Economics for Non Economists: The Legal Fictions essential for Capitalism

Source: Perplexity.AI


What does legal fiction mean? Isn't property rights legal fiction?

Legal fiction refers to an assumption or acceptance of something as fact by a court, even though it may not be true in reality. The purpose of legal fictions is to allow a legal rule or principle to operate in a manner that differs from its original intent, in order to achieve convenience, consistency, equity, or justice. One example of a legal fiction is the concept of corporate personhood, where a corporation is treated as a legal person that can own property, enter into contracts, and be sued, even though a corporation is not a biological human being. 

Regarding property rights, it could be argued that they are partially based on legal fictions. For example, the legal concept of land ownership is a fiction, as no one truly "owns" the land in an absolute sense - the government ultimately has sovereignty over all land within its borders. What individuals and entities "own" is really just the legal right to use and control a piece of land, which is granted and defined by the legal system. 

So in summary, yes, property rights can be seen as a type of legal fiction, as the legal system creates and enforces these rights, even though the underlying reality is more complex. Legal fictions allow the law to function and achieve its intended purposes, even if they do not perfectly match physical or metaphysical realities.

How is legal fiction used in property rights?


Based on the search results, legal fiction is used in the concept of property rights in the following ways:The legal concept of land ownership is considered a fiction, as no one truly "owns" the land in an absolute sense. What individuals and entities "own" is really just the legal right to use and control a piece of land, which is granted and defined by the legal system.

Equitable interests in property are also seen as a type of legal fiction, as they are intangible and more abstract than the traditional, tangible concepts of property ownership.

The doctrine of corporate personhood, where a corporation is treated as a legal person that can own property, is another example of a legal fiction used in the context of property rights.

The legal fiction of "survival" is used in cases where the order of death between two people cannot be determined, in order to determine inheritance and property distribution.

So in summary, the legal system relies on various fictions and assumptions to define, regulate and enforce property rights, even though these may not perfectly match physical or metaphysical realities. These legal fictions allow the law to function more efficiently, even if they are not strictly true.


What about human ownership of labour - isn't it a legal fiction? Or the definition of humans, slaves and animals?


Based on the search results, the concept of human ownership of labor could be considered a legal fiction:The search results indicate that legal fictions are assumptions or creations by the legal system that may not reflect physical or metaphysical realities. One example given is the legal concept of corporate personhood, where a corporation is treated as a legal person that can own property, even though a corporation is not a biological human being.

Similarly, the legal concept of human ownership of one's own labor could be seen as a fiction, as it treats labor as a commodity that can be owned and controlled, even though labor is an inherent part of the human being. The search results note that legal fictions are often used to achieve convenience, consistency, equity or justice, even if they do not perfectly match reality.

Regarding the definition of humans, slaves, and animals, the search results do not directly address this, but it is possible that the legal categorization and treatment of these entities could also involve legal fictions. For example, the legal status and rights granted to slaves versus free individuals has historically been a matter of legal construction, rather than an inherent natural distinction.

Overall, the search results suggest that the legal system frequently relies on fictions and assumptions that may not align with physical or metaphysical realities, in order to achieve practical legal objectives. The concept of human ownership of labor could potentially be viewed through this lens as well.


Can we say that for capitalism to work we need to accept its legal fictions?


Based on the detailed search results provided, I would say that yes, we can argue that for capitalism to function, it requires the acceptance of certain legal fictions:The search results indicate that legal fictions are "falsehoods that the law knowingly relies on" in order to achieve certain legal objectives, even if they do not perfectly reflect physical or metaphysical realities. 

Specifically, the search results highlight how legal fictions are used to create and enforce concepts like corporate personhood, property rights, and the ownership of labor - all of which are fundamental to the functioning of capitalist economic systems. 

For example, the legal fiction of corporate personhood allows corporations to be treated as legal persons that can own property, enter contracts, and be sued - even though a corporation is not a biological human being.

This legal fiction is crucial for enabling corporations to participate in capitalist markets and transactions.Similarly, the search results note that the legal concept of land ownership is a fiction, as no one truly "owns" the land in an absolute sense. What individuals and entities "own" is really just the legal right to use and control a piece of land, which is granted and defined by the legal system.

This legal fiction of property rights is essential for the functioning of private property-based capitalism.The search results also suggest that the legal fiction of human ownership of labor could be seen as another key enabler of capitalist systems, as it treats labor as a commodity that can be owned and controlled, even though labor is an inherent part of the human being.

