Abstract and Keywords
This chapter opens by providing empirical evidence that income inequality persists or increases in many new democracies after their transition. Then it gives a brief overview of studies that expect reduced inequality because of democratization and questions their three assumptions regarding median voters, party system stability, and the authoritarian legacy on citizen–party linkage. It offers a revision to the median voter theory, emphasizes high electoral volatility in new democracies, and reexamines the legacy of previous nondemocratic regimes on citizen–party linkage. Having offered its argument in a nutshell, it turns to research methodology and case selection. It offers the rationale behind employing a multimethod approach to test its arguments. It tests its argument through large-N analysis in new and longstanding democracies in Europe as well as two paired case studies: Poland and the Czech Republic in postcommunist Europe and Turkey and Spain in Southern Europe.
Does democracy reduce income disparity? According to the established view in the political economy literature, democracies are responsive to majorities and for this reason are expected to generate income equality (Acemoglu and Robinson 2005; Boix 2003; Ghobarah et al. 2004; McGuire and Olson 1996). The research cited suggests that because they can turn their numerical majority into political advantage and thereby demand redistribution, the disadvantaged have a greater voice in democracies than in nondemocracies. Indeed, according to several studies democracies see significant increases in social spending in the aftermath of a transition from authoritarianism (Huber et al. 2008; Lake and Baum 2001). A fundamental assumption in the studies based on the Meltzer–Richard (1981) model (MR model), however, is that this increased social spending goes to the (mostly poor) majority because democratic leaders need a larger winning coalition than authoritarian leaders do, and thus choose policies with an eye to improving their electoral chances (Acemoglu and Robinson 2005; Bueno de Mesquita et al. 2003).
This study argues that, despite such theoretical expectations, new democracies do not show any remarkable capacity to reduce income inequality. Unlike previous studies, it directly analyzes the relationship between inequality and democracy by focusing on the trajectory of inequality after the transition to democracy. It provides empirical evidence showing that most new democracies either maintain the level of income inequality they inherited or increase it over time. Figure 1.1 presents changes in income inequality levels across thirty-one new and established European democracies by comparing these levels during three phases—under authoritarianism, during the transition to democracy, and under a democracy—for the period of 1975 to 2009.1 Overall, there has been a significant increase in mean inequality across the new democracies, which contradicts the conventional expectation that democracy reduces inequality. Figure 1.1, which provides a comparison in which growing inequality across the globe is controlled for, indicates that increases in inequality in new democracies are especially large. Whereas the mean increase in inequality between the transition year and the post-transition year (2009) is about 7.2 points for (p.2) new democracies, it is around 1.2 points for established democracies. The increase in inequality is more than double in new democracies. This difference begs for an explanation. Furthermore, the persistence of inequality in new democracies goes against the expectation that pro-majoritarian policies will produce income equality even after the initial spike in inequality produced by the transition to a market economy.
These empirical observations do not conform to theoretical expectations and are thus quite puzzling. Why is it that some new democracies have difficulty generating income equality? This is an important question because the majoritarian and redistributive character of democracy lies at the center of democratic theory. Based on the MR model, scholars such as Acemoglu and Robinson (2005), Boix (2003), and Bueno de Mesquita et al. (2003) have led us to believe that the transition to democratic governance should bring increased taxes for the rich, and that this wealth is redistributed in order to narrow the gap between mean and median income. Building on this expectation, Acemoglu and Robinson (2005) and Boix (2003) argue that a high level of income inequality reduces the willingness of authoritarian leaders to implement political reforms in order to effect democratization. Expectations regarding the effect of democratization on income inequality vary depending on the existing level of inequality. However, the literature, including these two (p.3) influential studies, is consistent on the point that the distribution of income under authoritarian regimes is right-skewed, and that redistribution after democratization continues until the mean and median incomes converge. In particular, the increased size of the selectorate in a country after transitioning to democracy is held to incentivize political parties to adopt redistributive policies, resulting in increasing welfare for the average citizen. Nevertheless, as discussed above, Figure 1.1 belies this expectation.
