The Future of Democracy

Nicolas Berggruen and Nathan Gardels. This discussion paper was presented at the first meeting of the 21st Century Council in Berlin in September.

Berlin—“Democracy is the worst form of government except for all those other forms that have been tried from time to time,” Winston Churchill famously said in the House of Commons in 1947. The prestige of the great British statesman who held forth when the empire was already on its last legs was such that democratic institutions have scarcely evolved as the world moved on, even after the end of the Cold War.

In a way, Churchill prefigured Francis Fukuyama, who declared the “end of history” in 1989, postulating that the defeat of communism in the Cold War meant the triumph of Western-style liberal democracy suitable for all of humanity.

Perhaps it is time to take another look at democracy as we know it, not just because of the sustained success of forms of non-Western modernity, notably in places like soft-authoritarian Singapore or China, but because the West itself has changed.

In much of the West today, we no longer live in what common coinage refers to as “industrial democracies,” no less the agriculture-based landed aristocracies in which most contemporary political systems and their constitutions were originally conceived.

Far from the insulated homogeneity and small scale of traditional societies with their earthy virtues of place, or even from the time when capital and labor confronted each other across the barricades or through disciplined mass parties, today we live in highly diverse, culturally hybrid, densely networked consumer democracies that are largely middle class. In the United States, consumer purchases account for 70 percent of GDP.

Yet the arrangements of governance inherited from the 20th century—whether mass parties, “public opinion” or the structures of representation—have not evolved to cope with the unprecedented extension of life expectancy and population growth, work and leisure habits or exploding diversity of interests and particularist sentiments that come with the economic, cultural and political fragmentation of de-massifying societies. Tea parties, alternative lifestyles, flex-time working schedules, social networks, digital tribes, niche markets, large populations of immigrants, sharp political partisanship and the demise of the mainstream media (predicated on the phantom commonality of a mass audience) are all expressions of the growing complexity and decentralization of open societies.

At the same time, one paradoxical danger of the greater fragmentation of the information age is that it risks becoming the age of non-communication. Niches speak only to themselves, while mass media is reduced to the lowest-common-denominator appeal as it seeks to “monetize attention.” Lacking nuance, context or complexity in the manner of a Hollywood blockbuster, it trades on stereotypes or cardboard cutouts, lacking depth or empathy for those outside one’s own experience. Similarly, and famously, mass market retailing from McDonald’s to Walmart tends to flatten tastes and preferences in the cultural space in and around the niches.

Clearly, much of the alienation and apathy we see across the West today results from the fact that newly distributed power has not been accommodated by updated institutions that are responsive to the fragmented and heterogeneous nature of today’s societies. Ever more empowered individuals in such a society regard large, mass institutions, whether centralized governments or big corporations, with suspicion. The antiquated mechanism of occasional voting for a distant representative from among a large population where majoritarian interests are assumed is still the norm.

As Woodrow Wilson put it long ago, democracy is an organism, not a mechanism. If intelligence is a matter of efficient feedback, a more robust responsiveness is both necessary and possible as societies grow more complex in the information age.

Nor has democracy come to grips with the long-term consequences of its post-WWII marriage to consumerism.

Democratic systems are designed to give people what they want—consumer plentitude in our age—when they want it, which is now. By nature, consumer choice is short-term and self-interested. Enabled by the new technologies of the information age, it is this dynamic that has largely driven the powershift that devolves social, cultural and political authority downward and outward toward diverse networks of the like-minded, organized minorities and the individual.

While no one would diminish the very considerable comforts and conveniences of consumer society, a guiding societal ethos of short-term self-interest inevitably tends to eclipse any perspective of the long-term and common good. All the feedback signals in a consumer democracy—politics, the media and the market—tend to steer behavior toward immediate gratification.

In such a society, there is scarce political capacity for the long-term thinking, planning and continuity of governance required for the sustainability of democratic society over time.

Surely, no system of governance can endure without the self-interested consent of the governed. Yet, neither can it endure, as every political sage from Plato to James Madison understood, when ruled by the popular “appetite” (Plato’s word), which the new technologies have further empowered.

When scarce political capacity and consumer democracy are joined with robust technological prowess—from carbon-fueled industry and transportation to genetic engineering—both the societal and generational impacts are amplified beyond the present moment and extended well beyond the local environment. Climate change is but one example of how the retail sanity of self-interested choice can add up to wholesale madness.