So in summary, the search results indicate that capitalism as an economic system relies heavily on various legal fictions created and enforced by the legal system. Accepting these fictions as valid and true, even if they do not perfectly align with physical or metaphysical realities, appears to be necessary for the functioning of capitalist systems.


What would happen if we did not accept the legal fictions?


Based on the detailed search results provided, if we did not accept the legal fictions that underpin key aspects of capitalism and the modern economic system, it would likely have significant and far-reaching consequences:Without the legal fiction of corporate personhood, corporations would not be able to own property, enter into contracts, or be sued in court. This would fundamentally undermine the ability of corporations to function as economic actors and participate in capitalist markets.

Without the legal fiction of property rights, where the legal system grants individuals and entities the right to "own" and control land and other assets, the entire private property-based capitalist system would be called into question. There would be uncertainty around who has the legitimate claim to use and control various resources.

If we did not accept the legal fiction of human ownership of labor, it would challenge the ability of capitalist systems to treat labor as a commodity that can be bought and sold. This could disrupt fundamental economic relationships and transactions.

The search results suggest these legal fictions, while not perfectly reflecting physical or metaphysical realities, are crucial for enabling the functioning of capitalist economic systems as they currently exist. Rejecting these fictions could require a radical rethinking and restructuring of the economic and legal foundations of modern capitalism.

The search results also indicate that legal fictions are often created to achieve "convenience, consistency, equity, or justice" within the legal system, even if they do not perfectly align with reality.

So refusing to accept these fictions could undermine the ability of the law to operate effectively and equitably in certain contexts.Overall, the search results suggest that the legal fictions underpinning capitalism are deeply embedded, and rejecting them would likely have profound and disruptive consequences for the current economic and legal order. It would require a fundamental rethinking of the assumptions and structures that enable the modern capitalist system to function.

Who decides what legal fictions need to be created?


Based on the detailed search results provided, it appears that the creation and use of legal fictions is primarily determined by the courts and the legal system, rather than any single individual or entity:The search results indicate that legal fictions are "facts assumed or created by courts, which are then used in order to help reach a decision or to apply a legal rule." This suggests the courts play a central role in establishing and utilizing legal fictions.

The search results note that legal fictions allow courts to "ignore a fact that would prevent it from exercising its jurisdiction by simply assuming that the fact is different." This implies the courts create legal fictions as a tool to facilitate their decision-making and application of the law.

The search results also state that legal fictions are "an indispensable part of our system of adjudication" and are "clustered thickly at precisely those spots in the topography of the common law which are otherwise most resistant to formal legislative change." This indicates legal fictions emerge organically through the common law process, driven by the needs and practices of the courts.

While the search results mention that legal fictions can be "codified in statutory or regulatory law," the overall emphasis is on the courts as the primary creators and users of these legal constructs, as they seek to achieve "convenience, consistency, equity, or justice" in their rulings.

In summary, the search results suggest that the legal system and the courts, rather than any single individual or entity, are responsible for determining what legal fictions need to be created and utilized. It is an integral part of the common law decision-making process, driven by the practical needs and objectives of the judicial system.


Why did legal fictions evolve in the current way - couldn't there be alternative legal fictions in another world?


Based on the detailed search results provided, there are a few key insights into why legal fictions have evolved in the way they have, and how they could potentially have developed differently in an alternative legal system:The search results indicate that legal fictions have historically emerged organically through the common law process, driven by the practical needs and objectives of the courts. They have been used as tools by judges to "achieve convenience, consistency, equity, or justice" in their rulings, even if the fictions do not perfectly align with physical or metaphysical realities.

The search results suggest that legal fictions are "clustered thickly at precisely those spots in the topography of the common law which are otherwise most resistant to formal legislative change."  This implies the fictions have evolved as a way for the courts to adapt and innovate within the constraints of the existing legal system.

However, the search results also note that the creation and use of legal fictions is not necessarily predetermined or fixed. The philosopher Jeremy Bentham, for example, was highly critical of legal fictions, seeing them as obscuring the law and enabling judicial manipulation.

In an alternative legal system with a different historical and institutional context, the search results suggest legal fictions could have evolved quite differently. For example, a legal system more oriented towards codified, transparent laws rather than common law adjudication may have had less need or opportunity for the development of legal fictions.

