Approach Ben Ansell and David Samuels Contents 1 Introduction 1 1.1 Why Democracy? . 1 1.2 Democracy or Property? The Redistributivist Thesis . 2 1.3 Puzzles for the Redistributivist Approach . 4 1.4 Democracy and Property? . 7 1.5 Democracy, Property, and Elite Competition . 10 1.6 Plan of the Book . 15 2 Inequality, Development, and Distribution 19 2.1 Introduction . 19 2.2 Inequality and Class Structure: A Thought Experiment . 21 2.3 Inequality and Class Structure: Historical Examples . 26 2.4 Conclusion: Implications of Social Tables . 39 3 Actors and Interests 42 3.1 Introduction . 42 3.2 Inequality, Income and Interests . 43 3.3 Inequality, Income and Interests and the 2nd Reform Act . 51 3.4 Other Cases . 60 3.4.1 Imperial Germany . 60 3.4.2 19th Century Sweden . 62 3.4.3 20th-century South Korea . 63 3.4.4 Contemporary China . 65 3.5 Conclusion . 68 4 An Elite Competition Model of Democratization 70 4.1 Introduction . 70 4.2 The Redistributivist Approach . 71 i ii CONTENTS 4.2.1 Introduction . 71 4.2.2 Boix’s Argument . 72 4.2.3 Acemoglu and Robinson’s Argument . 73 4.3 Rethinking Assumptions . 75 4.4 An Elite-Competition Model of Democratization . 82 4.4.1 Introduction . 82 4.4.2 The Economic Model . 82 4.4.3 The Political Model . 86 4.5 Conclusion . 105 4.6 Appendix: Thinking about Asset Mobility . 106 5 Assessing the Relationship between Inequality and Democratization 109 5.1 Introduction . 109 5.2 Quantitative Research on Inequality and Regime Change . 110 5.3 Dependent and Independent Variables . 112 5.3.1 Conceptualizing Democracy . 112 5.3.2 Conceptualizing Inequality . 114 5.3.3 Control Variables . 116 5.4 Empirical Analysis . 117 5.4.1 Democracy as a Dichotomous Measure, 1820 to 1992 . 117 5.4.2 Democracy as a Dichotomous Measure, 1955 to 1999 . 126 5.4.3 Democracy as a Continuous Measure, 1820 to 1992 . 129 5.4.4 Democracy as a Continuous Measure, 1955 to 2004 . 131 5.4.5 Instrumental Variables and Checks on Exogeneity . 133 5.5 Conclusion . 136 6 Inequality and Democratization: Empirical Extensions 139 6.1 Introduction . 139 6.2 Varieties of Regimes . 140 6.2.1 Autocracy, Partial Democracy, and Full Democracy . 140 6.2.2 Polity Thresholds . 141 6.2.3 Decomposing the Elements of Democracy . 147 6.3 Inequality and Regime Change at Different Levels of Development 150 6.4 The Impact of Asset-Mobility . 152 6.5 Conclusion . 155 CONTENTS iii 7 Democracy, Inequality and Public Spending: Reassessing the Evi- dence 157 7.1 Introduction . 157 7.2 Democracy and Redistribution: Theoretical Expectations . 159 7.3 Redistribution 1880 to 1930: Reexamining the Evidence . 163 7.3.1 Sample . 165 7.3.2 Dependent Variables . 166 7.3.3 Independent Variables . 167 7.3.4 Aggregate Public Spending . 168 7.3.5 Disaggregating Public Spending . 179 7.3.6 Spending 1880-1930: Summary . 182 7.4 Findings: 1950-1999 . 182 7.5 Conclusion . 187 8 Democracy, Redistribution, and Preferences 188 8.1 Introduction . 188 8.2 Preferences over Redistribution and Democracy: Theory . 190 8.3 Preferences over Redistribution: Empirics . 195 8.3.1 Data and Sample . 197 8.3.2 Income, Inequality, and Redistributive Preferences . 201 8.3.3 ‘Typical’ Redistributive Preferences and Inequality . 204 8.4 Preferences over Democracy: Empirics . 210 8.4.1 Attitudes towards State Ownership . 210 8.4.2 Support for Democracy: Expectations . 213 8.4.3 Attitudes toward Democracy . 214 8.5 Conclusion: Interpreting our Results . 222 8.A Estimation Technique for Two-Stage Analysis . 224 9 Conclusion 226 Bibliography 234 List of Tables 1.1a Income and Land Inequality: Probability of Democratization . 14 1.1b Income and Land Inequality: Example Cases . 14 2.1 Income Distribution in China, 1880 . 27 2.2 Social Table for the UK, 1867 (adult males only, income in £) . 30 2.3 Social Table for Germany 1882 . 33 2.4 Social Table for Russia 1904 . 35 2.5 Social Table for Peru 1876 . 36 2.6 Social Table for Chile 1861 . 37 2.7 Social Table for Java 1924 . 38 3.1 Size of the Working Class . 50 4.1 Expected Effects of Different Forms of Inequality on Choices of Bourgeoisie and Elites . 97 4.2 Expected Effects of Different Forms of Inequality on Choices of Bourgeoisie and Masses . 105 5.1 Democracy as a Dichotomous Variable, 1820-1992 . 118 5.2 Predicted Yearly Probability of a Democratic Transition, 1820 to 1992 . 