Thus, while the new realities of the 21st century require more devolution of political institutions to accommodate diversity at the grass roots, they also require an enhanced capacity for governance of society as a whole, including the design of better institutional filters—new checks and balances—against the short-term mentality of organized special interests and individuals alike that characterizes consumer democracy. Institutionalized feedback mechanisms that favor the long-term perspective are key to restoring good governance to the Western democracies.

As is often the case, the extreme reveals the essence. Everyone can see that the experience of unmediated direct democracy in California, where budgeting by the ballot box through popular initiatives has proven ruinous. California’s crisis, a louder echo of America as a whole, reveals the delusions of a Diet-Coke civilization that wants sweetness without calories, consumption without savings or government services and infrastructure without taxes.

As a result, California today is mired in debt and political gridlock. With a $20 billion deficit and no revenue options, California is factually bankrupt. Traders consider its bonds to be a greater risk than those of Kazakhstan. Already nearly 8% of its budget goes to debt service. Students are protesting tuition increases and canceled classes. Teachers are being laid off. Prisoners are being let go. Health services for the poor and elderly are being slashed.

Worse, California has not invested substantially in infrastructure for the last five decades, since the late 1950s and early 1960s when it built Pharoahnic-scale canals to bring water from the wet north to the arid south, a world-class university system integrated into a statewide education master plan and many thousands of miles of interconnecting freeways. These were the building blocks that enabled the Golden State to become the world’s eighth largest economy.

This contrasts sharply with America’s top creditor, China, which is today investing heavily in its future the way California did 50 years ago, building bullet trains that will link 80 percent of the population, expansive subway systems beneath its megacities and a university system modeled on California’s. China has also taken the lead in solar and many other renewable-energy technologies, once the province of America’s most environmentally sensitive state, California.

None of this is to say that China doesn’t have serious problems or America doesn’t have great strengths. It is to say that governance matters in whether a state or nation advances or regresses. And it does raise the issue of whether the fragmented and indebted consumer democracies of the West, hobbled by their short-term cultural habits and political horizons, are becoming ungovernable while the unified, far-sighted leadership of authoritarian China is moving that country boldly and decisively into the future.

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This contrasting dynamic between America—the borrower and consumer whose economy is dominated by finance and services—and China—the saver and exporter whose economy is still industrializing—has generated an imbalance in the global economy that, if not corrected, threatens the peace and prosperity that has so far been achieved through globalization. That correction cannot be economic alone, but depends as well on the recalibration of democracy in both West and East.

While China must move inevitably toward greater democratic responsiveness and accountability as it morphs into an urban consumer society climbing the income scale, the prosperous consumer democracy of the US requires the opposite: more long-term political capacity, not least in order to reduce consumption and increase savings and investment so it can get back to building its future.

In China’s case, further democratization, including free labor unions, will aid the reorientation of its juggernaut from export-led growth to domestic consumption. In the case of the US, some kind of new meritocratic institutions, insulated from the political pressures of immediacy and with the whole nation in mind, will aid the rebalancing of the economy. Returning to fiscal responsibility, stemming inequality and rebuilding the middle class are the key to preventing democratic constituencies in the West from rejecting globalization.

Former International Monetary Fund chief economist Raghuram Rajan has argued that political pressures to compensate for America’s growing inequality gap through eased credit was a driving dynamic behind the housing bubble. As a result of freer trade, technological change and the educational gap, by 2009, 58 percent of income in the US was held by the top 1 percent of the population. Since 1975, he reports, the wages of the 90th percentile of the US population (the top 10 percent) grew 65 percent more than the 10th percentile. In short, it was credit, not savings, that enabled the demoted middle-class consumer to “keep up with the Jonses.” By 2007, consumer debt in America equaled 100 percent of GDP. For Rajan, reigniting growth through encouraging renewed purchases of houses and cars on easy credit will only reinflate another bubble cycle.

In the integrative approach, the related problem of trade and financial imbalances would be examined in the perspective of the fate of the middle class:

What policies can mitigate income inequality in both China and the US—where the gaps between rich and poor are greater than anywhere else—thus fostering a rebalancing of savings and consumption across the Pacific?

In the US, the proper tax and education policies (again, because, in an era of technological change, education is the key variable of income differentials) as well as policies that foster domestic production would diminish a situation where the top 1 percent holds nearly a quarter of all wealth. Fairer income spreads in a developed consumer economy would enable the middle class to once again thrive on earnings and savings instead of seek to maintain their diminishing status through easy credit, which the political system readily accommodates.