Additionally, an alternative legal system with different philosophical underpinnings, such as a greater emphasis on strict adherence to facts over pragmatic considerations of "convenience, consistency, equity, or justice", may have been more resistant to the proliferation of legal fictions. 

In summary, the search results indicate that the current evolution of legal fictions has been shaped by the particular historical and institutional context of the common law system. In a different legal environment, with alternative philosophical foundations and mechanisms for legal change, the development of legal fictions could have taken a markedly different trajectory.

Who are the winners and losers from an acceptance of the current legal fictions?


Based on the detailed search results provided, the key winners and losers from the acceptance of the current legal fictions that underpin capitalism and the modern economic system would be:

Winners:

Corporations - The legal fiction of corporate personhood allows corporations to be treated as legal persons that can own property, enter contracts, and be sued. This grants corporations significant legal rights and powers.

Wealthy individuals and entities - The legal fictions around property rights and ownership of assets allow the wealthy to accumulate and protect their wealth and assets through the legal system.

Lawyers and the legal profession - The search results suggest that private lawyers, operating outside of democratic institutions, end up shaping many of the legal fictions and rules that govern the economic system.

Losers:

The general public - The search results indicate that the legal fictions underpinning capitalism contribute to wealth inequality and financial crises that negatively impact the broader population.

Marginalized groups - The legal categorization and treatment of entities like slaves versus free individuals, as well as the legal fiction of human ownership of labor, have historically disadvantaged marginalized groups.

Advocates for reform - The search results suggest that legal fictions can make it difficult to achieve formal legislative change, as they are "clustered thickly" in areas resistant to change.

Critics of legal fictions - Philosophers like Jeremy Bentham who were highly critical of legal fictions and saw them as obscuring the law and enabling judicial manipulation would be considered "losers" in the current system.

So in summary, the key winners appear to be powerful corporate and economic actors who benefit from the legal fictions, while the losers tend to be the general public, marginalized groups, and those seeking reform or challenging the status quo.

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Are Universal Human Rights a form of Imperialism? Is the Chinese Communist Party right?

From The Economist

The fall of the Berlin Wall in 1989 held out the promise that the world was about to enter a virtuous circle. Growing prosperity would foster freedom and tolerance, which in turn would create more prosperity. Unfortunately, that hope disappointed. Our analysis this week, based on the definitive global survey of social attitudes, shows just how naive it turned out to be.

Prosperity certainly rose. In the three decades to 2019, global output increased more than four-fold. Roughly 70% of the 2bn people living in extreme poverty escaped it.

Alas, individual freedom and tolerance evolved quite differently. Large numbers of people around the world continue to swear fealty to traditional beliefs, sometimes intolerant ones. And although they are much wealthier these days, they often have an us-and-them contempt for others. The idea that despots and dictators shun the universal values enshrined in the UN Charter should come as no surprise. The shock is that so many of their people seem to think their leaders are right.

The World Values Survey takes place every five years. The latest results, which go up to 2022, include interviews with almost 130,000 people in 90 countries. One sign that universal values are lagging behind is that countries that were once secular and ethno-nationalist, such as Russia and Georgia, are not becoming more tolerant as they grow, but more tightly bound to traditional religious values instead. They are increasingly joining an illiberal grouping that contains places like Egypt and Morocco. Another sign is that young people in Islamic and Orthodox countries are not much more individualistic or secular than their elders. By contrast, the young in northern Europe and America are racing ahead. The world is not becoming more similar as it gets richer. Instead, countries where burning the Koran is tolerated and those where it is an outrage look on each other with growing incomprehension.

On the face of it, all this seems to support the argument made by China’s Communist Party that universal values are bunkum. Under Xi Jinping, it has mounted a campaign to dismiss them as a racist form of neo-imperialism, in which white Western elites impose their own version of freedom and democracy on people who want security and stability instead.

In fact, the survey suggests something more subtle. And this leads to the conclusion that, contrary to the Chinese argument, universal values are more valuable than ever. Start with the subtlety.

The man behind the survey, Ron Inglehart, a professor at the University of Michigan who died in 2021, would have agreed with the Chinese observation that people want security. He thought the key to his work was to understand that a sense of threat drives people to seek refuge in family, racial or national groups, while at the same time tradition and organised religion offer them solace.