This book attempts to explain this puzzle in the political economy literature: why do new democracies promote inequality? Recently, some scholars have expressed skepticism in regard to established theories concerning the relationship between democracy, democratization, and inequality (Ross 2006; Haggard and Kaufman 2008; Keefer 2007; Slater et al. 2014). For example, Ross (2006) argues that democracies do not improve the welfare of the poor to any greater extent than nondemocracies. In Ross’s view, claims that democracies perform better on this point are based on biased samples that exclude nondemocratic countries that have performed well. Ansell and Samuels (2014) view democratization as a product of intra-elite negotiations rather than a response to the demand for redistribution from the poor: intra-elite negotiations increase redistribution toward the poor in countries with low income inequality. However, in countries with high income inequality, wealth is redistributed to members of economic sectors that support the direct economic interests of the wealthy. Haggard and Kaufman (2012) oppose the linkage between inequality and democratization. They do not find strong evidence regarding the extent to which redistributive conflicts lead to democratization and offer alternative mechanisms to explain the redistributive conflict theorized between the elite and the masses. Scheve and Stasavage (2016) argue that democracy does not naturally or necessarily reduce (wealth) inequality. Their study finds no significant relationship between suffrage and inheritance taxation; taxation did not increase after suffrage in longstanding democracies. Nor do they find any significant relationship between income and wealth inequality and taxation level in the US and Europe. They argue that tax rates substantially increased for the rich in longstanding democracies for war and war mobilization, the First World War, the interwar era, and the Second World War. Gilens (2012) shares a similar view regarding the causes of inequality, i.e., that neither the poor nor the middle class exert significant influence over public policies, asserting that the influence of the wealthy on these policies, including social policy and taxation, perpetuate inequality in the US. Acemoglu et al. (2013) updated the empirical testing of the redistributive model presented in their earlier unpublished works with a new dynamic panel data analysis and found no significant relationship between income inequality and the transition to democracy. Furthermore, they found that both tax revenues and investment in education increase after democratization. However, the same empirical analysis shows that increases in tax revenues and education spending do not translate into (p.4) lower income inequality. Yet they do not fully explain the causes of this weak relationship, although they note that their null finding requires further research than existing ones including their own.
In attempting to qualify the relationship between income inequality and redistribution in longstanding democracies, other researchers have argued that citizens view redistribution as a form of insurance against future loss of income (Moene and Wallerstein 2001, 2003; Iversen and Soskice 2001). Kenworthy and Pontusson (2005), Larcinese (2007) and Mahler (2008) are among the first studies to posit a clear connection between voter turnout, especially among poor voters, and inequality/redistribution. In particular, Mahler (2008: 162) exposes the hidden assumption in the MR model that “all potential voters in a polity actually vote.” Lupu and Pontusson (2011) claim that redistribution depends on intra- and inter-income inequality within and between the middle and lower classes. Power resources theory states that inequality and low levels of redistribution persist in the absence of organized pressure on the state or employers that naturally seek to avoid the costs of welfare policies (Iversen 2005). Income inequality declines if unions can mobilize to narrow wage disparities, increasing income for laborers and leading to low levels of pre-redistribution inequality (Bradley et al. 2003; Korpi and Palme 2003). In other words, the proponents of this theory suggest that distributive economic policies depend on the distribution of power resources in society or the distribution of power in civil society through the organizational strength of unions and leftist parties (Bradley et al. 2003; Stephens 1979; Korpi 1983). Huber and Stephens (2012) argued that the MR model cannot explain the redistributive policies in Latin America because the greater distance between the median income and the mean income generates the demand for redistribution, but this does not translate into, or account for, political demands and policy outcomes. Their work provides new empirical evidence that supports the power resource theory that Korpi (1983) and Stephens (1979) developed, and which subsequent studies from Huber and Stephens and others have continued to test in different countries with new data (e.g., Bradley et al. 2003; Solt 2008). They highlight the importance of material resources and organizational networks in meeting redistributive demands. However, the nature of the data that they use in their studies on Latin America may lead to nonrepresentative findings, as the strength of the left parties and strong union movements are not characteristics of countries especially in their sample. Although Iversen (2005) is critical of the power resource approach because the power of industrial workers has declined with the rise of the postwar welfare state, Kenworthy and Pontusson (2005) and Mahler (2008) argue that turnout is the key to reconciling the expectations of these two approaches regarding redistribution. In other words, turnout is the common ground where power resource theory and the redistributive theories meet. If the mobilization of the poor can be successful through unions and (p.5) left parties, then the differences in turnout between the poor and the nonpoor can disappear. However, this study provides evidence that (divided) unions and (weak) left parties are not the only actors for mobilization. Right-wing parties can, and do, mobilize poor voters through social policies and nationalist or religious party programs, as seen in both Poland and Turkey.
