Democracy and Economic Interests: Subverted Democracy or Middle-Class Supremacy?

• In Event: The Coalitional Dynamics of Distributive Politics in the Knowledge Economy

Abstract

A new and highly-cited literature on redistribution and economic policy-making paints a gloomy picture of democracy, which we refer to as the Subversion of Democracy Model (SDM). It comes in two varieties. One uses public opinion data to show that policies are strongly biased towards to the preferences of the rich; another uses macro-level data on inequality and redistribution to show that democratic governments are no longer responding to rising inequality. This paper is a critical reassessment of this literature. We point to methodological and theoretical issues that may bias the results, and we propose solutions that point to a very different interpretation of the data, which we refer to as the Representative Democracy Model (RDM). We test the SDM against the RDM on both public opinion data and a new dataset on fiscal policy and find that government policies largely reflect the economic preferences of the middle class, and that middle-class power has remained remarkably stable over time, even as inequality has risen. The rich have no or little influence on redistributive policies, and it does not appear that the democratic state is increasingly constrained by global capital.

Authors

• Torben Iversen, Harvard University

• Mads Andreas Elkjaer, University of Oxford