This is one way to see America’s doomed attempts to establish democracy in Iraq and Afghanistan, as well as the failure of the Arab spring. Whereas the emancipation of central and eastern Europe brought security, thanks partly to membership of the European Union and NATO, the overthrow of dictatorships in the Middle East and Afghanistan brought lawlessness and upheaval. As a result, people sought safety in their tribe or their sect; hoping that order would be restored, some welcomed the return of dictators. Because the Arab world’s fledgling democracies could not provide stability, they never took wing.

The subtlety the Chinese argument misses is the fact that cynical politicians sometimes set out to engineer insecurity because they know that frightened people yearn for strongman rule. That is what Bashar al-Assad did in Syria when he released murderous jihadists from his country’s jails at the start of the Arab spring. He bet that the threat of Sunni violence would cause Syrians from other sects to rally round him.

Something similar has happened in Russia. Having lived through a devastating economic collapse and jarring reforms in the 1990s, Russians thrived in the 2000s. Between 1999 and 2013, GDP per head increased 12-fold in dollar terms. Yet, that was not enough to dispel their accumulated sense of dread. As growth has slowed, President Vladimir Putin has played on ethno-nationalist insecurities, culminating in his disastrous invasion of Ukraine. Economically weakened and insecure, Russia will struggle to escape the trap.

Even in Western countries, some leaders seek to gain by inciting fear. In the past the World Values Survey recorded that the United States and much of Latin America combined individualism with strong religious conviction. Recently, however, they have become more secular–a change driven by the young. That has created a reaction among older, more conservative voters who reflect the values of decades past and feel bewildered and left behind.

Polarising politicians like Donald Trump and Jair Bolsonaro, the former presidents of America and Brazil, saw that they could exploit people’s anxieties to mobilise support. Accordingly, they set about warning that their political opponents wanted to destroy their supporters’ way of life and threatened the very survival of their countries. That has, in turn, spread alarm and hostility on the other side. Republicans’ sweeping dismissal of this week’s indictment of Mr Trump contains the threat that countries can slip back into intolerance and tribalism.

Even allowing for that, the Chinese claim that universal values are an imposition is upside down. From Chile to Japan, the World Values Survey provides examples showing that, when people feel secure, they really do become more tolerant and more eager to express their own individuality. Nothing suggests that Western countries are unique in that. The question is how to help people feel more secure.

China’s answer is based on creating order for a loyal, deferential majority that stays out of politics and avoids defying their rulers, at the expense of individual and minority rights. However, within that model lurks deep insecurity. It is a majoritarian system in which lines move, sometimes arbitrarily or without warning–especially when power passes unpredictably from one party chief to another. Anybody once deemed safe can suddenly end up in a precarious minority. Only inalienable rights and accountable government guarantee true security.

A better answer comes from sustained prosperity built on the rule of law. Wealthy countries have more to spend on dealing with disasters, such as pandemic disease. Likewise, confident in their savings and the social safety-net, the citizens of rich countries know that they are less vulnerable to the chance events that wreck lives elsewhere.

However, the deepest solution to insecurity lies in how countries cope with change. The years to come will bring a lot of upheaval, generated by long-term phenomena such as global warming, the spread of new technologies such as artificial intelligence and the growing tensions between China and America. The countries that manage change well will be better at making society feel confident in the future. Those that manage it poorly will find that their people seek refuge in tradition and us-and-them hostility.

And that is where universal values come into their own. Classical liberalism—not the “ultraliberal” sort condemned by French commentators, or the progressive liberalism of the left—draws on tolerance, free expression and individual inquiry to tease out the costs and benefits of change. Conservatives resist change, revolutionaries impose it by force and dictatorships become trapped in one party’s–or, in China’s case, one man’s–vision of what it must be. By contrast, liberals seek to harness change through consensus forged by reasoned debate and constant reform. There is no better way to bring about progress.

Universal values are much more than a Western piety. They are a mechanism that fortifies societies against insecurity. What the World Values Survey shows is that they are also hard-won.

A Level Economics 25: Resource Allocation in Free Markets

The main assumptions of a free market are as follows:

1. Perfect Competition: The assumption of perfect competition implies that there are a large number of buyers and sellers in the market, with no single entity having control over prices or market conditions. All market participants are price takers, meaning they have no influence on the market price and must accept it as given.

2. 
   