China might learn from the policies of Asia’s development pioneers—Japan, South Korea or Taiwan—where income is more evenly spread as result of policies on labor-management relations, a credible safety net and high and broad levels of investment in education and knowledge. A more even income spread and some sense of social security in a developing market would widely stimulate greater consumption.

In other words, such an exercise would look at how the American and Chinese inequalities play off each other—a low-wage export-led economy piling up huge reserves from overconsumption by an American middle class that fills the gap in its falling status through borrowing at rates pushed low by flush liquidity from China (and an accommodating Fed). Then it would propose structures and practices of governance that would counterbalance these trends.

If America’s vested interests and rigidities lay in consumption, China’s lay in production.

“When working properly,” Singapore’s foreign minister George Yeo has rightly said, “China’s modern-day mandarinate is meritocratic and imbued with a deep sense of responsibility for the whole country.”

However, will this modern mandarinate that has competently moved China from a peasant economy to the factory of the world be able to transcend its Maoist roots and respond to the new conditions and constituencies it is creating?

Unless it shifts its policies toward more democracy and tends to the interests of the rising urban middle class, it risks ending up in the same stagnant cul-de-sac as its exporting neighbor, Japan, long before it reaches general prosperity.?

To be sure, China’s rural population remains massive. But China is urbanizing at a speed and on a scale never before seen in human history. In Mao’s time, only 20 percent of the population lived in cities. Today it is 40 percent and will be 80 percent to 90 percent in the coming decades.

With more than a billion inhabitants, yet lacking less arable land than India and short on energy, China has embarked on a colossal effort to organize its immense population into megacities with tens of millions of people. The McKinsey Global Institute projects at least 15 such megacities with 25 million residents—each the population size of a major country.

Since the revolution concentrated land ownership in the hands of the state, the Chinese authorities have vast leeway in shaping these cities that must accommodate so many people, planning the urban infrastructure with high-speed connecting trains, state-of-the-art airports, deep subways, industrial parks, universities, and seas of skyscrapers.

“Although politics in China will change radically as the country urbanizes,” says Yeo, “the core principle of a bureaucratic elite holding the entire country together is not likely to change. Too many state functions affecting the well-being of the country as a whole require central coordination. In its historical memory, a China divided always means chaos.”

Yet, without the civic infrastructure of enhanced democratic accountability that complements the scale of their infrastructure hardware, will the Chinese bureaucratic elite be responsive enough to the needs, expectations and aspirations of its burgeoning, ever more prosperous urban citizens? Can the same one-party system that focused single-mindedly on export-led growth also manage the diversifying interests of a more prosperous population?

The mandarinate is already being tested on many fronts, from the need to stimulate domestic consumption as American and European demand for Chinese exports weakens to endemic environmental crisis to the striking workers at Honda and the Foxconn suicides.

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As the process of globalization seeks to regain its footing in the wake of the 2008-2009 financial crash, how the US and China resolve the relationship between their clashing systems—that have nonetheless tethered them together as partners—will matter a great deal.

Because of its sustained double-digit economic growth that has lifted hundreds of millions out of poverty, China’s model of rapid development guided by an authoritarian state—“the Beijing consensus”—is gaining appeal as a more suitable alternative to the now tarnished “Washington consensus” of liberal democracy and free markets for striving poor nations. And, to be sure, there is plenty of evidence to suggest what the Chinese suspect about Western parliamentary democracy: That it is captured by organized special interests and the short-term mentality, thus short-circuiting development.

This is a particularly critical debate at this historical moment when the changes accompanying the “rise of the rest” after 500 years of Western domination are now also being reflected in the institutions of global governance.

In the past two years the g-20 has supplanted the old g-8 as the executive committee of globalization. The BRIC nations—Brazil, Russia, India and China—have formalized their links into a cooperative and coordinating organization with an autonomous global role, focusing on South-South relations. Turkey and Brazil have stepped outside the United Nations Security Council on the issue of Iran’s nuclear program, a symptom of the Security Council’s inability to reform itself and close the democratic deficit that reflects the global power relations of the mid-20th century.

Further, Europe is grappling with how to implement the principle of subsidiarity as sovereignty is shared across nations linked by a single-currency but with widely varying fiscal conditions. Japan is struggling with reforms, including the idea of devolution proposed by the first Democratic Party of Japan prime minister, Yukio Hatoyama, while trying to restructure a society geared for decades to export production into a society that meets the expectations and aspirations of its prosperous urban citizenry.

