Povilas Gylys
Vilnius University, Lithuania
Abstract. In orthodox economic theory, democracy is treated as a non-economic phenomenon. Such an attitude is a logical consequence of the individualistic perception of social reality. Methodological individualism is based on the assumption that the only social actor is a separate individual with his self-interest. Consequently, there are no supra-individual, collective actors in social life. Accordingly, economy is equal to the market, and therefore public interests, public needs and other public phenomena are somewhat alien to economy. For individualistic thinkers, one of such non-economic phenomena is democracy, which is the concept of political science and does not belong to the scope of economic science. We argue that methodological individualism gives a distorted picture of economic reality and that a holistic paradigm should be applied in economic inquiry. In the framework of a holistic paradigm, democracy could be treated as an economic good created in the conditions of limited of resources. Moreover, it is an economic good of systemic character, and failures in producing, providing democratic regimes lead to systemic crises. The latter means the spread of anti-economic practices and substantial economic losses.
Introduction: what is economic science about?
The question raised above is not as trivial as it may seem at the first glance. As we have shown in our earlier research, economic science has no commonly accepted definition of economy and thereby faces difficulties in understanding the scope and boundaries of economic explorations (Gylys, 2008).
In our recent publications on the issue, we argue that the main reason for the existence of the economic aspect of social life is the scarcity of resources. The limitedness of time, money, material or energy resources forces social actors, consciously or subconsciously, to search for an optimal ratio between the desired benefit and the input of scarce resources. In other words, social actors facing the limitedness of resources have to economise.
Thus, the economisation takes place everywhere when the problem of scarce resources exists, no matter it is the sphere of material production or creation of intangible goods. It would be difficult to find an economist who explicitly denies scarcity, but there are plenty of them who ignore this fact (Perelman 2003).
Thereby, all goods produced in conditions of limitedness of resources and whose process of creation subdues to the principle of economization are economic goods. Economic goods differ from free goods, such as sunshine, fresh air, etc. They have two aspects, or facets: one of them reflects the input of resources, i.e. the cost of production, and the other shows their beneficial side, i. e. utility. Free goods have only one characteristic feature which reflects utility, use value, the beneficial side. They are costless, and social actors are not pursuing the task of their economization. In other words, they do not search for the optimal ratio between benefit and cost.
Democracy, as follows from the above, is an economic and not free good. It isnt costless. It requires a certain amount of various limited resources. But it is a specific economic good a good of common, collective use (consumption), i.e. public good (Samuelson, 1954). Unfortunately, this kind of economic goods is neglected by mainstream economists who concentrate their attention on private goods, on commodities, on the part of wealth which circulates in the private sector, in the market. As a consequence, economy is reduced to business. Thus, the picture of economic reality is amputated, reduced to its part the market. Therefore, a large part (portion) of economic problems which originate from another part of economy - public sector - are left unexplained. As we will demonstrate, to a great extent this reductionism results from an explicit or implicit adherence to the principles of methodological individualism. We propose the methodological holism - a paradigmatic alternative to the individualistic perception of economy.
Democracy as a public good
The holistic worldview is based on the assumption that the whole is more than the sum of its parts and elements, that social reality is hierarchical, multi-tiered, that on the economic stage there act both individual and collective actors, and that in parallel there exist both individual and common interests and needs. These common needs could be met through the use of public goods, i. e. goods of common consumption. National security, legal system, the system of public governance are examples of public goods. One should distinguish between national and international, among them global, public goods (Kaul et al., 1999).
A law or a public policy act do not automatically become a public good. In case they are inadequate, harmful from the point of view of public interests and needs, they acquire characteristics of a public bad and add to what is called anti-economy (Gylys, 2011)
Pure democracy by its definition is a public good. Another matter is a real political system with dominating democratic characteristics. In real political life, alongside the prevailing democratic regimes, elements of oligarchy, plutocracy, authoritarianism may exist. For this reason, one can discriminate between (true) full democracy, flawed democracy and so on (Kekic 2007).
Democracy as a public good is, on the one hand, a product, result, consequence of a long historical process. on the other had, it is a systemic, infrastructural good which covers, encompasses the whole social organism of a country. Thirdly, it requires large amounts and a certain combination of limited human, financial (budgetary), material and other resources. Readiness of the people to contribute to the common, public good and their real contributions to democratization, a proper understanding of public interests and their defence when these interests are endangered, together with the ability to select and to elect worthy, proper people for the public service, the creation, enforcement of public solidarity and cohesion, tax obedience are only a few of the whole range of factors facilitating the strength and quality of the democratic system.
Democracy is a specific form of social governance, which can be implemented and enforced if certain conditions are met. One of such preconditions is objective economic necessity, demand for democratic regimes of governance. We, economists, should not limit our professional discourse exclusively to a humanitarian need for democracy. Our duty is to look for economic factors or democratization of societies. And here, we have to admit, we lag considerably behind the demand for such kind of scientific inquiry. This lag could be largely explained by the fact that democracy for most of us in our profession is a purely political concept and does not belong to the conceptual apparatus of economic science, to the subject matter of economics. But, as we have already said, every social phenomenon related to the use of scarce (limited) resources with the purpose to attain a certain benefit, utility must be perceived as an economic good. As far as democracy isnt a free good and requires certain human, social, financial resources which are in essence limited, it is an economic good. Thus, it should be included into the scope of economic investigations.