3. Rational Behavior: The assumption of rational behavior suggests that consumers and producers act in their self-interest and make rational decisions based on maximizing their utility or profits. They have access to complete and accurate information and aim to optimize their outcomes given the available choices.

4. 
   

5. Absence of Market Imperfections: Free markets assume the absence of external factors that may distort market outcomes. There are no barriers to entry or exit, no transaction costs, and no market failures such as externalities or public goods.

6. 
   

7. Property Rights and Rule of Law: The assumption of well-defined and enforceable property rights ensures that individuals have the right to own, use, and transfer property and assets. The rule of law ensures that contracts are enforced, fraud is punished, and disputes are resolved impartially.

In a free market, the allocation of resources is determined through the interaction of supply and demand. The price mechanism plays a central role in coordinating the decisions of buyers and sellers. Here's how the market allocates resources:

1. Price Signals: Prices act as signals that reflect the relative scarcity or abundance of goods and services. When demand for a particular good or service increases, its price rises, signaling that resources should be reallocated towards its production. Conversely, when demand decreases, prices fall, signaling a reduction in resources allocated to that product.

2. 
   

3. Profit and Loss: In a free market, producers are motivated by profit. If a good or service is in high demand and prices are high, producers have an incentive to allocate more resources towards its production to earn higher profits. Conversely, if a good or service is in low demand and prices are low, producers may reallocate resources to more profitable areas or exit the market, leading to a reduction in supply.

4. 
   

5. Consumer Preferences: Consumer demand and willingness to pay for goods and services influence resource allocation. As consumers express their preferences through purchasing decisions, producers respond by producing the goods and services that are in demand, adjusting production levels, and innovating to meet consumer needs.

6. 
   

7. Efficient Allocation: The free market is assumed to allocate resources efficiently by directing them to the most valued uses. Through the price mechanism and competition, resources are allocated based on consumer preferences and production costs, maximizing societal welfare and economic efficiency.

It's important to note that while free markets can be effective in allocating resources and promoting efficiency, they may also have limitations and require appropriate regulations and interventions to address market failures, promote fairness, and protect public interest. The assumptions of a free market provide a theoretical framework, and in reality, markets may deviate from these assumptions due to various factors and imperfections.

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Bagga or Mevani, an unlawful arrest is just that. But tell that to Indians picking sides

Yogendra Yadav in The Print


Principles be damned, whose side are you on? This seems to be the ruling philosophy of our public life. We all talk about principles, we invoke norms, we cite rules — but only after choosing whom to support. Rarely do we allow our judgement about who is right or wrong to be touched by the principles, norms or rules we extoll. No wonder, no one takes any proclamation of principles seriously.

As someone who is a stickler for procedures, I have often been at the receiving end of this sorry side of our public life. No one is willing to entertain a suspicion that I might have said something because it is right, correct or fair. It is not just our political life, which is especially charged at this moment. I have faced the same reaction in academia, government institutions as well as social movements. If you object to a proposal by a “friend” just because it is a poor proposal, you are sure to risk your friendship. If you support something right done or said by someone from the other camp, tongues start wagging — zaroor kuchh setting hai! That is what happened when I spoke up against hoisting of religious flag inside the Red Fort on 26 January, or against lynching of a Dalit Sikh man at Singhu border by some Nihangs. My visit to the family of a BJP worker who died at Lakhimpur Kheri is still held up as a proof of lack of loyalty to the cause.

So I was prepared for the usual reactions when I tweeted welcoming the Punjab and Haryana High Court order staying the arrest of BJP member Tajinder Pal Singh Bagga until 6 July. My tweet simply said: “The order should be welcomed, no matter what our opinion about the person. Sending police to arrest someone on a tweet is not done. Be it Jignesh Mevani or Rana couple, Alka Lamba or Disha Ravi, it is unethical and illegal to use police to torment political opponents.” You can check my timeline for the replies I received. The usual trolling was joined by AAP supporters, no less vicious than BJP ones — who assumed that I was taking out khundak (grudge) against Arvind Kejriwal. (As and when I support something the AAP does, it is read as a sign of a wish to come back.)

Looking beyond the personal antics

Many critics made valid points: that what happened to Bagga was nothing compared to what BJP governments have done to their critics, that the courts were far from consistent in protecting other victims in his position. Some of them assumed that I had forgotten Bagga’s past, especially his leading a physical assault on my friend Prashant Bhushan. Some of them insisted that given his low-grade trolling, the Punjab police had good reasons to give him its famous dose.

