The Need for Change Management
In the contemporary business environment, organizations fight the battle of competition by building their adaptive capabilities and preparedness for coping against the pressures of change. In the present scenario, top management give a lot of importance to change management process and the need for being flexible as well as adaptable for tackling the growing environmental […]
Why Effective Governance is the Only Way to Sustained Economic Growth
Effective Governance is a key reason why Nations Grow or Fail Nations and societies grow for a variety of reasons and strong and stable institutions are one of the them. When countries have a well functioning bureaucracy, competent law enforcement agencies, and a capable judiciary, it follows from this that the country would grow economically. […]
Human Brain, Neurons and Behaviour
Several years of research have made important advancements in explaining the functioning of human brain and explaining how biological processes can influence human thoughts, feelings and behaviour. For understanding biopsychology, it is important to understand the three most important physiological components of human anatomy, i.e. Brain, the neurotransmitters and the Nervous system. The Nervous System […]
Crisis Management Team – Meaning, Role and its Function
Sequence of sudden unwanted events leading to major disturbances at the workplace is called crisis. Crisis arises on an extremely short notice and triggers a feeling of fear and uncertainty in the employees. It is essential for the superiors to sense the early signs of crisis and warn the employees against the same. Once a […]
Effective Report Writing
What is Report Writing? A report can be defined as a testimonial or account of some happening. It is purely based on observation and analysis. A report gives an explanation of any circumstance. In today’s corporate world, reports play a crucial role. They are a strong base for planning and control in an organization, i.e., […]
In the 21st century, it is being increasingly recognized that Democracy has emerged as the alternative to other systems of political thought in delivering the fruits of economic success to the citizens of the world. With the rise of liberal democracy in the world since the demise of communism in the 1990’s, there has been an accompanying rise of globalization and an integration of the countries of the world into the global economy.
The debate over whether democracy is superior to autocracy as far as economic development is concerned is mainly about how much the people in democracies and autocracies gain from economic growth and development.
Indeed, there is evidence to support the contention that both democracy and autocracy can lift people out of poverty and the crucial difference is the quality of life in democracies versus the quality of life in autocracies. The succeeding discussion examines these aspects from multiple perspectives.
It is thus apparent that the spread of democracy and the rise of the markets go hand in hand. As the protestant work ethic that is so essential to capitalism is replicated taking into account the specific circumstances of the countries, it is clear that only democracy can deliver the goods as far as economic development is concerned.
The notable exception in this case is China that has an autocratic structure in place, yet, has managed to achieve rapid rates of growth. This is the other side of the debate where it is often argued that LDC’s (Least Developed Countries) need an autocratic government to push through reforms that may be otherwise stymied due to the resistance from entrenched interests in the country.
What is now clear is that democracy is superior when it comes to countries that have a heterogeneous mix of people and cultures since it is imperative that all sections of society be carried along if the process of economic development has to succeed. In case this does not happen, the concerned country faces the risk of social unrest and the inability of the government to carry all the citizens along with the process of economic development.
The renowned international affairs expert, Francis Fukuyama argued in his book, The End of History and the Last Man, that the fall of communism and the rise of liberal democracy have marked the End of History as far as the triumph of a particular ideology is concerned. This has been echoed by other writers who have expressed sentiments in favor of capitalism and democracy being concomitant to each other in their complementarities.
There has been a consensus view emerging within the economic community that all round economic development can only be achieved if there are a measure of democratic norms in place within societies that are unable to grow beyond a certain point due to lack of opportunities and stifling political systems.
Even in the case of China, the transition from a communist state to a market economy with autocratic government has not been smooth going by the reports of large scale human rights violations and the underlying sense of disorder and unrest beneath the surface.
Economists like Amartya Sen have pointed to the social indices as a measure of building up human capital that is so vital to the establishment of norms of market behavior. And the so-called tiger economies like South Korea have done exceedingly well in the economic sphere due to their capacity to absorb financial capital and translate it into productive returns using the skilled human resources at their disposal.
An alternative measure of human development called the HDI (Human Development Index) has been categorized as a means to measure the effectiveness of public policy in spreading the fruits of economic development. This particular measure goes beyond the GDP or Gross Domestic Product and takes into account a comprehensive measure of poverty alleviation that includes access to social services like safe water and sanitation among other parameters.
The effectiveness of democracy lies in the participatory nature of the process wherein individuals are empowered to voice their concerns and ensure that people have a say in electing the government of their choice. Thus, this makes for a political system that is based on representation of different ethnic minorities that is so essential to the success of any measures to alleviate poverty and economic development.
Autocracy on the other hand seeks to impose policies in a top down manner without adequate provision for the grassroots realities that are so essential to the success of the experiment of market democracy.
In all measures of economic development, the one thing that stands out is how many absolute numbers of people have been lifted out of poverty and the provision of basic services to cater to their needs.
Market economics works on the principle of competition and meritocracy that are only possible if fair numbers of people are allowed to participate in the process without restriction in their ability to take part effectively in the process.
In conclusion, it is the contention of this author that democracy is the only viable option for continuation of market policies that promote the expansion of opportunities for economic development. This is possible only if large numbers of people have access to the market mechanism and forms of suppression are not used to prevent them from much needed jobs and education.
Fukuyama, Francis. The End of History and the Last Man. 1991
Weber, Max. The Protestant Ethic and the spirit of Capitalism. 1930.
Sen, Amartya. Economic Development and Opportunity. 1995
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What is Compassionate Capitalism and Why We Need it in These Times of Planetary Crisis ?
February 12, 2025
