Wednesday, January 21, 2009

The relationship between markets and democracy

I just had two very distinct experiences in Bangladesh and Malaysia. Both the countries are poised for democratic transitions. Bangladesh had perhaps for the first time in three decades a free and fair election last December that elected 300 new Members of Parliament, after two years of military backed caretaker government. Free and fair election is something that most of us in India take for granted.

In Malaysia, an opposition coalition is beginning to make in roads, and erode the dominance of the ruling coalition that has been in office continuously since Independence from Britain in 1957. It seems a very interesting parallel to our experience in 1977, when the first non-Congress government was elected to power in Delhi, following the general election at the end of the 20 month emergency.

In the last few years, I have been trying to grapple with the relationship between democracy and market. It seems that democracy and markets are two sides of the same coin, both empowers the citizens and consumers, by enhancing their scope of choice in politics and economics. In these turbulent economic times, I think this could be a critical issue to understand.
Another interesting corollary seems to be that historically, property rights had a very significant role in democratisation of societies. Only property owners could be full citizens in ancient Greece.

Democratisation of property ownership played a key role in gradually dissolving the absolute rights of kings, beginning with Magna Carta in UK. Only property owners could vote at the founding of US. In case of India, 60 years of political democracy seems to have started with socialisation of economics and nationalisation of property rights, but now there seems to be a better political recognition of the need to respect for property rights (land rights).

Would like to exchange views with anyone interested...

Barun Mitra

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