Another reason why economists should be interested in democratic regimes is the interconnection, interdependence between the changing structure of wealth and the increasing demand for the democratic rule. It is a widely accepted postulate that the humanity has gone through three stages of development. At the first stage, economy was mostly natural in the sense that it was dominated by natural factors such as climate, the quality and specific characteristics of soil, by woodedness, closeness to water (lakes, rivers or sea), by physical force, mental dexterity, etc.
At the second stage of economic development, artefacts, material means of production created by humans became the decisive factor of the material wellbeing of people, population, though natural factors still played an important role, because they satisfied the natural, biological needs of mankind. Thus, natural wealth to a large extent gave way to the artificial, so-called secondary nature, i.e. natural things to which humans bestowed a social form which satisfied social needs. For instance, needs for a table, steak, decorating on, a machine, etc.
The peak of this stage coincides with massive industrialization, although the very first steps of this form of activities were made by our early ancestors.
The third stage of the economic development was marked by a rather dramatic shift from the material production to services and especially to knowledge. This drastic shift is sometimes called the scientific-technical revolution, and its beginning is often attributed to the second half of the 20th century, and the process is still going on.
We are not in the position to discuss all subtleties of this periodisation, because it goes beyond the task of this article. We only want to state that different stages of economic development are characterized by particular structures of wealth, which in turn required different regimes of governance or, in other words, tolerated the absence of more sophisticated, more progressive forms of governance. Natural economy was more dependent on the natural environment regimes, but was less fragile in social terms. The network of social ties (links) wasnt thick, and the interdependence of universal (nonspecialized) entities, such as tribes usually was not so vitally important as the ties among the modern enterprises. In short, the humankind lived in a rather fragmented economic world which could be characterized, with a certain stipulation, as a sum of economic units (tribes, peasant families) rather than an economic system.
With the development of artisanship and especially industrial factories, which meant a deeper and narrower specialization of economic units, entities, the mode of market relations substantially strengthened and with time became the dominating form, or type, of economic relations. With the intensive industrialization, economy took the form of a system in which the interdependence of the market participants grew of terms in their thickness, intensiveness, and importance. As we have already stated, the thicker network of intensifying relations meant a higher fragility of the system and, contrary to the prevailing attitude, a more pressing demand for the quality of organizing regimes. This requirement was partly met by the self-regulating abilities of the market itself. However since the market never functions in its ideal form as a regime of perfect competition, has an inherent inclination to cyclical fluctuations and produces negative (ecological or social) externalities, a prudent public governance is needed to prevent the expansion of anti-economy and shadow economy. In case such a governance is absent or ineffective, irrelevant, both business and society at large are suffering great losses in the form of the falling production, consumption, rising unemployment, the deteriorating ecological condition, etc.
Thus, if in the era of the dominance of natural economy, the economic need for public economic governance (except places where massive irrigation systems were built, and where the so-called Asiatic mode of production existed) was not acute, with industrialization the economy needs the incrementally growing regimes of macroeconomic, nationwide governance. The need for other public infrastructures such as roads or schooling, are on the increase as well. This tendency finds its expression in Wagners law, i.e. in the increasing portion of public finance in the national product.
However, as the historical experience shows, industrialization could sustain in the conditions of both democratic and non-democratic regimes of governance. The Soviet industrialization is one of the vivid examples of a relatively successful industrialization which took place in the conditions of totalitarian and later authoritarian political regimes. China or Chile are the other examples demonstrating, at least a relative, compatibility of industrialization and non-democratic (at least in Western terms) political regimes, when these regimes are providing stability and develop a satisfactory infrastructure (roads, networks of communication, a set of state institutions producing the administrative and legal services, etc.).
Post-industrial society, with its emphasis on intangible wealth and knowledge, requires shifting towards democratic regimes. Authoritarian modes of governance are not relevant, appropriate in the systems based on the creativity of people, on their ability to produce new and quality knowledge. The freedom of expression, conditions for selfrealization, for satisfying the needs of esteem and self-esteem, a certain room for the roaming and the environment of tolerance for errors are not the tenets of authoritarian systems, but they are indispensable, or at least desirable, preconditions of spirituality and creativity, of the effective use of human capital for the procurement of knowledge and encouragement of innovations. And democracy is the regime of governance, which creates these conditions.
Democracy: do we really know what it is?
The term democracy is too often perceived as self-evident and clearly defined. As we will show, this isnt the case; the dominating individualistic understanding of democracy suffers from reductionism its reduction to only part of its characteristics. Ethimologically, democracy means the rule (authority) of people (in ancient Greek demos people, cratos rule, power). Holistically, democracy is the rule of the whole people understood not as a sum of individuals, but as community in the widest possible sense. This regime of governance is executed either by a direct referendum (direct democracy) or through elected representatives (representative democracy). The tradition of democratic governance comes from the political practice of some Greek city-states, first of all Athens, where free citizens enjoyed various freedoms and where equality (especially before the law) had to be preserved.
Although today the concept of democracy bestows the aura of legitimacy to any political regime, the practice of democracy returned hardly more than one hundred years ago mainly in Europe and North America. Thus, the democratic experience of the humankind in historical terms is rather limited. In addition, despite the prevailing feeling that the meaning, the content of democracy is fully disclosed or self-evident, there are some fundamental aspects of the concept, which remain ambiguous or cause various polemics and misinterpretations.
