Home >Opinion >How liberal democracies are born

Much in life looks obvious after the fact. The challenge is to understand events and trends earlier, which is especially important when the issue is the demise of democracy.

In their excellent new book How Democracies Die, Harvard professors Steven Levitsky and Daniel Ziblatt use international experience to examine the question. In recent cases, the cause was not the overthrow of an elected government, but the actions of elected leaders.

The modus operandi is surprisingly similar. An elected populist demagogue eliminates or weakens the checks and balances on his authority by undermining the independence of the courts and other bodies, severely restricting the freedom of the press, tilting the playing field to make elections easier to win, and delegitimizing and imprisoning political opponents.

Venezuela provided many of the lessons that Levitsky and Ziblatt cite: its democracy is already a corpse. The question there is how to resurrect it—a challenge complicated by the country’s ongoing hyperinflation and humanitarian catastrophe. Should Venezuela postpone the re-establishment of democracy and focus on ousting President Nicolás Maduro and reviving the economy, or should it re-establish democracy before tackling economic matters?

Historically, liberalism preceded democracy in Europe. As Princeton University’s Jan-Werner Mueller argues in his book Contesting Democracy, combining the two principles, by extending the franchise at the end of the 19th century, made for an unstable compound. On one hand, there is the danger of what Fareed Zakaria called “illiberal democracy": elected governments that do not respect civil rights. On the other, there is what Harvard’s Yascha Mounk calls, “undemocratic liberalism": regimes that protect individual rights and legal equality, but delegate public policymaking to unelected technocratic bodies like central banks and the European Commission.

In most countries, the wellbeing of the majority depends on the willingness of capitalists, entrepreneurs, managers, and professionals to organize production and create jobs. But these elites are unlikely to do so if their property and civil rights are not protected. Communism can be understood as an attempt to eliminate dependence on these elites by organizing production through the state. But excluding these elites causes a shortage of financial capital and know-how. So, a basic bargain at the core of liberal democracy is the recognition of rights that key minorities value and that are fundamental to generating broader benefits.

What happened in Venezuela was near-elimination of property rights, which caused a massive exodus of those who could organize production. Not coincidentally, this process coincided with an oil boom and massive external borrowing. Dollar abundance convinced the ruling clique that the state could substitute for the productive elite, through nationalization and other forms of collective property. While the mirage lasted, the system could tolerate moderately competitive elections: it had become an illiberal democracy. When the price of oil plummeted in 2014, the mask slipped, and the economy imploded. By December 2015, voters elected a national assembly with a two-thirds opposition majority, signalling to Maduro that even a highly illiberal democracy would not suffice to maintain them in power. At this point, Venezuela descended into outright dictatorship.

So how can democracy be revived? Given the humanitarian crisis, Venezuela needs a rapid economic recovery, which is unlikely unless property rights are credibly re-established. But how is this possible in the context of majority rule? What will prevent a future electoral majority from grabbing assets again after the economy recovers?

Levitsky and Ziblatt warn that democracy requires political competitors to refrain from acting too uncooperatively. Such a system, based on mutual recognition and forbearance, was formalized in Venezuela in 1958, through the Punto Fijo Pact, which stabilized democracy for 40 years, before Chávez denounced and destroyed it. Such pacts cannot extend recognition to organizations that oppose democracy.

Spanish democracy died in the 1930s because a system of mutual recognition among fascists, conservatives, liberals, and Communists was impossible. Democracy in West Germany after World War II required a denazification process that banished the worldview that had led to disaster. As Frederick Taylor discusses in his book Exorcising Hitler, society-wide rejection of Nazi ideology did not happen overnight. It required concerted political action. After all, in 1952, 25% of West Germans still had a positive view of Hitler, and 37% thought that their country was better off without the Jews.

Likewise, in Venezuela today, it will be impossible to re-establish liberal democracy if the current regime is allowed to return and expropriate again. Venezuela’s recovery depends on its capacity to translate the current catastrophe into a set of new social norms of the form: “never again shall we…"

There can be no stable democracy in Venezuela if it must co-exist with a large, totalitarian political party that can rely on funding from a corrupt, money-laundering elite. And such co-existence would rule out a robust or long-lasting economic recovery, because it would limit the credibility of individual rights. To secure liberal democracy, Venezuela must exorcise not only the regime and its henchmen, but also the world view that put them in power. ©2018/Project Syndicate

Ricardo Hausmann is director of the Center for International Development at Harvard University and a professor of economics at the Harvard Kennedy School.

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