Capitalism, Democracy, and Countermajoritarian Institutions

Abstract

Is the United States sufficiently democratic? And does it provide sufficient protection for the thriving markets that have sustained American prosperity? The answers are not obvious because these two values conflict. Many democratic theorists argue that the Constitution is not democratic because of its many restrictions on elected officials. Yet, maintaining a market economy requires sustained restrictions on democracy – the rule of law, strong property rights, and enforcement of contracts. How is the market to be sustained? Democratic theorists ignore the problem of long-term democratic stability. Yet most new democracies fail. Elections alone cannot provide long-term stability. Instead, stability requires three conditions: the limit condition, the consensus condition, and adaptive efficiency. The limit condition, for example, says that stable democracies must limit the stakes of power. The reason is that high stakes lead many to support extra-constitutional action (such as coups) to protect themselves. Restrictions that lower the stakes – that is, countermajoritarian institutions – make constitutions more likely to survive. Democratic theorists who value unfettered democracy but who also value democratic stability therefore face a tradeoff that they have ignored: fewer restrictions make a constitution more democratic but also less stable. Further, countermajoritarian provisions are often necessary to the instantiation of democracy as essential groups refuse to participate unless they are protected in particular ways. Examples include slaveholders in the early United States, whites in South Africa in the 1990s, and the former communist regime in Poland in 1989.