Trying to explain the connection between democracy and market-driven growth can be like trying to solve the puzzle of the chicken and the egg: which came first? Our panelists in the free enterprise and democracy webinar on September 12 did a commendable job of sorting through the linkages and debunking several myths.
One of the starting premises for discussion was that economic growth flourishes when private property rights are protected in a market-oriented system under rule of law. While autocrats can provide a level of protection for property and a legal order, without democratization there cannot be universal protection of property rights, as Boris Begovic, Senior Fellow at the Center for Liberal Democratic Studies, pointed out. In the long run, democracy brings greater certainty to the rule of law. Businesses require certainty for long-term investment, and this is lessened when the whim of an autocratic ruler prevails.
Aurelio Concheso, Director of Aspen Consulting, further stated that autocratic decisionmaking discourages innovation. As an economy becomes increasingly complex, feedback becomes essential to the decision process and feedback is facilitated by democratic governance. By contrast, oligarchic societies raise huge barriers to entry and innovation in order to protect incumbent political and business elites.
Selima Ahmad, Founder and President of the Bangladesh Women Chamber of Commerce and Industry, and John D. Sullivan, Executive Director at CIPE, spoke about how the private sector can act to level the playing field, for example by advocating universal property rights as guaranteed in the UN Declaration on Human Rights. Businesses ranging from small and medium enterprises to those engaged in international commerce have an interest in regulatory reform, which they can pursue collectively through voluntary associations and policy agendas.