The settlement of all these conceptual quandaries would bring about both cognitive and practical benefits. A more precise and explicit understanding of the contents of democracy would mean a clearer guidance for democratic movements, parties, and the media. The diagnosis of non-democratic elements in our public life would be more convincing, evident, and effective. It also would lessen the danger of misusing the term for propaganda, apologetics by different power centres, which is quite a widespread practice, of monopolizing the right to decide which system is democratic and which is not, of political manipulations. A clear and systemic definition of the concept of democracy could lessen the practice of the rule by stealth or by obfuscation.
This statement certainly requires the further elaboration. In our view, most of those who willingly use the term democracy dont bother to explain how the rule by the people is executed, what the purposes and means of the rule are, in other words, what the ruler wants and what the kit of instruments of democratic governance is, where the dividing lines between democratic and non-democratic rule lie.
Some could say that people are well informed about the direct, participatory democracy and representative democracy, they are aware of the requirements of democratic election (formation of authorities), and they would be right. But others could ask: is it enough to call a country democratic if its political authorities are formed through elections and these elections are technically free? In our opinion, it is a legitimate question.
It seems that a simplified perception of the contents of democracy, its reduction to the technical aspect are widespread and based on some misleading, usually implicit assumptions. They are mostly of individualistic origin. And they hamper the understanding of the basic tenets of a truly democratic system. Another hindrance on the way to a proper understanding of democracy is cognitive: it is the confusion of the very concept of democracy in which a purely democratic system is presented by concrete political systems of advanced western countries.
The concept of democracy is the result of a scientific procedure of idealisation. In its abstract, idealised definition, all basic features of democracy are presented and all alien, non-democratic features from this definition are excluded. The result of such an idealisation is the model of a pure, ideal democratic system without any alien, non- democratic element. However, there are no ideal democratic systems in the real world. The political practice of even the most democratic countries is always trashed by non- democratic elements. This means that nor the US or Germany, neither highly appraised Sweden are absolutely, one hundred per cent democratic countries. They are littered by nepotism, bureaupathology, autocracy, oligarchy, clique, crony governance.
Lets begin our inquiry of the issue from the vintage point of regimes. Social regimes are spontaneous, reactive and programming, proactive. The latter could be named as governance regimes. The peculiarity of these regimes is that here social actors analyse themselves and the environment and create the programme of their actions, which is comprised of two blocks: firstly, the set of goals and secondly, the kit of means factually or potentially available. These regimes exist on all levels of the social system from an individual person to mankind as a whole. Individuals, families, firms, states, global society have explicit or implicit, tacit, well defined or poorly articulated goals. All they have in their disposition certain instruments for the implementation, realization of these goals (Gylys 2009).
When the formation of goals could be treated as democratic? What should be the contents of goals of a democratic governance? When they do not meet the democratic requirements and contradict the principles of democratic rule? Too often we circumvent these questions for cognitive (common sense, simplicity, self-evidence traps), ideological or political reasons; all these questions could be properly answered only in the context of holistic thinking.
Why individualism is inappropriate for the understanding and implementation of democracy?
In our view, democracy is a holistic category, and the real systemic democratization of social life in all its aspects and on all its levels is possible only on the platform of the holistic political agenda. We assert that liberal democracy, which is based on individualistic assumptions by its definition, is internally contradictory and amputated because it is reduced to only part of characteristics of true, full-fledged democracy.
As we have already noted, strict individualism is based on the premise that the only social reality is a self-interested and in this narrow sense rational, individual (L. Mises, F. Hayek). Consistent individualists (they are few in real life) do not recognize the existence of or the need for supra-individual entities and bodies like community or state. They do not recognize the existence of common (communal) goals and purposes. They believe that Margaret Thatcher was right in saying that there is no such thing as community. Lets stick to this premise of true individualism for a while, so far postponing the recognition that most of individualists frequently make unconscious, hidden paradigmatic shifts towards holism.
But if individualists are right in denying all kinds of communities and any common needs and purposes, then, logically, no regimes of governance be it democratic, aristocratic, authoritarian are needed. All supra-individual regimes and bodies emerged and evolved, developed because of specialization of social life. This, in turn, led to the emergence of the need for the integration of parts into the whole and coordination of the activities of the parts in the framework of the whole. The whole differs from the parts and is higher than the part. Any community has its own specific characteristics which cannot be reduced to the traits of individuals that belong to the community the postulate ignored by the individualistic camp.
For instance, as we have already said, with the development of the market, the network of relationships was becoming more and more complex and thick, interdependence among market participants, agents more and more vitally important, essential for the every market agent and for viability of the market as a whole. To ensure stability, fairness (monopolies) of the market system, the regimes of mostly indirect (indicative) governance emerged. As an expression of this tendency, the role of the state in the market was growing. It was virtually forced to implement the increasingly sophisticated rules and norms to smooth the workings of the market regimes, from the protection of property (rights), antitrust laws and up to the fiscal and monetary policy. All these elements do not belong to a pure, ideal market, but they are an indispensable part of the contemporary economic life which is called to serve the common good of market participants.