In short, the ideas and institutions that will govern us for decades to come are now being forged. The world is evolving rapidly. So must our stalled thinking about good governance in this second decade of the 21st century.

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With the foregoing in mind, let us permit ourselves to engage in an act of unfettered political imagination.

The evolution of democracy in the 21st century would sensibly involve combining the best features of East and West through “intelligent governance” consistent with the imperatives of our age. That would mean a reliable rule of law and more accountability for the non-democratic Chinese model of governance. It would mean more decisive, meritocratic and long-term political capacity for the Western democratic model, which at the same time must devolve power on the principle of subsidiarity and “decision division” to the proliferating constituencies of an ever more polycentric society.

For the striving poor nations, a “middle way” between the Beijing and Washington consensus would seem most suitable.

During the first round of globalization at the turn of the 20th century, Sun Yat-Sen tried to blend the institutions of Western democracy with Confucian meritocracy. Perhaps today, as the “rise of the rest” challenges Western dominance, the political imagination may again be open to new ideas. This time, it won’t be just Western ideas flowing east, but Eastern ideas flowing west as well.

Undoubtedly, there is much history under the bridge of today’s interdependence between China and the US that inhibits convergence. China’s ancient “Warring States Period” ended with a commitment to unified territorial integrity and stability that led to a modern focus on political control and social harmony. The path to peace after the West’s religious wars in the Middle Ages led to the opposite ideals: tolerance and diversity. In the Confucian tradition, China has relied on ethics, including obligations of the ruler to the ruled, and education to keep its institutions responsive, fair and honest. The West has relied on the check of democracy.

Nonetheless, as the political philosopher Daniel A. Bell proposes, some common ground can be found.

Counterintuitive as it may sound to the Western ear, China may be more open to fundamental political reform than the US. Since the rule of law in the US is based upon the notion that the state itself is constrained by a body of pre-existing law that is sovereign, any thought of rewriting the Constitution is anathema.

In China, however, some intellectuals point out that Communist Party theory posits that the current system is the “primary stage of socialism,” meaning that it is a transitional phase to a higher and more superior form of socialism. The economic foundation will change with broader prosperity, and thus the legal and political superstructure must also change.

That has led some contemporary Confucian scholars to argue that Marxism cannot be the philosophy of the higher stage of development, not least since it is a foreign ideology, and that any new form of government must be based on indigenous sources of legitimacy from within the Chinese experience—meritocratic knowledge of the governing class, the people and tradition.

Bell, who teaches at Tsinghua University in Beijing, has taken these ideas a bit further. He envisions a meritocratic upper house whose members are chosen not by election but examination; an elected national democratic legislature that advises the upper house on “preferences”; direct elections up to the provincial level; and freedom of the press. The “symbolic leader of the state” would be chosen from among the most august members of the meritocratic house.

Such a formulation and others similar to it—about which there is a rich debate across China today—sticks to the Confucian idea of excellent meritocratic government mitigated by popular accountability but not completely ruled by it. This seems precisely the kind of non-Western political modernization we will see as China adopts its own form of democracy.

China desperately needs such a system of accountability to stem the arbitrariness, corruption and cronyism that have accompanied the primary stage of socialism. All too easily the strong hand of the state that has so competently guided long-term development can become the harsh fist of repression or the open palm of corruption.

Yet such an approach as put forth by Bell is likely to also maintain stability in a way that parliamentary democracy of the West might not, and thus would be an acceptable course of change in China.

The evolution of democracy in the West must approach the same point from a different angle.

Some years ago, pondering the mediacracy that gave rise to Silvio Belursconi, the Italian foreign minister Gianni de Michelis argued that the West needed a “Montesquieu of the information age.”

“In their Constitution,” de Michelis noted, “the American founders understood that sound government must prevent rule by the pure wash of immediacy and populist emotion. If, for example, long-term common interests such as preservation of the environment or human rights for all, are unable to check and balance the immediate interests of the consumer or the narrow fears of the racist, the unmediated reign of public opinion will end up destroying democracy itself.”

Musing on what such a new system of democracy might look like, de Michelis asked these questions: “Instead of mass political parties, will there be a daily, electronic plebiscite of all citizens? Will all parties be small, niche groups representing very particular interests, from child-care parties to organic-farmer parties? Instead of operating outside the formal rules of democracy but influencing government disproportionately, will special-interest lobbyists be brought into the system to compete accountably according to the same rules as everyone else? Will there be an explicit social contract that empowers authority at the highest level of integration but empowers all to participate at the lower levels?”