Without doubt, Tajinder Singh Bagga is what in polite English you’d call a ‘disagreeable’ character. The thesaurus offers you less polite options to choose from: rude, nasty, obnoxious, repugnant, disgusting. Worse, we don’t even know if this public persona is his real self. All we know is his reel self on social media. All we know is that he has made a political career and business out of attacking — physically and verbally — those targeted by the BJP. We just know him as yet another cardboard character — straight from a cartoon strip — that has arrived in our public life to meet the ever-rising demand for hatred, contrived and real.

How do you deal with someone like him? Ideally, he should be ignored. Stop feeding people like him with negative attention and they perish. Or, you could turn him into a meme, as satirist @roflGandhi has done, much to my delight. Or you could refute him — an ineffective and unwise option, to my mind — through fact-checking or counter-trolling. But can you set the police after him? That is the operational question in this instance.

Just consider the facts of the case. In March this year, Bagga wrote a nasty tweet, since deleted, in response to Arvind Kejriwal’s speech in Delhi assembly questioning the BJP’s promotion of the movie The Kashmir Files: “When 10 lakh ***** are born, one Kejriwal takes birth”. Disgustingly provocative the post certainly was. But would you say it is “criminal intimidation” or “promoting enmity between communities”? These are the charges under which the Punjab police, following a complaint from a local AAP functionary, booked Bagga. He dodged police summons to come to Punjab for “questioning”, a euphemism for mental and physical torture. The Punjab police, ever so focused on this one FIR, landed in Delhi to arrest him.

The drama that followed, involving Punjab, Delhi, and Haryana police, can only be called a farce worse than Bagga’s antics. The National Commission on Minorities, conspicuously silent on bulldozing of Muslim-owned houses and shops, was peeved at Bagga not being allowed to tie his turban. When the court opened at midnight for him, India’s criminal justice system looked like a joke. The Punjab and Haryana High Court order was a welcome end to this prolonged and pathetic public spectacle.

Noticing a nation-wide trend

This drama is being played all over the country, in what Shekhar Gupta calls Mutually Assured Detention. While the BJP leads in targeting its critics with the help of agencies, mainstream media and social media, the opposition-led governments have also taken a leaf out of the BJP’s book. They, too, use the standard recipe: file a frivolous complaint, slap draconian charges in the FIR, use the police to go after the target and teach them a lesson. The job is done before the case ever comes up for trial in a court of law.

That is why I cite the case of Jignesh Mevani. Now, it seems ridiculous to compare Mevani’s fight for justice and his courage of conviction with Baggas of the world. My point here is to remind us that the insidious trick used by the BJP in Mevani’s case is not different from that used by the AAP in the case of Bagga. Now that the AAP controls a police force for the first time (Punjab’s), it is happy to misuse it exactly as other governments. They have also targeted Kumar Vishwas and Alka Lamba on similar trumped up charges.

The Maha Vikas Aghadi (MVA) government in Maharashtra is no different, as the recent case of MP Navneet Rana and her MLA-husband Ravi Rana demonstrates. Their proposed gimmick of reading Hanuman Chalisa outside the private residence of the Chief Minister could at the most call for preventive detention. But arrest under charges of sedition and spreading hatred between communities is plainly ridiculous. Such vindictive actions cast a shadow on other cases — the one against TV anchor Aman Chopra, for example — where the charge of spreading enmity between communities appear to be serious and worthy of a criminal trial.

Hence my plea to all those who are concerned about the endangered constitutional fiction called the Rule of Law: can we stick to principles, irrespective of the persons involved? Or am I whistling in the dark?

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The failure of liberal democracy and the rise of China’s way

Eric Li in The Economist

ALARM BELLS are ringing about the state of democracy. Freedom House proclaims the “global decline in democracy has accelerated” and that even in America it has “declined significantly”. Much of the weakening is happening in countries that are aligned with America, according to research by the V-Dem Institute in Sweden. Larry Diamond, a political sociologist, argues that the “democratic recession” has reached a “crisis”, intensified by the pandemic. There are many diagnoses. Francis Fukuyama, a political scientist, believes the American government is captured by elites and the public is divided by cultural identities. And then there are those who always reach for the easy answer, blaming China and Russia.