Laws, administrative norms, fiscal and monetary policy instruments are public goods provided by the state. It would be enough to imagine that all these public goods are withdrawn from our life. If the imagination is intact and doesnt fail, we should admit that without these public goods the market would be seriously distorted and damaged in terms of its stability, fairness, and efficiency.
But these public goods as well as the regimes producing them cannot be properly perceived in the framework of the individualistic worldview. They are invisible for the individualistic camp. They are not part of the individualistic picture of the economy. Nonetheless, invisible doesnt mean non-existent.
One additional paradox, at least in terms of the individualistic perception of the economy, is that although the market is based on self-interest and competition among private entities (producers, traders and consumers), it is a system, a whole, and therefore it needs systematic, common rules, norms, supra-individual incentives. These needs are provided by public institutions central government, central bank, municipalities, etc. Could we imagine the modern market without these institutions? The answer is definitely not. Another issue would be to decide on the extent to which these institutions intervene into the market realm. Searching for the answer to this question, we should avoid extremes such as universal planning and total non-interfering and should use the contingency approach, because in times of emergency the role of governance regimes is increasing.
Now, we are ready to discuss the viability of the philosophy of liberal democracy. Liberal democracy developed as the antipode to absolute monarchy, authoritarianism, totalitarianism, theocracy, plutocracy, i.e. to all non-democratic political systems. Undoubtedly, this political philosophy played to a certain extent progressive, positive role in the development of political systems of many countries and of the world as a whole.
Its emphasis on the reason and on the principles of liberty and equality, promotion of the rule of law and the separation of legislative, executive and judiciary powers were widely accepted in the developed western countries and, after the collapse of the Soviet system, in the majority of post-communist countries (especially in Central Europe) and in many countries of Africa. The end of dictatorial regimes in Latin America was marked by a visible shift towards the principles of liberal democracy, too.
At one moment, to some social scientists it seemed that the mankind is close to the end of the history (Fukujama) because the human race is approaching the final, ideal stage of its development (it somehow resonates with the idea of communism) which is namely liberal democracy. Although voices of criticism directed at liberal democracy existed, they were politically weak and therefore went almost unheeded.
Several decades of the unprecedented global dominance of the principles of liberal democracy demonstrate fundamental, serious flaws. Their application didnt produce the expected results in new democracies. In some respects, the results were in fact contrary to the teachings, gospel of liberal democracy. Democracies in Eastern and Central Europe resemble more a combination of democracy, oligarchies, or plutocracies. However, officially they are democracies, although in some assessments they are attributed to the category of flawed democracies for several reasons: the multy-party system does not guarantee the real ideological pluralism and demonstrates strong elements of ideological tyranny in the form of market fundamentalism; the distance between citizens and authority is still large; the level of understanding and internalization of public interests is low; the media are too often more the instrument of rule by obfuscation and rule by stealth than the means of disseminating crucial, essential information and is the arena of a meaningful political discourse, etc.
It took place, despite the officially declared efforts to to implement the tenets of liberal democracy. Some scientists and pundits try to explain the failures of democratisation, the discrepancy between declared principles and political reality by the remnants of the Soviet legacy, by the mentality of people in the post-Soviet area, and others explain them by a too short time period of the normal development.
Not denying totally these explanations, we tend to see the reason for the failure of liberal democratic reforms in post-communist countries in the fundamental, axiomatic flaws of the very doctrine of liberal democracy, which went unchallenged by social democracy or any other political doctrine in this area.
Liberal democracy is in principle an individualistic doctrine because it emphasises individual values, preferences, freedoms, and is largely unconcerned with the problems of the functioning of communities, collectivities, with public matters, with what is called the republic- public affair. Liberal democrats think that a real, full-fledged democracy could be achieved by, firstly, the state which adheres to the principles of pluralism and the rule of law, freedom of speech and assembly, freedom of religion, where the separation of powers is observed, where elections (at least technically) are free, where the universal suffrage is guaranteed, etc.
In this conceptual political framework, an individual is treated as automatically rational (prudent) and moral. In addition, his self-interest is the ultimate criterion of rationality and fairness, although not always this is stated overtly and explicitly. Thus, when a liberal is considering relations between an individual and the state, he is inclined to settle the conflict of their interests in favour of the individual. For most of them, the state is the unavoidable vice which threatens private liberties, while the individual represents a social virtue. In addition, liberals tend to ignore other threats, alongside state bureaucracy, to individual rights and liberties, i.e. power centres such as big business, the media tycoons and some rights and liberties of mainly economic origin (Beetham, 2003), including the right to enjoy a dignified way of life, to avoid social exclusion, to obtain and retain the right to education, health care, social protection, etc. (Fotopoulos, 2005; Mulligan et al., 2010).
As the historical and political experience shows, the dirty journalistic practice in many cases is a bigger danger to the equality and freedom of people, to their civic courage, to the transparency of public life than the state apparatus, especially when the latter is democratic (even only in the formal terms). On the other hand, for the true democracy, all rights and liberties are important, not only those stressed, cherished by proponents of liberal democracy. Some limitation, constraints on individual behaviour could be imposed, but if an individual is naturally, innately, automatically, absolutely rational and moral, limitations of his behaviour would be minimal and imposed only in exceptional cases (mental illness).