These studies all cast doubt on the theorized relationship between democracy and reduced income inequality. Yet, given their focus on specific historical periods and regions—mostly on advanced European democracies—and their use of large-N studies with a significant amount of missing data, these studies have yielded inconclusive results. To determine whether democratization increases inequality, we need to compare income-inequality levels before and after the transition to democracy using a methodology that controls for country-specific, region-specific, and global factors. For this reason, this study undertakes an analysis of the democratic transition in third-wave democracies by examining these countries after their transition to democracy, specifically how social spending affects income inequality in them. It is not about how inequality affects redistributive policies, but it is about how transitioning to democracy affects redistribution. The study shows that new democracies consistently fail to deliver on their economic promises to the poor and explains why this is the case. However, I make this claim with an important caveat: I do not endorse the position that citizens in nondemocracies would enjoy high welfare if they remained authoritarian. Rather, the aim of this study is to contribute to the burgeoning literature that examines the relationship between democracy and inequality by developing a systematic theory to account for the persistence of inequality in new democracies. Accounting for this persistence is important because academics and policy makers alike promote democracy as a means to improve the lives of the disadvantaged in general (Sen 2001; Diamond 2008). This study offers a new theory to explain why this promise is not fulfilled in new democracies and applies it to the study of new democracies in Europe.
This new theory is based on two interrelated arguments. First, low electoral participation on the part of the poor and weak political party system institutionalization in new democracies cause high levels of “targeted” spending toward the nonpoor. This argument goes against well-established assumptions regarding the voting patterns of socioeconomic groups. Previous studies assume a normal distribution of voter turnout or abstention, ignoring the fact that the disadvantaged tend to vote less frequently because of lower levels of material resources and social capital and/or a weaker sense of political efficacy in terms of the impact they expect to have on public policy (Dahl 1961; Lijphart 1997; Barro 1997; Kenworthy and Pontusson 2005; Solt 2008). This study shows that the low political participation of the poorest segments of society has implications for social policies that negatively affect the poor, and it suggests that economic inequality translates into political inequality in new democracies.
(p.6) Further, this argument questions the stability of political party systems in new democracies and argues that weak party system institutionalization shapes the distribution of domestic resources at the expense of the poor, affording more leverage to organized groups and groups whose voter turnout is high. In this respect, weak party system institutionalization increases electoral uncertainty and provides parties with strong incentives to use social policies to secure their own electoral base, resulting in particularistic and targeted social spending designed to overcome shortcomings in terms of political credibility (Keefer 2007; Kapstein and Converse 2008; Roberts 2010; Robbins 2010). Such behavior undermines the assumption that new democracies have a stable political party environment resembling that of longstanding democracies and thus increase social spending to mitigate deprivation and reduce inequality. As discussed in Chapters 2, 4, and 5, the transition from state-dominant economies to neoliberal economies in Latin America, and the dual transition in postcommunist Europe, has not made the citizen–party linkage easier. In Europe, the communist legacy of political apathy, social distrust, and the belated development of effective political parties has produced the highest electoral volatility in the world. This volatility has significantly influenced social spending and its recipients.
The second argument is that although these factors tend to increase the level of social spending targeting the nonpoor, they have a drastic negative effect on income equality. That is, targeted spending excludes the poor from the distribution of domestic resources and has a regressive effect on income equality. The reason for this is that the poor benefit from spending on social policies that are universal in nature, such as the provision of education and healthcare (see also Huber and Stephens 2012: 7). Spending in support of such policies affords the poor some opportunities to improve their wellbeing, including by climbing the social ladder. However, to appeal to organized groups and other likely voters, political parties, especially in weak party systems, are more inclined to increase targeted spending than to increase spending on universally beneficial policies, thus hurting the wellbeing of the majority.
The present study’s contributions to the literature and its practical implications are manifold. First, the study contributes to our understanding of the relationship between democracy and inequality. It demonstrates that there is a need to reconsider certain assumptions made in the political economy literature regarding both voter turnout and the presence of stable political party system institutionalization. Modifying these assumptions, the study offers a new version of the median voter theory referred to as the median likely voter theory. Second, it emphasizes and analyzes the effect of volatility in party systems in new democracies and argues that high volatility leads to targeted social policies that have a regressive effect on economic equality. Why does this study focus on social transfers rather than taxation? The welfare state literature largely agrees that tax policy has little impact on income redistribution because (p.7) direct and indirect income taxes can produce opposite results, as well as the possibility of tax avoidance at middle and upper income levels (Jenkins 1995). This book therefore considers welfare policies as the primary redistributive mechanism (e.g., Mulé 2001).
This study also emphasizes the importance of the linkage between political parties and social, occupational, and other organized groups that goes back to the authoritarian era, and which should be studied further in relation with the strength of party systems and redistribution policies. Ex-authoritarian parties or anti-former regime movements/parties are likely to design public policies tailored toward their own electoral bases. It should be noted that their historical ties to the parties may exist in some countries, which can increase the parties’ survival, but their relatively small size or ideological, religious, or ethnic divisions within these groups may weaken their abilities to put a specific party in power. Further, the study brings together several major political science literatures—democratization, social policy, income inequality, and party system institutionalization—to solve the puzzle of why transitions to democracy can lead to greater income inequality. Third, the study draws on a combination of large-N and case-study methods and a diverse range of data sources in order to contribute to the burgeoning multimethod approach in political science.
