Abstract
Ekrem Karakoç’s first book combines a stunning critique of democratization theory and detailed qualitative and quantitative analysis. It raises a very important question: whether democracy reduces inequality or, in defiance of existing theory, actually increases it? Simply posing this question and providing some solid evidence that existing approaches to the relationship between democracy and inequality may be wrong makes this an important work. I find a number of questions left unanswered and many issues to discuss. However, the fact that this book sets an important research agenda cannot be denied.
Karakoç provides a lucid critique of existing democratization theory. Many leading lights in the field base their work on the assumption that democracy enables greater representation of the rights of the poor and working classes. Increasing opportunities for participation is widely believed to lead politicians in democratic countries towards policies that reduce inequality. Therefore, one should expect that in the transition from authoritarian to democratic rule, inequality would be reduced. However, as Karakoç points out, this has not been the case. In new democracies in recent years, inequality has increased. This holds not only for former communist countries of Central and Eastern Europe, but also for Southern Europe. Karakoç raises a difficult question: could democracy actually disadvantage the poor? Could democratic theory be making faulty assumptions, so that many of its central models and findings may be wrong? These are uncomfortable questions for a field that has placed great trust in the benefits of democratic rule.
Karakoç provides a plausible theory that might explain why new democracies increase inequality. He focuses on two aspects: party system volatility and disenfranchisement of poor voters. In new democracies, voter participation is low among poorer voters. And high volatility pushes political parties to use social spending promises to capture political constituencies, leading to a high degree of targeted benefits for the non-poor. This results in higher inequality.
Karakoç provides statistical analyses that carefully demonstrate each step in his causal argument, as well as paired case studies of the Czech Republic and Poland and Spain and Turkey. These show that countries with more volatile party systems spend more on potential electoral constituencies, undermining pro-poor policies. It really makes you think whether democratic theory has it all backwards and how this work may revise thinking about politics of social policy in new democracies.
There are some issues, however, that make this book less than fully persuasive. First, there is the time period considered. The recent wave of democratization coincided with the implementation of neoliberal policies globally, policies that are known to increase inequality. Since the book only studies one historical period and does not seem to control for the impact of neoliberal policy or compare countries with higher and lower degrees of neoliberalism, it remains possible that the observed inequality is caused primarily by this omitted variable.
Second, there is the question of how much variance is really explained by Karakoç’s model. It appears that the size of the differences explained are fairly small. For instance, on page 68, Karakoç notes that “new democracies have a higher level of targeted spending (57 percent) than longstanding democracies (53 percent),” but is this great enough to cause significantly higher levels of inequality? Then, there is the question of the measure of “targeted spending” being used. Targeted spending is defined simply as the “ratio of public cash spending to all social spending” or alternatively as the “ratio of pension spending to spending on the sum of pension, healthcare, and education spending.” But these blunt measures may hide a lot and also seem to represent an underlying liberal definition of the welfare state, which is meant to be residual and pro-poor.
If not fully convincing, Karakoç’s study is nonetheless pathbreaking in attacking one of the core findings of democratization theory. Democracy may not promote equality. This certainly helps to make sense of the postcommunist countries, where democratization was consonant with the destruction of universal, cradle-to-grave welfare states and the construction of markets in many spheres where they had not existed before. Whether democracy caused the rise of inequality in this context is not entirely clear, but it was certainly correlated with a massive burst of inequality. The fact that something similar was true in Southern European transitions lends additional credibility to these findings.
More research will have to be done to verify Karakoç’s results in other contexts and to consider the implications for social policy in new democracies and democratization theory. However, there should be no doubt that this book has started an important line of inquiry that has somehow escaped other scholars and appears, at first glance, to turn existing scholarship upside down.