The other prerequisite of liberal democracy is, as they say, that the free market model suits the principles of liberal democracy, free market economy. The problem with this precondition is that, free market being a normal theoretical concept, the ideal type of the market is, as we have shown, impossible to implement and practically non-existent. Monopoly and monopsony, oligopoly and oligopsony, monopolic competition, various regimes of governance are mixed with some elements of free market. Thus, this mixture of various market types and all types of visible hands, to begin with the state, business organizations, labour unions, the media and up to communities, but not the free market was and is the economic reality.
Secondly, this real market tends to distort and destroy the ideal liberal world, pure liberal democracy, i.e. it is incompatible with liberal democracy. Liberal democracy promotes equality, but the real market increases inequality in terms of income and wealth. The market (not always fairly) punishes losers of market competition and rewards the winners, thus promoting, inequality. Monopolies, being a kind of a visible hand, take themselves an unfair slice of the economic pie, thereby deepening inequality. In addition, they have the power to impose their will, restrictions not only on individual employees or consumers. They are in the position to exert pressure on a would-be democratic state, municipalities, different communities. They do it in pursuance of their private interests at the expense of public interests. Therefore, it is difficult to talk about equality, fairness in society, about the rule of people, when major power centres dominate on the public stage, when they often make public interests the means of achieving their own private goals. This is a bureau-pathology in societys life, which is incompatible with democratic values.
Monopolies or oligopolies in the mass media nowadays are not an exception. Suffice it to remind the readers of Rupert Murdocks global media empire. Driven mainly by their own and only partly by public interests, they can block uncomfortable, unwanted opinions, manipulate public opinion, hamper the formation of the public spirit of citizenry, deform the understanding of the real sense of public needs and interests.
Monopolies, oligopolies, other power centres in modern societies have a huge influence on various aspects of social life (Beetham, 2011). This fact contradicts the very spirit of liberal democracy with its equality, freedom, etc. However, strangely enough, academicians, the think tanks of this mainstream thinking, somehow are able to live in peace with this contradiction as if not noticing it, turning the blind eye on it. They pretend that the free market is the true reality and not a scientific abstraction, that monopolies, monopsonies, state intervention, etc. are exceptions rather than the widespread practice, the everyday reality.
The peculiarity of the doctrine of liberal democracy is that its proponents readily deal with the individual, private dimension and instinctively ignore, neglect public matters, the public level of social reality, which could be investigated in the context of what is called the public choice problem.
By paradox, to liberals belong the honour to be called the pioneers of the public choice theory. The paradox is hidden in the fact that the individualistic but not holistic camp is more known for explorations in the theory of public choice, although the very concept of public choice is holistic by definition. Another side of the paradox is that individualists are not able to resolve the problems of public choice, which originate from common, collectivistic interests and needs, from supra-individual levels of social life.
Why doesn't J. Buchanan's theory of public choice work?
Public choice theory, formulated by J. Buchanan, G. Tullock and their followers, is based on individualistic assumptions (premises) of the mainstream economics, on the doctrine of homo oeconomicus. According to J. Buchanan, public choice is politics without romance. He disparages the view that politicians and state administrators (bureaucracy) may be devoted, benevolent public servants caring for the public interest, that they may be able to rise above their own private needs and wants (Buchanan, Tullock, 1962) For public choice theorists, the motives of a politician, state administrator or voter are not different from those of people on the marketplace. All they behave as a kind of homo oeconomicus understood in individualistic terms. All they are guided by their own self-interest. Some of those theorists vaguely admit that a human being, thus also a politician, a bureaucrat, may care about the community or family, but these elements of social thinking and behaviour arent properly analysed because, as we suspect, they do not fit the individualistic picture of social reality. They are largely ignored because they obviously smack of collectivism and, according to their views, could be treated as negligible exceptions, marginal cases.
Public choice theory in its individualistic version concentrates its attention on the individual and overtly rejects or covertly circumvents the problems of other, nonindividual decision-makers such as society or community. Collective units do not make decisions, do not make choices; only individuals do. This means an explicit or implicit but always decisive denial, rejection of the existence of supra-individual units and their needs. In the circumstances when the only reality is the self-interested individual, the market principles are transferred to the realm of public life, thus into politics, too (Soros, 1999). In other words, public choice becomes one of the cases of private choice.
Unfortunately, both public choice theorists and most of their critics do not recognize the antinomic character of individualistic public choice theory. Rejection of collective units and communal, collective interests and needs means in fact that public choice is an empty term, because all choices, be they connected to car industry, to a restaurant, bakery or political, bureaucratic activities, in essence belong to the private domain.
Being a consistent individualist, a public choice theorist should stress that all political and bureaucratic hierarchies are obsolete, that a political system would be a flat, one- tier system based purely on the competition among producers of political products, political goods. Political goods should be freely available for sale; otherwise, the political market wouldnt be free and effective enough. Producers of political goods should be compensated - they should cover the costs of production and, surely, should get personal benefit. Otherwise they would be forced to cancel, terminate their political activities and to allocate their resources (their abilities) to other spheres of the market system. We remind the reader that in the individualistic philosophy the market and the economy are synonyms, and the political market is part of the market economy (Soros, 1999).