Moreover, the theory developed herein and the findings associated with it have some important implications for welfare-state and social-policy studies as well. For example, Rudra (2008) has argued that it is the middle class rather than the poor who are most negatively affected by globalization. This is because the latter were never a beneficiary of state social policies, whereas the middle class, which benefited from government programs, was not powerful enough to resist retrenchment in developing countries. However, the present study challenges Rudra’s argument by showing that it is the poor, not the middle class, who are the most affected. This may be because transitional politics are geared toward demobilizing the labor force and other active segments of society through public policies. The study holds a similar view with Wibbels (2006) that governments do not cut from organized middle class, but from the poor who are unable to mobilize. Additionally, it adds to the regime legacy literature. Haggard and Kaufman (2008) find the legacy effect of social policies under authoritarian regimes on present democratic ones. Similarly to arguments by Pierson (1994) and Campbell (2003), the present study emphasizes policy legacies and shows how groups fight against the retrenchment of programs of which they are the beneficiaries at any cost. It also highlights an overlooked dimension of social-policy formulation in democracies—i.e., how policy outcomes are affected by the weak institutionalization of party systems.
The findings contribute to studies on pension programs in Europe as well. In particular, similarly to Lynch’s research (2006) on Europe, we find that occupational pension systems contribute to fragmented and particularistic (p.8) social-policy programs in democracies. Due to the legacy of communism in Eastern Europe and the former Soviet Union and statist economic policies in Southern Europe, occupational social-insurance programs have remained an important element of social policy in these regions. In the aftermath of a transition to democracy, social policies continue to privilege some occupational sectors for economic (e.g., privatization) and political purposes, a tendency that exacerbates economic divides through specific initiatives such as early retirement or high replacement rates for pensions in certain occupations. In other words, the occupational systems in most new democracies create opportunities for politicians to use social policies for their particularistic goals (Lynch 2006). Members of groups that benefit from such policies not only vote in higher numbers, but also possess more resources to draw on in an effort to influence the policy-making process (McAdam et al. 2001). As we witnessed with the failed healthcare reform of the Clinton era, the lobbying effort of resourceful groups in the face of the weak mobilization of the groups that would benefit from this reform may shape the formation and persistence of an inefficient social policy (Brady 2009). In particular, the findings of the present study support Lynch (2006) on advanced European democracies, which show the importance of pensioners as beneficiaries of the welfare state. Through early retirement and other policies that benefit certain age groups in specific occupations, pensioners have increased their leverage and become an important constituency in highly volatile electoral contexts. In this respect, this study adds to the literature on the influence of pensioners on welfare spending and shows that this group has become one of the most important beneficiaries of welfare spending (Wilensky 1975; Pampel and Williamson 1989).
Finally, through analysis of the rise of the Polish Justice and Law Party (PiS) and the Turkish Justice and Development Party (AKP) to power, this study investigates the historical and political background of the populist parties and traces their policies and party discourses that became a permanent member of party systems in Poland and Turkey. It shows that parties in weak party systems design social policies that create a sizable and demanding electorate. Increasing the number of pensioners, others that receive other state benefits, and low-income groups in general creates fertile ground for populist and radical right parties to target “outsiders” such as migrants or refugees or the elites that “do not care about ordinary people and their interest.” Cultural, religious, and nationalist arguments become part of the electoral process and beyond. The rise of the AKP and the PiS since 2002 and 2005 respectively illustrate this trend, extensively discussed in Chapters 4 and 5. However, this pattern is not restricted to these two countries. The combination of electoral volatility and an increase in social spending in countries with significant inequality may end up empowering other populist or radical parties in democracies. The rise of populist parties in the 2017 Czech elections in a country where electoral volatility rises, and pension politics further gains resonance in (p.9) the election campaigns, provides empirical evidence for the theory and findings of this study.
Asides from these contributions, however, the major contribution of this study is to offer a theory and empirical evidence on the dynamics of inequality after the transition to new democracy. To reiterate, this study argues that the expectation that increased social spending will result in a reduction in income inequality does not hold in new democracies. It presents clear evidence of the persistence of inequality in new democracies and then, using multiple methods of inference, explains the causal mechanisms behind this outcome. First, it confirms the basic theory proposed in a time-series cross-sectional analysis of thirty-one European countries. Then, it adopts an approach of cross-case and within-case analyses to document the causal mechanisms at play in individual cases in order to overcome the limitations of large-N studies on social policy (Haggard and Kaufman 2008; Gerring 2004). It relies on two paired case studies of new democracies, one in postcommunist Europe and the other in Southern Europe, to more fully specify the causal mechanisms that underlie the theory and identify instances in which the general theory does not fully work.
Why New Democracies in Europe?