On the other side of the spectrum, democracy’s sceptics are enjoying a moment of Schadenfreude. Russia’s foreign minister, Sergei Lavrov, recently criticised the West’s failed attempts to “enforce democracy” on other countries whose cultures were ill fitted for such political systems and called on them to stop. Kishore Mahbubani, a Singaporean diplomat and scholar, believes America has in some ways “all the attributes of a failed state.” A decade ago even I weighed in, arguing that China’s model is superior to the West—a smug way of saying democracy is doomed.

Yet these pronouncements miss the mark because they share a flawed definition of democracy. To be more precise, they mistakenly equate liberalism with democracy, thereby rendering liberal democracy the only form of democratic governance. This is wrong.

In 1992, at the end of the cold war and beginning of a golden era for liberal democracy’s universalisation, Lord Bhikhu Parekh, a political theorist, wrote in an essay, “The Cultural Particularity of Liberal Democracy”, that “liberal democracy is liberalised democracy: that is, democracy defined and structured within the limits set by liberalism.” This combination, he noted, was crystallised around the 18th century in Europe and was widely championed in practice by the West only after the second world war as a way of opposing the Soviet Union. Democracy itself, in its earliest Western incarnation in ancient Greece, long preceded liberalism.

Moreover, in combination, liberalism was the dominant partner and democracy was subjugated. In fact, liberalism was hostile to democracy. The development of liberal institutions over the past two to three centuries has in many ways consisted of attempts at limiting the power of democracy. If we are to be historically accurate and intellectually honest, we need to recognise that liberal democracy is but one kind of democracy.

During the European Enlightenment, liberal thinkers such as Locke, Montesquieu and Mill proposed revolutionary ideas about how human societies should be governed based on the tenets of liberalism, such as the individual as the fundamental unit of society, the sanctity of private property and the primacy of procedural rule of law. Most modern liberal political institutions were developed with these ideas—representative government based on elections, separation of powers, freedom of the press, an independent judiciary and so on. They are fundamental to America’s constitution and to most other liberal societies.

But at the same time, many liberal forefathers also recognised that the goal of liberal institutions is to deliver happiness to the people. If that outcome is not met, procedures must be changed. According to Mill, even access to voting could be curtailed, say, if a citizen were illiterate.

Liberal democracy had enormous successes, notably in the second half of the 20th century. During that period, liberal democratic countries delivered unprecedented prosperity to their people—so much so that many countries, including China, sought to emulate many of the West’s practices, such as market economics. However when groups like Freedom House and V-Dem rank countries on their levels of democracy, it in essence measures countries on how closely they follow liberal institutional procedures. When people say democracy is receding in many countries, they really mean liberalism is in trouble.

Why is liberalism in bad shape? The reason is that in many places it seems to be failing its junior partner—democracy. Liberal democracy is in crisis mode because so many of these countries face severe problems: persistent inequality, political corruption, collapse of social cohesion, lack of trust in government and elite institutions, and incompetent government. In short, liberalism has been failing to deliver democratic outcomes.

In the Soviet Union there was a popular joke: “We pretend to work, they pretend to pay us.” In many liberal societies, people can turn that around: “We pretend to vote, they pretend to govern.” At this rate, the word “liberal” may soon no longer deserve to be followed by “democracy”.

A broader view of governance

The world needs a better and more inclusive way of evaluating democracy. Defining and measuring democracy by liberal procedures is way too narrow—historically, conceptually and under contemporary conditions. In ancient Greece, when democracy was first practised in the West, democratic politics was rather illiberal. There was no concept of individual or minority rights. That was why Plato and Aristotle—no democrats, both—criticised its majoritarian nature. Elections were not the only way of selecting leaders. Sortition—choosing leaders by lottery—was widely practised and fit Aristotle’s definition of democracy.

In the contemporary West, populist movements from the right and socialist activism on the left seem to be, at least in part, attempts to hold liberalism accountable for not delivering on outcomes. Looking at democracy anew is no easy task and will no doubt take a lot of work and debate. But I venture to propose a common-sense idea: let’s measure democracy not by procedures but by outcomes.