Only under conditions described above, the theory of political system presented by J. Buchanan and his camp would be logically consistent because it would present the ideal world without collectivities, hierarchies, etc. However, in this case the term public choice would be empty and misleading: empty, because the only form of choice is the private choice, and misleading, because it creates a false (in the eyes of the individualist) impression that something of a public origin does exist. In the coherent individualistic thinking, there is no place for the terms such as public interest, public need, public choice, because they persume the existence of a supra-individual - communal or governmental level of social reality. But such an admission negates the very fundamental presumption of individualistic philosophy that the only social reality is the individual with his private interest, that this reality is one-tiered, flat. Thus, conceptual inconsistencies could be ironed out by eliminating alien elements from the individualistic theory of public choice and, of course the very term public.
A much bigger problem arises when this theory is confronted with reality. There is quite a stark contrast between this theory and social practice. In reality oaths to serve the public good by politicians, judges and other officials are given worldwide in spite of cultural or political differences; the political hierarchies show no signs of extinction, disappearance; courts, commissions, and committees judge on whether a politician or a public servant wasnt involved in the conflict between his own and public interests, the media are full of declarations that they stands for public and not for their private interests, soldiers are fighting and sacrificing their lives for the common national cause, governments declare that they are pursuing public goals.
All this is the evidence that there is a sharp contrast and discrepancy between the postulates of individualistic public choice theory (in fact private choice theory) and social reality. And there are only two possible explanations: either reality is distorted (the distortions of history are possible as the stories of fascism and bolshevism demonstrates) or the theory is the result of an improper, incorrect reflection of reality. In fact, there exists the third version: a false social theory through the regimes of reflexivity distorts the real social life.
In our view, the individualistic version of public choice theory is fundamentally faulty, and as part of social reality (irrational one), through regimes of reflexivity, it distorts this reality, making it less effective and fair. This doctrine is a kind of public bad, which adds to social disorganization, entropy, contributes to the expansion of elements of antieconomy, shadow economy in the forms of cronyism, bureau-pathology, bribery etc.
Asserting that a politician, or a public servant, has no other form of interest than his own personal self-interest, public choice theorists have indoctrinated the whole generation of (western) party leaders, social activists as well as bureaucrats with the values that are contrary to their real, actual public duties. They encourage the market behaviour in the public domain. Therefore, they could be treated as the group that has contributed substantially to the demoralization of political and administrative elites worldwide, who scientifically explain and justify the individualistic, in fact corrupt, behaviour of decision-makers in the public life, and rational ignorance the passiveness of voters.
If a solid scientific group disseminates the idea that there are only individual interests and that a rational person no matter working in a café or a ministry - would pursue them (at all costs), how could one condemn the politician who does not represent and defend public interests? He is doing his utmost to maximize his personal utility for the lowest possible cost.
All this reminds the famous, notorious Douglas McGregors theory X and theory Y, known to all of us from handbooks of management. The human being in this theory is not a constanta, a set of inborn, innate traits. His behaviour to a large extent depends on the psychological, social environment, created by, e.g., the managers of the firm. If the management belongs to adherents of theory X and assumes that ordinary employees are lazy, responsibility-averse individuals without high ambitions and treats them accordingly, then the result will correspond to these managerial views the employees will demonstrate unwillingness, dislike of work, a lower responsibility level, orientation towards the lower levels of motivation (according to A. Maslow). It is a kind of negative reflexivity, negative self-fulfilling prophecy.
However, in case the management and here to the principles of theory Y and is more positive about the employees and believe that the work can bring them satisfaction, that they could be driven by the motives of the higher levels, such as esteem, self-esteem or self-fulfilment, they could be committed to set the objectives and be ready to accept responsibility if appropriate conditions are created, i.e. the result would be different from that in the firm managed by the principles of theory X.
To draw a parallel with the individualistic public choice theory, it is appropriate to say that if at least part of public (politicians and public servants included) is persuaded that politicians and bureaucrats in principle can pursue only their own private interests, the intangible but real vicious circle is implanted into the social body, i.e. society. This implant is anti-public; therefore, it hampers and destroys, damages the regimes producing public goods, creates the social disbalance expressed in the shortage of the required, necessary public goods (services) that assure the sustainable and efficient functioning and development of the social organism as a whole and of it parts, the private sector included. In this sense, anti-public settlements created by individualistic scientific theories and encouraged by mighty power centres (mainly business and pro-business organizations) bring us closer to a dangerous social disequilibrium and is the factor of increasing the insecurity of nations and the globe as a whole. This process could be described in terms of a systemic crisis (Gylys, 2011) or the tragedy of the commons (Hardin, 1968).
The elites would admit that the very social philosophy employed by the major power centres is the factor of a frightening social disequilibrium and insustainability, and that individualism would be replaced by the holistic paradigm in social sciences. Then, the bigger are the chances to prevent humanity from the revolutionary and civil (civic) conflict scenario. Our main argument behind this statement is the following: only in this framework one can formulate a coherent economic theory in which public and private choice regimes could be reconciled and combined in the harmonious whole, where the public and private sectors, state or market would be not unduly marginalized as evils or treated as inherently antipodic. A modern holist would state that public and private choices are complementary, interdependent and mutually reinforcing. Both are parts of a sustainable true by democratic social system.
The main tenets of the holistic model of pure democracy
Without ambitions to absolute preciseness and strictness, we will try to construct a conceptual model of pure, ideal democracy. Such a theoretical model could be created in case the method of abstraction or idealization is properly used. The basic requirement for this procedure is to consistently use the criteria of including into the model the characteristics and feature of the political system which reflects the essence of democracy, i.e. the rule of the people for the good of the people as a whole.