The rapid increase in the number of democracies globally and the occasional reversals of democratization processes since the 1970s have led scholars to investigate the factors that affect the survival and consolidation of democracies (Bernhard et al. 2001; Reenock et al. 2007; Svolik 2008; Sing 2010). Regardless, all processes of democratization create winners and losers, leading to conflicts of interest among socioeconomic groups. In some cases, such conflicts of interest have not functioned as an impediment to democracy, while in others they have provoked military coups and reversions to dictatorship. This study confines itself to studying democratization in Europe for several reasons. First, this region hosts a significant number of democratizing countries that have not experienced a reversion to authoritarianism. This continuity enables us to test the theory proposed herein in a maximum number of countries while controlling for a number of regional factors. Other regions, especially Latin America, have had similar experiences, but they are limited in terms of the number of countries in which we can test the theory. In addition, a European sample allows us to control for unobserved heterogeneity across countries. The region (including the post-Soviet countries such as the Baltic ones) also hosts countries that began democratization processes almost simultaneously. Southern and postcommunist European countries transitioned to democracy (p.10) in the mid-1970s and late 1980s to early 1990s, respectively, although Turkey, which began its democratization in 1983, is an exception. The advantages of conducting a cross- and within-case analysis in these two regions of Europe is that the two sets of democratization processes are temporally proximate, which makes it possible to reduce the effects of both time-related and unobserved factors on the variables of interest in this study. Moreover, although both regions are European, their political and economic dynamics have developed along different trajectories, including the role played in social and economic policies. Thus, the structural differences contribute more to the diversity of this study than an arbitrary measure of geographic distance. Two such diverse regions in cross-national analyses and case studies increase the external validity of the findings.2 Lastly, the longevity of Southern and postcommunist Europe democracies enables us to test the argument about changes in inequality in new democracies. These two regions contain several countries whose democratic experience has continued uninterrupted for three to five decades.
Another advantage of a European sample is that it allows for the control of global trends in inequality, which is important for the period since the 1970s. Given its ability to provide a comparison group of long standing—highly developed democracies that stand at the center of the global economy—Europe provides an effective way to control for the effect of general trends in the world economy. In our large-N analysis, we include longstanding democracies to control for whether there is an upward global trend in inequality that accounts for the inequality we see in new European democracies. This enables us to show whether new democracies differ from longstanding democracies and whether our key independent variables operate differently in new democracies. Finally, Europe was selected as the focus of this study because it is the only region in the world that can provide the kind of data with which to test the theories. No other region can do this at the present time.
Comparative Case Studies
Central to this study are two sets of paired comparisons, one drawn from postcommunist Europe (Poland and the Czech Republic/Czechia3) and the other from Southern Europe (Spain and Turkey). Both sets of comparisons include observations that exhibit variation in regard to the main independent variables (turnout by the poor and the strength of the party system) and the main dependent variables (high volatility/high inequality and low volatility/low inequality). The case studies examine patterns in voter turnout, the development of the party system, and the struggle over social spending by organized interests and political parties.
(p.11) In order to increase confidence in the causal connections between the variables, the two paired case comparisons use the process-tracing method, which constitutes an important tool for understanding the causal mechanisms underlying a proposed relationship. Specifically, this method provides “a continuous and theoretically based historical explanation of a case, in which each significant step toward the outcome is explained by reference to a theory that makes process tracing a powerful method of inference” (George and Bennett 2005: 30). Causal relations among variables, starting from the authoritarian era, can tell us about the mechanisms through which the variables affect each other and also enable us to determine when the theorized mechanisms do not work.
There are several criteria for choosing the cases for this study. In terms of volatility in party systems, postcommunist countries have unprecedentedly high levels of volatility, while the new democracies of Southern Europe are more moderate in this regard. However, both regions exhibit a range of volatility. In combination with different levels of income inequality and patterns of social spending, this allows us to test our theory over a set of cases that vary broadly in terms of volatility. In sum, there is sufficient variation both across and within these two regions for us to test the theory in a small-N context.
In designing this study, I have relied on a most similar systems design; that is, I have chosen cases with similar socioeconomic and political variables within each region. In selecting these cases, I have followed Seawright and Gerring’s (2008) suggestion to choose a combination of most similar cases for the purpose of comparison to avoid the pitfalls of selection bias (Geddes 2003; King et al. 1994). In other words, case pairings in this study are most similar in terms of their control variables, yet they still exhibit a range of variations in regard to the main independent variables.
