Explaining the Path of the Democratic Transition

Abstract

The paper explains two centuries of development of the political systems of the west by the underlying economic fundamentals. Democracy indices for the average country have a strong long-run empirical relation to income that looks like a perfect transition curve. The traditional steady state political system was the three pillars model of king, aristocracy, and Church for half a millennium before modern development. Development caused the gradual but inevitable collapse of this model, as the agricultural and religious transitions undermined two of the pillars. However, all political systems try to consolidate, giving spells of status quo equilibria, so the model broke down in leaps and bounds. Development also caused the growth of the middle class, which came to dominate. It wanted mass representation, so the political system changed to democracy. This explains why the main causal direction is from development, as proxied by income, to democracy.