As far as democracy is a form of governance, one could distinguish three aspects of democracy: firstly, who rules, secondly, what are the goals of the ruler and, thirdly, how the ruler implements his goals, i.e. what tools are used to achieve the goals.
Usually, politicians, analysts and pundits focus on the role of the ruler. Trying to reveal to what extent the real political system is democratic, they investigate whether people can participate in and influence social life, whether they have the possibility to vote, freely express their minds, etc. The instruments, means of democratic rule are quite intensively discussed, although the set of instruments by mainstream thinkers is unduly reduced to several technical means. All three aspects of democratic governance who, how, and for what purpose comprise a system. The absence of one part indicates that democracy is limited. Lets examine this postulate in detail.
Although at first glance all three sides of democracy seem trivial, self-evident, actually they make a complex distorted by casual thinking. Lets begin with the issue of who. May we state that people is a true ruler even in western societies? Is it enough to give a positive answer, when it is stated that individuals enjoy the universal right to vote, that they are free to express their opinion, to join a political party and nongovernmental organizations? Could we claim that a country is fully democratic if less than half of its voters take part in elections? Is a country enjoying true democracy, if a large part of its population is excluded from the full-fledged social life, live in poverty, are unemployed, although seek a job? Are people real rulers if they are deprived of the means of modern communication, do not read newspapers, do not follow political, social, cultural, ecological events and have a limited understanding of the public matters or dont see any sense in participating in public life? How should we treat a country which meets the other requirements of democracy, qualifies as democratic, but where ordinary voters, people see the mighty power centres (business, the media) which dominate the public life and have the possibility and, resources to indoctrinate people, to deform their mentality and to direct electoral processes to the direction which is beneficial to them but is detrimental to public interests?
In other words, could we treat a country as democratic, if its mighty power centres using peaceful means and not using military, police measures and intimidation are able to impose their will on the strata of society less powerful in terms of material, financial and communicational resources? In all these cases, the answer to the question who (rules) isnt trivial and often wouldnt fit the definition of true democracy. When mighty power centres dictate their will on the public arena to other parts of society and society as the whole, the answer to the question who rules should be: these power centers and not always the people are the real rulers, and therefore such a political order cannot be called purely democratic. oligarchic, plutocratic and other non-democratic elements are present in such political systems.
Unfortunately, in the world dominated by individualistic perceptions of democracy, the problem of who has not been comprehensively studied and publicly discussed. One of the possible reasons is that in self-proclaimed democracies the major power centres are not interested in a substantiated, fundamental discussion on the issue, because they are satisfied with the status quo which allows them to get maximum benefits from the existing power structure which, in our opinion, is far from the democratic equilibrium.
In the democratic system where regimes of direct and representative democracy are combined, the issue of who is not exhausted by creating conditions for a comprehensive popular participation in public affairs. In a representative democracy, it matters a lot who, what kind of people are representing the peoples interests. Are such people available in society in quantities and qualities enough to guarantee, ensure an effective selection into political and administrative public positions? Or people ready to serve the public good are scarce because, for example, of a massive anti-cultural indoctrination of the society in the individualistic, thus anti-public spirit or widespread, intensive information terrorism employed by the media or by the post-dictatorial (post-authoritarian) political claim of scare. In all these cases, the problem of who could substantially hinder the process of democratization.
When is the political system of the country democratic from the point of view of the goals of social governance? The individualistic camp is either not explicit on the problem or implies that there are no separate, distinct, autonomous public goals and that public goals are a sum but not a system of individual purposes.
But it is a major misconception, which is an essential obstacle on the way to a comprehensive understanding of the fundamentals and origins of democracy because, in the ideal model of democracy, society, people as a whole (not the sum of individuals) have common, systemic goals which couldnt be reduced to a sum of the goals of individuals. In other words, in a real, full-fledged democracy, the socium (society) is pursuing the common, public goals which cannot be achieved individually by separate social actors. If there are no such common goals, people wouldnt gather into community meetings, wouldnt organize plebiscites, referenda, wouldnt elect their representatives to the parliaments, etc. Community gatherings and other public arrangements prove that there are needs and thus goals of common, collective, public, systemic nature.
Public goals as systemic goals are the pinnacle of the tree of social goals, of the pyramid of goals; this means that if to confine ourselves to the national scope, the goals of the country as a whole are of the highest rank. In holistic philosophy, it should be openly stated that the national goals such as the strive for the nations vitality, security, efficiency, coherence, harmony, are preconditions for a smooth, balanced functioning of the lower layers of the social system, although the opposite bottom - top interdependence - exists as well, i.e. the efficient work of lower social layers, tiers is needed to ensure the vitality of the social system as a whole.
Therefore society shouldnt shy away from the issue of public goals, interests and needs. It should create working, reliable cognitive and communicative regimes of their identification. And this is not a trivial task, because people has to discuss not only the set and contents of national goals, but also the goals, interests and needs of territorial, ethnic, religious and other communities, firms, households, and individuals. One of the most demanding, difficult challenges is to find the optimal combination of national, communal, family and individual goals. Every society is facing this multiple dilemma, but usually it solves it in quite a murky cognitive ideological and political environment; this to a large extent explains the weakness of self-proclaimed democratic countries, not to mention new or young, emerging democracies.