Postcommunist countries present a unique opportunity for explaining variations in social spending because they have similar “welfare state structures, featuring centrally administered, budget-financed, comprehensive though poor quality, social provision” (Cook 2007: 23). Based on these similarities, I have been able to control for a range of socioeconomic and political variables. These countries simultaneously transitioned to capitalism and democracy.4 Under such circumstances, increased inequality is unsurprising. These countries transitioned to capitalism at different rates, however. A recent study argues that as Latin America moved from state-led economies to neoliberal market economies, political parties—especially labor-mobilizing parties—adopted different economic and political policies that led to significant variations in electoral volatility (Roberts 2014). In Eastern Europe, no country adopted a full-scale capitalist economy, but they varied in the way they made a transition to economic liberalism, resulting initially in different levels of income inequality. Inequality remained stable after a slight increase in the early 1990s in the Czech Republic, Slovakia, and Hungary, while in others (p.12) such as Poland showed a substantial increase. After the initial differences, however, inequality remained fairly consistent as these countries recovered from economic crisis or stagnation. By the end of the 1990s they had returned to the level of economic development and prosperity that they had attained in 1989. The puzzle for this study is that almost three decades after the transition, inequality has not significantly declined, instead persisting or increasing in most postcommunist countries despite a high level of social spending.
Among postcommunist countries, I have chosen the Czech Republic and Poland because they are very similar in regard to many of the control variables: both countries have successfully consolidated a democracy, both have market economies, and both have ethnically homogenous societies. In addition, they followed similar trajectories as Iron Curtain countries and joined the European Union (EU) at the same time. Capital mobility, which was almost nonexistent in the communist era, has followed a similar trend in both countries, enabling us to control for its impact on inequality.
Despite their apparent similarities, these countries differ in their size, in the nature of the communist systems from which they emerged, and the mode of their transitions. For the latter, the Czech Republic is associated with authoritarian-bureaucratic communism, and Poland with national-accommodative communism, which, along with mode of transition (rupture in the Czech Republic versus negotiation in Poland) determined the fate of former communist parties in both countries. Regarding social policies, two countries differ significantly in regard to their social policies after their transition. In the early phase of the transition, Poland began by reforming only its in-kind benefits, such as subsidies on housing and goods. Attempts to reform pensions and other social programs were strongly resisted by unions, which mobilized and succeeded in blocking such efforts in the early 1990s. Despite this early success, the unions lost their initial momentum and began to fragment (Cook 2007: 200) such that from the mid-1990s onwards the Polish government was able to restrict the extent of and access to social benefits. In contrast, the Czech Republic kept its spending relatively constant by introducing only small incremental changes in the early post-transition years. After a period of weakening economic performance, especially in the second half of the 1900s, the Czech Republic was forced to embrace policies focused on retrenchment and reductions in spending. These two countries’ inverse trajectories in regard to social spending provide inferential leverage to tease out the causal mechanisms driving the growth of income inequality in each. The chapter on postcommunist countries examines how a low-volatility/low-inequalitycase—the Czech Republic—and a high-volatility/high-inequality case—Poland—differ in terms of how they allocate social spending. One must note, however, starting from the 2010 election, the Czech Republic showed increasing electoral volatility along with the growth of nationalist/populist and xenophobic parties. Poland, on the other hand, experienced significant but (p.13) brief decline in volatility between 2007 and 2011, but this ended in 2015. While I discuss how these changes affect targeted spending and inequality, it remains unclear if change in electoral volatility, and thus social spending, will remain a long-term trend or not, especially in the Czech Republic.
This study considers two possible pairs from Southern Europe, Spain and Turkey, or Spain and Portugal, both of which better fulfill the criteria for a most similar systems design than other possible pairs in Southern Europe. The preference for Spain and Turkey rather than Spain and Portugal has both theoretical and pragmatic causes. Many of the former pair’s socioeconomic and political similarities stem from their respective histories prior to their recent adoption of democracy. Both countries are successor states to empires (the Spanish Kingdom and the Ottoman Empire). The military was the dominant player in domestic politics for most of the twentieth century in both countries. Furthermore, in both Spain and Turkey the traditional family, particularly in large segments of the labor force employed in rural areas, still plays an important role as a social safety net (Martinez 1993; Gunther et al. 2004; Tuğal 2007; İnsel 1996; Buğra 2008). They also exhibit similarities in their post-transition political and economic policies, as both countries have followed a course of gradual economic and political liberalization.
As stated above, this study considered Portugal and Spain, which feature prominently in many democratization studies, often at the expense of other Southern European examples. These countries share some important common characteristics: the timing of their transition, geographic proximity, and the nature of the previous regime. Nevertheless, they are not a perfect match either; Spain is a multiethnic country and has struggled with ethnic conflict, violence, and secession attempts, while Portugal is an ethnically homogenous state. Both countries differ in other important factors such as population size (the Spanish population was four times that of Portugal in 1975, 35 million versus 9 million), type of transition (nonhierarchical military coup of Portugal versus pacted transition of Spain), political system (semi-presidentialism of Portugal versus parliamentary system of Spain), and unitary system versus Spain’s devolution system.