We have gone a step further and tried to answer some of these questions. For Western democracies, the governing structure proposed by “intelligent governance” would seek to counterbalance populist and partisan impulses by institutionalizing the perspective of the long-term and common good in a stronger deliberative body and independent administrative branches of government. The accountability and responsiveness of these institutions would be ensured not only by democratic elections but also by an active, civically literate citizenry organized in human-scale associations paired with a decentralized administrative structure. Governance will thus be as horizontal, with the broadest base of an active and informed citizenry, as practically possible.

Its key features would include:

Knowledgeable Voters. Wide use of new information technologies and deliberative forums would enhance voter capacity. This will foster intelligent democracy by making every effort to be sure that the electorate is fully knowledgeable about decisions it is called upon to make.

Community-based Democracy. This would be accomplished through a pyramidal electoral structure for an elected lower house. Breaking down the electorate into human-scale districts, each level of which elects the next, will shrink the distance between elected representatives and those they represent, thus devolving power while encouraging more considered and meaningful democratic deliberation.

Quality Deliberation. This would be ensured through a non-elected meritocratic upper house (though approved by the elected lower house) of distinguished citizens with a mandate to consider the long-term and common good. This will create a better balance with the elected lower house that represents the immediate interests of constituents.

Strong Leadership. This would be provided by a government leader elected by the public at large from a pool of candidates nominated by the lower house. This would ensure the highest quality of political leadership at the national level.

Administrative Excellence. The institutional separation of administration from political power would create an independent branch of government. This would provide a better balance between partisan political pressures and the effective implementation of policy as well as delivery of services.

A highly trained and compensated civil service that is non-partisan, internally competitive, paired with representatives at all levels of the elected side of the pyramid and monitored for performance by independent agencies will help ensure excellence in administration and greater responsiveness of government to the public.

A Unifying Sovereign. Established through a council of heads of state appointed by both houses, this body, by standing above the political fray, will serve as civic guardian and unifying symbol of society.

Quality Media. A free media complemented by an independent communications agency will ensure that the accurate, essential and objective information the public requires for responsible deliberation is widely available, especially in free societies dominated by commercial mass media.

A Common Foundation. The provision of public goods from quality education to a clean environment to universal health care will create the strongest foundation for economic opportunity, the exercise of personal freedom and the pursuit of self-realization.

The reason for the indirect approach to electing a parliament through a pyramid structure is to remove the distance between the representative and represented at each level. The larger the constituency, the greater distance there will be between the individual citizen and the person he or she elects. Yet, the smaller the constituency, the more unwieldy the legislative body because it will have so many members that considered deliberation cannot take place. The solution is to break down the political system into workable units, with each body successively electing the next.

In this progressive, base-to-top pyramidal structure, electors at each level will thus have a more effective voice in setting the political agenda through an emphasis on small group deliberation; they will have greater responsiveness from government through coordination with administrative counselors assigned to their respective level to implement policies and provide services. Close collaboration and feedback will constitute a grass-roots public check on the bureaucracy.

What might be lost through directly electing a parliament is more than gained through citizens achieving a real voice in their affairs through quality of deliberation and proximity to their elected official at their level of participation.

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Needless to say, this exercise in political imagination cannot be implemented wholesale. For any system to be effective, it must arise organically from the historical and cultural roots of a state or nation. At the same time, as always in history, new realities prompt innovations and departures from the past.

The principles involved can be adapted practically across a wide range of circumstances. In California, for example, we are working with the governor, the legislature and a group of eminent Californians to design a constitutional revision along the main lines of “intelligent governance” as described in this paper.

Under the principle that revenue and budgeting power should rest with the jurisdiction that delivers the service and is closest to the population, we are proposing a devolution of such responsibilities from the state level to localities and special districts (such as schools). California’s experience with Proposition 13 (which severely limits property tax levies) and the polling evidence is that people will pay for the good government they can see and touch and be involved in. Or, they will revolt against taxation for bad governance from a distance.

At the same time, we are proposing the establishment a “Long-Term California Strategy Council”—regents for the state as a whole—which can check the short-term political impulses of the elected legislature and popular initiatives and that keeps the state focused on the challenges of the future: excellence in education, smart growth, smart energy grid, green jobs, information technology, biomedical innovation and Pacific trade.

These small moves toward “intelligent governance” suggest that the evolution of democracy in the West is as practically possible as it is necessary.