119 5.3 Conditional Logit Specifications, 1820-1992 . 121 5.4 Testing Functional Forms 1820-1992: Democracy as a Dichoto- mous Variable . 123 5.5 Democracy as a Dichotomous Variable, 1955-2004 (BAR Data) . 127 5.6 Examining the Polity Index 1820-1992 . 129 5.7 Examining the Polity Index 1955-2004 . 132 5.8 Instrumental Variables Tests: BM Gini 1820-1992 . 135 5.9 Instrumental Variables Tests: BAR Gini 1950-2000 . 137 iv LIST OF TABLES v 6.1a Regime Change Probabilities: BM Gini .30 to .55 . 141 6.1b Regime Change Probabilities: Rural Inequality 0 to .95 . 142 6.2 Goertz Components of Polity Index . 149 6.3 High and Low Income Countries . 151 6.4 Capital Shares . 154 7.1 1880-1930 Total Social Spending: Democracy Dummy . 169 7.2 1880-1930 Total Social Spending: Polity Score . 173 7.3 1880-1930 Total Social Spending and Turnout . 175 7.4 1880-1930 Total Social Spending and Left Vote Share . 178 7.5 1880-1930 Types of Spending: Democracy Dummy . 180 7.6 1880-1930 Types of Spending: Polity Score . 181 7.7 1950-1999 Total Government Consumption . 184 8.1 Competing Hypotheses about Preferences . 196 8.2 Autocracies Under Analysis . 199 8.3 The Effect of Income on Redistributive Preferences . 202 8.4 Effects of Inequality on Citizens’ Typical Redistributive Preferences206 8.5 Preferences over State Ownership . 212 8.6a Views on whether Democracy is Desirable: Binary . 215 8.6b Views on whether Democracy is Desirable: Ordered . 218 8.6c Probability of Believing Democracy is Very Desirable: Effects of Income and Redistribution Preferences . 219 8.6d Probability of Believing Democracy is Very Desirable: Effects of Income and State Ownership Preferences . 219 8.7 Views on whether Democracy is Good for the Economy . 221 List of Figures 2.1 An Equal Society . 22 2.2 An Unequal Society . 23 2.3 China’s Gini Coefficient 1985 to 2010 . 27 4.1 The Partial Democracy Game . 90 4.2 The Joint Democracy Game . 98 5.1 Linear Estimates of Probability of Democratic Transition 1820- 1992 (BM Gini ) using Model 1 of Table 5.4 . 125 5.2 Quadratic Estimates of Probability of Democratic Transition 1820- 1992 (BM Gini ) using Model 2 of Table 5.4 . 125 6.1 Effects of Shift from 5th to 95th Percentile of BM Gini on Per Period Probability of Transition for Polity Thresholds . 143 6.2 Effects of Shift from 5th to 95th Percentile of Rural Inequality on Per Period Probability of Transition for Polity Thresholds: His- torical Dataset . 145 6.3 Effects of Shift from 5th to 95th Percentile of BAR Gini on Per Period Probability of Transition for Polity Thresholds . 146 6.4 Effects of Shift from 5th to 95th Percentile of Rural Inequality on Per Period Probability of Transition for Polity Thresholds:Modern Dataset . 146 7.1 The Effects of Democratization (0 to 1) on Social Spending at Different Levels of Rural Inequality . 171 7.2 The Effects of Democratization (0 to 1) on Social Spending at Different Levels of Income Inequality . 171 7.3 The Effects of Turnout on Social Spending at Different Levels of Rural Inequality . 176 vi LIST OF FIGURES vii 7.4 The Effects of Turnout on Social Spending at Different Levels of Income Inequality . 176 7.5 The Marginal Effect of the Polity Score on Government Con- sumption at Different Levels of Income Inequality . 186 8.1a Redistributivist Preference Formation Model . 190 8.1b Elite-Competition View of Redistributive Preferences . 191 8.1c Elite Competition View of Democracy Preferences . 192 8.2 Effect of Income on Redistributive Preferences . 203 8.3a Fifth Percentile . 207 8.3b Twenty-fifth Percentile . 208 8.3c Median Citizen . 208 8.3d Seventy-fifth Percentile . 209 8.3e Ninety-fifth Percentile . 209 8.4 Effect of Income on State Ownership Preferences at Varying Lev- els of Inequality . 213 Preface In light of recent experience, the question is not whether democracy will rob prop- erty owners of their property, but whether propertied interests will rob common men of their chief weapon of defense against exploitation, democracy. Lippincott ([1938] 1974, 238) Our intellectual journey began with a question Samuels raised to Ansell. Long a student of Brazilian politics, Samuels also taught a graduate seminar on democ- ratization. Reading Boix and Acemoglu and Robinson’s.
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