Obvious differences exist between Spain and Turkey too. Most importantly, they differ in the mode of their transition to democracy. As discussed in Chapter 5, Spain is the prototype of a pacted transition, whereas Turkey is a classic transition from above (Schmitter 1986). They also differ in terms of their levels of socioeconomic development. Both countries have followed distinct trajectories in several significant ways, including their relationship with the European Community (EC)/EU and the relationship between the military and civil society (Sunar and Sayarı 1986). The military in Spain was put under civilian rule, while the predominance of the military over civilians has continued in Turkey to various degrees until an unsuccessful military attempt on July 15, 2016.
(p.14) Three other significant differences require consideration: EU membership, religion, and economic development. The former two have limited impacts on social policies in these two countries. Even though both countries took a different path toward the EU, its influence on domestic politics in general and on social policies remains limited. The prospects for Turkey’s full membership have always been uncertain, thus reducing the government’s incentives for radical political and economic reforms. Spain, in contrast, joined in the European Economic Community (EEC) in 1986, and its social policy remained in the sphere of domestic policy until the economic crisis of 2008–2016, discussed in Chapter 5. The EU agreed to open negotiations with Turkey in December 2004, which paved the way for new reforms in the country, but its impact on social policies was limited or nonexistent in the face of other major issues such as the Cyprus and Kurdish problems and democratization in general. The Kurdish and Cyprus conflicts created an ongoing stalemate between Turkey and the EC/EU since the 1990s. Growing authoritarianism in Turkey under the AKP governments and the reactions of the EU leaders to this trend suggest that Turkey’s EU membership does not loom on the horizon at all. As for religion, Spain and Turkey show significant differences in religious tradition, but similar effects in many ways. In both societies, the family serves as a social safety net and religious organizations continue to provide important social services. Pepinsky and Wellborne (2011) examined whether one’s religious denomination affects distributive preferences and found that Muslims do not differ from non-Muslims in their redistributive preferences. The important factor is not being Muslim or non-Muslim; being religious (regardless of religious denomination) affects one’s preferences on social policies along with electoral choice. Thus the differences that would appear to make Spain and Turkey an unsuitable pairing are in fact smaller obstacles than those found in seemingly more comparative societies like Spain and Turkey.
The Spain–Turkey pair also presents a pragmatic advantage in the form of the marginal benefit that Turkey provides. When looking at discussions of democratization and social policy on Southern Europe, there are great emphases on Portugal, Spain, Italy, and to a lesser extent on Greece (e.g., Linz and Stepan 1996; Gunther and Montero 2009; Encarnación 2008; Magone 2009; Bermeo 1987; Maravall 1997; Morlino 1998; Watson 2015). However, most studies on Southern Europe have sidelined Turkey totally or have limited themselves to a brief treatment, with some noteworthy exceptions (e.g., O’Donnell et al. 1986; McLaren 2008). This book gathers new original empirical data on social policy, party systems, and inequality not only in Spain but also Turkey. By doing so, it incorporates Turkey into Southern European studies in particular and comparative politics in general. For this reason I am persuaded that Turkey, rather than Portugal, pairs better with Spain and offers a richer contribution to studies on inequality, social policy, and party systems.
(p.15) These two cases also exhibit significant variations in the variables of interest—voter turnout, social spending, and income-inequality levels. Here, too, there is sufficient variation to provide inferential leverage for determining whether the proposed causal relationship exists. This significant variation in our key variables makes the two countries suitable for a most similar systems design (Bennett and Elman 2006; Mahoney 2007; Seawright and Gerring 2008).
The present study is also based on fieldwork, including interviews with state welfare bureaucrats, union officials, and party representatives from all four countries, as well as archival research in national newspapers and journals. I conducted interviews with Spanish, Polish, Turkish, and the Czech unionist, bureaucrats and party representatives during two weeks of the 2009 ILO Conferences in Geneva. Later on, I continued to contact some of the interviewees through email and visits. However, the fieldwork conducted in Turkey was more extensive, as along with my familiarity with Turkish politics, it was essential for investigating the factors behind Turkey’s high voter turnout and understanding the relationship between organized interests and political parties in the outcome of social policies in that country.
These sources have provided us with a basis for analyzing the interactions between policy makers, politicians, and representatives of organized groups. I used the technique of semi-structured interviews to uncover and analyze the interaction between political parties and various social groups and to do the same in regard to the motivation of politicians in seeking to expand the coverage of social policies in general and increase income support for pensioners in particular. The fieldwork included an original survey conducted in Turkey, which enabled us to gain a better understanding of the distribution of social policies at the level of recipients. The survey, which was conducted nationwide, included questions on voting behavior, party affiliation, and how benefits from social programs accrue, i.e., at either the local or the national level.