Most of them suffer from the distortion of natural hierarchies of goals, when partial interests to a larger or smaller extent dominate over the common goals, i.e. partial interests of the lower level replace (totally or in part) the interests and goals of the system as a whole. If public needs are dominated by partial, private needs, the coherence, harmony, balance, equilibrium of society in terms of its hierarchical structure are damaged, and the process of entropy and disorganization gets its impetus. The more complex, sophisticated, diversified the system, the more damaging this distortion is.
For instance, if business, the media, army, assume the role of public representatives and take their own goals as national ones, such a substitution of public matters with partial ones means a serious deviation from the democratic rule.
A typical case of social distortion of this kind is the bureau-pathology when the political and/or administrative elite replace public goals with the goals of the elite itself, i.e. when the establishment turns systemic public goals into the means of fulfilling its own partial goals. Disappointment, public outrage and political apathy of people are a natural negative outcome of such political behaviour. Lets be clear: all social actors both individual and collective can represent public goals, but only when individuals or groups are directly guided by public interests and needs, when they directly pursue them; their behaviour, actions could be treated as the pro-public behaviour. These could be actions of politicians, administrators, as well as deeds of journalists, business people or activists of non-governmental organization (NGO). All they can represent public goals and interests and thus serve the public good, unless their true partial interests are not disguised under the cover, smoke screen of public interests.
Thereby the actions of a public servant could be anti-pubic and anti-economic, while the behaviour of a patriotic business person could be pro-public. A non-governmental organization can be pro-public and can serve its internal (for instance, the wellbeing of its leaders) interests. The mob of crooks is practically always anti-public and anti-economic.
We hope that we have demonstrated the mismatch between the formal (declared) positions and the actual roles of social actors in terms of their relations to the formulation and implementation of public goals.
The democratic model observes not only the vertical, but also the horizontal balance of goals. This means the democracy to depend on the optimal proportion between the interests of various spheres of social activities (functional aspect) and territorial units (spatial aspect). In the first case, democratic regimes should observe a balance among industry, services, agriculture, forestry, etc. In the second case, they should strive for an even development of hierarchies, be they territorial or functional.
In the ideal, pure democracy goals and interests of all levels of society -individual, family, community, nation are properly represented and implemented. The interests of the whole nation are defended and intact. At the same time, the unavoidable contradictions between them and the interests and goals of communities, firms, families and individuals are openly and fairly discussed and settled. The regimes of institutionalized disproportionate dominance of one or another goal are excluded, neutralized. Although national goals are most important in the hierarchy of all social goals, in normal conditions the room for the realization of the goals of lower levels should be large enough, otherwise the vitality of communities, firms, etc. would be endangered.
It is worth noting that the relationships, proportions between all these goals are not constant and mechanistic and depend on the situation and the conditions in which society lives. In the conditions of national insecurity, society almost automatically shifts its attention and resources towards national interests. On the other hand, if, for instance, a big firm or community in the country faces serious threats or suffers big losses, attention and resources move more or less downward.
Now we approach the third aspect of democracy - how the democratic system works, what are the instruments of realization, implementation and enforcement of democracy. This is probably the best explored aspect of democracy. In the literature, issues of direct and indirect peoples rule (representative democracy), pluralism, multiparty system and free political competition, the majority rule and the minority rights, separation of legislative, executive and judicial powers, universal suffrage, the rule of law, independent press are usually named as the main tools of the democratization of society.
Unfortunately, one fundamentally important aspect of the instrumental side of democracy is usually neglected. We mean first of all the proper system of information and communication in society. The system that produces reliable information and guarantees good communication among social actors strengthens the organizational potential of society, makes the regimes of public governance more rational and fair. And, conversely, disinformation worsens the conditions of effective communication and has a negative impact on the organization and order in society. Besides, it creates conditions for political rule by stealth or rule by obfuscation. A good system of information and communication means greater transpearancy, better conditions for the enforcement of public interests, for a more effective public choice. Therefore, the system of information and communication in true democracy has to be both free and responsible, serving the common good.
Conclusions
True democracy is a valuable, precious public good, part of intangible national wealth. The volume and quality of this part of wealth to a large extent determine the further perspectives of economic development. Democracy isnt a free good, because it requires a certain input of scarce resources. These facts are ignored by mainstream economists who, explicitly or implicitly, build their economic argumentation on the premises of methodological individualism.
In cases when economists try to apply the mainstream economic logic to public life (for instance, when formulating the theory of public choice), such endeavour ends in quite bizarre, paradoxical results - the imitation of market behaviour in the domain of public affairs which intrinsically are antipodes of private, market affairs. Common - communal or societal - interests and needs, but not the private ones, guide the public choice. These interests and needs could be met when regimes of solidarity are developed. As far as solidarity does not belong to the mode of market behaviour and is an alien concept for individualists, they are not in the position to disclose the essence of the foundations of public choice and of public life at large. Consequently, they cannot produce a consistent theory of a democracy regime in which public choice is the core part of this type of political governance.
Methodological holism is a viable alternative to individualism. It allows to define the whole contents of democracy. In this framework, it is possible to show that democracy shouldnt be reduced to its formal side - technically free elections, free press, etc. True democracy presupposes the existence of the whole system of social, economic, political conditions, indispensable for an effective enforcement of public interest and needs by the organized and empowered general public.
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