Thursday, January 05, 2006

Are economists undemocratic?

Currently trying to finish this book (yes, I'm trying to catch up with readings, something I couldn't do before the break). It contains several criticisms to the so-called neoliberalism. One of the criticisms raised is:

"Neoliberal theorists are, however, profoundly suspicious of democracy. ... Democracy is viewed as a luxury, only possible under conditions ofrelative affluence coupled with a strong middle-class presence to guarantee political stability. Neoliberals therefore tend to favour governance byexperts and elites. A strong preference exists for government by executiveorder and by judicial decision rather than democratic and parliamentarydecision-making. Neoliberals prefer to insulate key institutions, such asthe central bank, from democratic pressures. ..." (p.66).

An article in Tempo Magazine by Prof. William Liddle indirectly replied this criticism. Apologize if you can not access the article as it requires subscription, and in Indonesian. Prof. Liddle's article is actually about new economic team led by Dr. Boediono. But we can make a generalization of his arguments to answer the question whether a technocratic government is democratic:
  1. Technocratic government and independent central bank does not necessarily mean undemocratic. Their policies and actions will be monitored and evaluated. by the parliament members.
  2. The parliament members have the mandate to reject the policies offered by the technocrats.
Prof. Harve's argument is also weak because his criticisms is not exclusive to market economy a.k.a. neoliberalism. It is a criticisms for representative democracy in general. His criticism, hence, implies that not only we need to revise neoliberalism, but also representative democracy. Off course, with all the cost.

P.S. Read also Alan Blinder, "Is Government Too Political?", Foreign Affairs, Nov/Dec 1997.

8 comments:

  1. Pe
    Bet if you had asked Boediono whether he likes being "intervieved" by our parliament and he would say NO.
    I believe that it is not the idea of check and balance that would bother him but instead it is how the parliament use the idea as a democratic hijacking arena.

    Ask around people in our ministry of finance. They will smile if you ask whether they paid parliament members to bring down their critiques to sanity level.

    My take is that market participants prefer certainty and predictable environment over a kick and rush scene. Reason being is simple, many tasks has some degree of irreversibility which costs you money.

    ReplyDelete
  2. How come a critic!? "less democratic" is a feature! :)

    Well, if I am to lead my house hold democratically, we'll have holidays all summer and no money left for the rest of the year.

    ReplyDelete
  3. Sjamsu, I agree! Easterly (2001) even further argued that in a highly polarized society, a strong, independent central bank (as well as independent technocrats) would be more favorable for low inflation and high growth. The argument is similar to blogowner's.

    My concern is how we can reply those kind of critics (even if they are merely just 'noise').

    That says, economists will need to find good arguments to say that: 1) democratic process does not equal to leave everything to popular voice, 2) that stable macroeconomy and high growth is a justified goal of a democratic government, and 3) to achieve (2) means we need to give a degree of independence for the CB and technocrats.

    ReplyDelete
  4. i think there is a misundertanding here of the relationship between technocracy and democracy, one that also causes messy situation to our economic policy exempliefied in blatant interventions of power-seeking politicians over economic policies often allegedly in the name of people's interests. to some extent, i agree that technocracy offers positive influences to policymaking process. rational, efficient, and objective thinking are among those technocrats are able to provide with.

    yet, giving a degree of independence to technocrats, as you urged, poses a question of how much independency they need to obtain so as to make them work effectively? i guess this is a political question becuse independence here means authority , which implies a certain degree of unassailable power.

    now my question is: Can you guarantee that politically independent technocracy will work at best? this might be a hypothetical question since technocracy is never off from politics, not to mention the implications of their "rational" decisions in political spheres. our history of technocracy going back to the era of pak Widjojo shows that technocracy has been a tool for politics. for some times it worked, while for some others it failed.

    now back to the future, i guess what we need is not a total separation of technocracy and democracy/politics, but a proper relation that allows technocrats to utilize their technical knowledge yet at the same time it connects to the social and political realities that surround the policy. will it be doable/achieveable? to be honest, i dunno. i'm not a technocrat, just a perplexed writer....:)

    ReplyDelete
  5. To respond to Aso's question:

    As you remarked, granting greater executive power gives more space to your technocrats to conjure wonderful things, but makes the system prone to abuse. Yet limiting the power is not the only way to make the system more secure.

    We can also split the people and the resources (that is, we move towards a loose federation). This effectively splits the executive power into a number of power centers. Each may adopt their own power-balance. But in anycase, the chance that they ALL turn abusive is less. Moreover, the damage inflicted if one power-center screws is now limited.

    The trade-off is that, on-paper, politically and economically each sub-nation is weaker than the original united Indonesia. But on the other hand, I don't think that at the moment Indonesia has much to lose. Despite our rich natural resources, our economy has plunged and stucks in the mud. Does any of you see that we can beat Malaysia in 30 years time?? I don't. Our huge size has become a liability rather than advantage.

    ReplyDelete
  6. As an economist-wanna-be, I would very much like to praise the virtue of technocratic policymaking and the vices of politically motivated policy.

    However, in the line of Aso, I prefer to frame to question on efficiency-accountability trade off.

    Few would question on the positive result of technocratic planning in South Korea and Singapore during their industrialization period, but I doubt Indonesian society now would readily surrender the hard won democracy with all the messiness.

    Independence can only increase as the accountability rise, first we need to prove that the a particular degree of independent is optimal to economic growth.

    The big catch is whether society will accept the short run pain for long run gain. I see it as the role of economist and technocrat to educate the public with readable articles in mass media and seminar speeches on the importance of consistent planning and scientifically sound policy.

    During my study period in Amsterdam, my thesis supervisor is also a staff at National Planning Bureau of Netherlands. He explained to me that economic programs of political party (they have specific programs and budget plan) before a national election have to be submitted to them to be analyze. The analysis made public and widely quoted in newspaper. Then the public can vote in election after knowing the economic consequences of their program.

    Berly

    ReplyDelete
  7. As an economist-wanna-be, I would very much like to praise the virtue of technocratic policymaking and the vices of politically motivated policy.

    However, in the line of Aso, I prefer to frame to question on efficiency-accountability trade off.

    Few would question on the positive result of technocratic planning in South Korea and Singapore during their industrialization period but I doubt Indonesian society now would readily surrender the hard won democracy with all the messiness. Independence can only increase as the accountability rise, first we need to prove that the a particular degree of independent is optimal to economic growth.

    The big catch is whether society will accept the short run pain for long run gain. I see it as the role of economist and technocrat to educate the public with readable articles in mass media and seminar speeches on the importance of consistent planning and scientifically sound policy.

    My thesis supervisor is also a staff at National Planning Bureau of Netherlands. He explained to me that economic programs of political party (they have specific programs and budget plan) before a national election have to be submitted to them to be analyze. The analysis made public and widely quoted in newspaper. Then the public can vote in election after knowing the economic consequences of their program.

    Berly

    ReplyDelete
  8. Pe, honestly, I haven't read the book. But I think you should make it also clear, whether it is 'representative democracy' or 'liberal democracy' that Harvey was critising. There is now a growing concern in development debates about how important to engage more participation from the people into democratic system. That is to correct the 'blind spot' of liberal democratic practices.

    ReplyDelete