Plan of the Book
Chapter 2 discusses the conventional approach to democratization and socioeconomic equality. It briefly summarizes and then critiques the basic arguments and empirical findings in the literature before proposing a new theory pertaining to how the median likely voter in weak party systems leads to an increase in targeted social spending—and, therefore, income inequality.
(p.16) Chapter 3 comprises two main sections. The first examines the effects of voter turnout and volatility in the party system on targeted social spending. This section includes a description of the research design, methodology, operationalization of the variables, and results. It also presents evidence showing that low turnout and high volatility are two consistent indicators of targeted spending. Further, it demonstrates that the effect of volatility on income inequality depends on the level of voter turnout. At higher levels of turnout, the effect of volatility on income inequality diminishes significantly and is even reversed. The second section focuses on the effect of targeted spending on inequality. The results suggest that targeted spending increases income inequality.
The theory is supported by a large-N regression analysis; for further validation, however, case studies are also used as an essential form of inference in this study. Case studies flesh out the mechanisms behind the main claim in this book—that a low level of voter turnout by the poor and a high level of party-system volatility result in a high level of targeted spending, which in turn increases income inequality.
In Chapter 4, a comparison of Poland and the Czech Republic is presented. The paired comparison relies on process tracing to uncover the essential causal mechanisms between the dependent and independent variables. The discussion presented in this chapter considers the legacies of the past on contemporary social policy with attention to both the interwar and communist periods, but the chapter’s main focus is social policy in both countries during the postcommunist period. The sources for these cases include legislative records, interviews with party bureaucrats and union officials, and the extensive secondary literature on both countries. The picture that emerges from the two countries affirms the theory proposed. As a country with high electoral volatility, low voter turnout, and increased targeted spending, Poland experienced a larger increase and fluctuation in income inequality than did the Czech Republic. In contrast, given that its party system is significantly more stable than Poland’s, the Czech Republic was able to reduce targeted spending and thereby initiate a comparatively more equitable social policy, which kept income inequality low stable. Over time, the Czech Republic showed different trends in its party system, starting with the 2010 elections, discussed in Chapter 4 extensively with its impact on inequality.
Chapter 5 examines the Southern European cases of Spain and Turkey to confirm that the causal mechanisms posited are indeed operational. Here, I discuss social policies during the authoritarian and democratic eras of each country. The findings suggest that targeted spending increased in Turkey between 1983 and 2002, where an institutionalized party system was weak. Between 2003 and the present (April 2018) one political party, the AKP, has dominated national politics, combining neoliberal economic policies with social policies that offered both contributory and noncontributory (p.17) social policies for the poor and the elderly. Despite significantly reducing poverty in the country, the AKP’s social policies’ impact on inequality has been curvilinear. Inequality decreased slowly but visibly until recent years, when political and economic instability affected middle and lower income groups. Social policies that targeted low-income groups mobilized these segments, which created a sizable electorate whose welfare depends on the state. As a result, income inequality increased, but less steeply than otherwise expected because of high voter turnout on social policies. In contrast, targeted spending decreased in Spain, a country with a stable political party system. As a result, inequality was on the decline until the 1993 recession, showing an increase in subsequent years. Parties agreed to not politicizing pensions as part of their electoral campaign in the Toledo Pact of 1995. Operating in a stable party system, Spain was able to keep social spending in a small margin, reducing inequality to a lower level until the 2008 financial crisis. The chapter will also discuss how electoral volatility, social policies, and inequality have changed since then.
The concluding chapter, Chapter 6, reiterates the theory and findings, proposes further related questions, and discusses this study’s contributions to the literature. Its main focus is on how the theory and findings presented herein contribute to the political economy literature and the democratization and political party systems literature—and how this study helps create a bridge between them. This chapter also discusses the impact of the theory presented in this book on previous studies. In order to consider the study’s contributions to the literature in the clearest way possible, this chapter is divided into a number of subsections that focus on such topics as social-policy legacies, political party systems, voting behavior, and populism.
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(1.) The transition year varies across countries. For example, it is 1989 for Poland, but 1975 for Spain.
(2.) Thank an anonymous reviewer for raising this point.
(3.) The Czech Cabinet, May 2, 2016, approved the usage of a new name for the country Czechia that was officially registered into the United Nations UNTERM AND UNGEGN country name database on July 5, 2016.
(4.) I am thankful to an anonymous reviewer for this important information regarding the nature of the transition to both capitalist economy and democracy at the same time. Transitioning to democracy in the region carries different characteristics than other democratizing cases in other regions, which I will discuss in detail in Chapter 4.