Sunday, January 15, 2012

Making Democracy Work

I read a book “Bowling Alone”, in which Robert Putnam, the author, illuminated the social performance and strength of civic community. “Making Democracy is his historical book by which much of “social capital” concept proliferated.

The central question in this book is “What are the conditions for creating strong, responsive, effective representative institutions?”

The author was lucky. He had the opportunity to gather the data of Italy, which experienced the shift from centralized government system to localized one. There were 20 regional governments established during 1970s, and the 20 institutions in Italy significantly differed in their social, economic, political, and cultural contexts.

It is said that the state of institution shapes politics and the institutions are shaped by the history (i.e. it is “path dependent”). The book tries to examine that hypothesis.

1. How to measure institutional performance

Firstly, the author introduces measures of “institutional performance”. The conception of institutional performance in this study rests on a simple model of governance:

Societal demands -> political interaction -> government -> policy choice -> implementation

In this sense, a high-performance democratic institution must be both responsive and effective, that is, sensitive to the demands of its constituents and effective in using limited resources to address those demands. The author used twelve factors in determining institutional performance (page 67-):

  • Cabinet stability : factor loading in institutional performance index is 0.874 (page 75)
  • Budget promptness: 0.851
  • Statistical and information services (which enhances the prompt and effective response to the public demand): 0.807
  • Quality of the reform legislation (comprehensiveness, coherence and creativeness of the legislation, each graded from 1 to 5): 0.797
  • Legislative innovation (evaluated by the factors such as strip mining regulation, promotion of fisheries, air/water pollution control, etc.): 0.779
  • Provision of publicly supported day care centers per person eligible for the service: 0.681
  • The number of family clinics per person: 0.640
  • Industrial policy instruments (whether the regional government used six policy instruments: regional economic development plan, regional land use plan, industrial parks, regional development finance agencies, industrial development and marketing consortia, and job-training programs): 0.625
  • Agricultural spending capacity: 0.580
  • Local health unit expenditures: 0.577
  • Housing and urban development: 0.545
  • Bureaucratic responsiveness (evaluated through asking fake questions to the local bureaucracies) : 0.468

The institutional performance index composed of these 12 factors indicated striking correlation with their own historical performance and citizen satisfaction correlation (evaluated by the question “how satisfied or unsatisfied are you with the way in which this region is governed?”) and the community leaders’ satisfaction correlation(pp 76 - 81). The fact implies that institutional performance has autocorrelation (during the period, the original gap between north and south has been widened) and is well-designed to measure institutional performance in the sense that the performance augments civil satisfaction.

2. Which factors determine institutional performance - the impact of civic community

There are three schools in explaining institutional performance. The first school claims that institutional design determines the performance, the thought that has its roots in formal legal study, such as J.S. Mill’s “Considerations on Representative Government”. The second school emphasizes socioeconomic factors. They argue that the improvement of institutional performance is due to the modernization of economy.

The third school argues that sociocultural factors explain the institutional performance, and the book devoted much of its pages for examining that hypothesis.

The author argues that strength of civic community is positively correlated with institutional performance. The communitarian idea has its longest history (starting from Greek philosophy), but is feeble in these days, especially after the liberalism came to the center of political philosophy, partly because the communitarian is confused or associated with the totalitarian.

To evaluate the performance of civic community, the author used the

following factors (pp87-):

  • Civic engagement
  • Political equality
  • Solidarity, trust, and tolerance
  • Civil associations (sports clubs, cultural and scientific activities, music, etc)

The author induced “civic community index”, measured by preference voting (factor loading -0.947), referendum turnout (0.944), newspaper readership (0.893), scarcity of sports and cultural associations(-0.891). (pp96)

The civic community index shows striking results: in almost all measurements, the civic community index shows clear correlation (negative or positive) with numbers related to institutional performance: clientelism and “particularized contacting” (-) (scarce in high civic index regions), political equality (+), electoral reformism (+), clericalism (measured by church marriage rate, unti-divorce referendum, etc) (-), citizens’ feeling of powerlessness (-), satisfaction with life (+), and so on.

3. Tradition made civic communities

Prof. Putnam argues that the civic community index is coming from the civic tradition. He shows that northern part of Italy (which showed strong performance) has its civic traditions. He shows that the civic traditions correlation (based on data from 1860 to 1920) strongly is correlated to civic community index today. (pp151)

Through quoting the history, Putnam also shows that the regions without strong social tie have suffered the lack of social capital for more than a thousand year. Why is it the case? The economics theory tells us how this could happen.

Civil collaboration can be described as “iterated game” in game theory. In this set-up, there could be two equilibrium. One is cooperative and another is non-cooperative. Overall, aggregated utility of the parties would increase under the cooperative game, but it is not always the case, and often parties fall into the situation called “Prisoner’s dilemma”, where total utility of the players is lower than when they collaborate. Once the game becomes non-cooperative, it is difficult to flip the situation. Putnam claims that civic community and thus the social capital prevent the people from getting to the Prisoner’s Dilemma situation. It enhances mutual trust and thus people can be cooperative.

What the book argues is, as shortly written in the final chapter, common in microfinance. RCA (rotating credit association) is the common one as a basic microfinance scheme, and there are different types of local credit associations.

4. Remarks

What I firstly came up with was the imitation of empirical analysis about the society. One difficulty is lack of enough and neutral data, and the difficulty of numerical definition was another. Regarding the lack of enough neutral data, the author was fortunate in that they had the great opportunity to conduct empirical analysis in Italy, which experienced unique governmental changes. However, regarding the difficulty of numerical definition, it is unclear if the author overcame it. It is always possible that the author could use measurements arbitrarily (e.g. it is difficult to clarify why the civic community index in page 96 composes the four factors)

Another is the potential reverse of communities. In philosophy, communitarian notably gained the strongest popularity since the civil revolution era. Other social scientists such as Putnam also claim the importance of communities to enhance social performance.

The final remark is about its implication for organization management. In business fields, some try to revisit the value of Asian style management which requires strong social tie and commitments. Shared value and culture will enable organizations to keep internal communities. Also, the autonomy of each division would make it easy for large companies to form a small group.

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