Democracy’s normative goal must be to deliver satisfaction to a vast majority of people over a long period. What good are elections if they keep producing poor leaders with the public stuck in perpetual cycles of “elect and regret”? What good is an independent judiciary if it only protects the rich? What good is separation of powers if it is captured by special interests to block necessary reforms? What good is freedom of the press, or freedom of speech for that matter, if it corrodes societies with division and dysfunction? What good are individual rights if they result in millions of avoidable deaths, as has happened in many liberal democracies during the pandemic?

In its attempt to challenge a rising China, America’s president, Joe Biden, frames this competition as a starkly ideological dichotomy of democracy versus autocracy. With that in mind, the administration is hosting a gathering of democracies on December 9th and 10th, to which some 110 countries or regions invited. A review shows that these 111 places (with the US included) consist of around 56% of the world’s population but had cumulative covid-19 deaths of 4.2m, which is 82% of the world’s total. More glaringly, the three countries with the highest deaths are the host country (780,000), which boasts of being the oldest democracy, Brazil (615,000) and India (470,000), which relishes being the largest democracy.

As for the seeming target of the gathering, China, it has 1.4bn people and just 5,697 deaths from covid-19.

Some may object that this was because China restricted freedoms more than “democracies”. But what kind of democracy would sacrifice millions of lives for some individuals’ freedom not to wear masks? It is precisely in this way that liberal democracy is failing its citizens.

Perhaps it is possible to develop a set of measurements that show which countries are generating more democratic outcomes. How satisfied are most people with their countries’ leadership and directions? How cohesive is society? Are people living better than before? Are people optimistic about their future? Is society as a whole investing enough to ensure the well-being of future generations? Beyond the narrow and procedural-centric liberal definition of democracy, outcomes must be taken into consideration when we define and evaluate democracies.

I would suggest that when it comes to outcomes, China doesn’t score so badly. The country has its problems—inequality, corruption and environmental degradation to name a few. But the government has been tackling them aggressively.

This is probably why a vast majority of Chinese people tell pollsters that they are generally satisfied with how the country is being governed. Can we at least now entertain the idea that China is generating more productive and democratic outcomes for its people and, measured by these concrete results, its political system is more democratic than that of the United States, albeit different, at the moment?

Abraham Lincoln characterised democracy in the most eloquent layman’s term: government of the people, by the people, for the people. I dare say that the current Chinese government outperforms America on all three. Chinese people overwhelmingly believe their government belongs to them and they live in a democracy; and it is a fact that a vast majority of China’s political leaders come from ordinary backgrounds. Quite to the contrary, many Americans seem to believe that their government is captured by monied interests and formed by an elite oligarchy. As for the last part, “for the people”, China is way ahead on outcomes.

The world needs greater diversity in the concept of democracy that is both historically truer (because democracy was not always liberal) and practically more beneficial. Many developing countries have seen their economic growth stagnate. They need to be unshackled from the ideological rigidity of the liberal doctrine and to experiment with their own ways of realising their democratic potential. New perspectives and measurements might help liberal societies as well.

Decoupling liberal democracy

For too long, liberalism has monopolised the concept of democracy and liberals have taken their democratic credentials for granted. This may be one cause for why many liberal governments are failing to deliver democratic outcomes for their people. Being measured not on procedures but on actual performance may be just the spur for liberal countries to implement much-needed reforms. If liberal governments could again deliver more democratic outcomes, so much the better for the world.

This perspective, on the need to judge democracy by its outcomes, is rarely discussed in global debates over governance. Liberal societies champion diversity in just about everything except for diversity in models of democracy, even at a conceptual level. But the reality is that the history of democratic aspirations and practices has been immensely rich and diverse. Besides Athenian democracy being decidedly not liberal, there were centuries of democratic ideals and institutional practices in China’s Confucian tradition—also not liberal. At this point in time, the world is certainly in need of more democratic experiments.

I am not attempting to advocate any particular form of democracy, and certainly am not making a case for majoritarian or direct democracy—which China is definitely not. Rather, I am proposing to broaden and pluralise both the definition and measurements of democracy. China’s current socialist democracy is surely a model worthy of study given the country’s obvious successes.

The American foreign-policy thinker Anne-Marie Slaughter recently argued that the United States should “accept at least the possibility that other forms of government could be better.” She further suggested, as a new measure of governance, that people evaluate which countries are doing a good job at achieving the United Nations’ Sustainable Development Goals.

It is a great idea. And the broader point needs to be amplified: end liberalism’s monopoly on democracy—and let more forms of democracy flourish.