Monarchies are frequently assumed to be inferior to other forms of government, especially republics, when it comes to economic matters. Most people believe that monarchies are more prone to confiscate property, wage war, undertake megalomaniac projects, add to the national debt, and mismanage the economy. The historical record, especially during the last 100 years, could not be more different than the conventional wisdom. In fact, many contemporary monarchies have delivered extremely high standards of living for their populations. But is it because they are monarchies or because they have adopted other features that tend to result in greater economic performance? Experts frequently mention it is no mystery that the monarchies that survived to the present time have done well economically—otherwise, so the argument goes, they would have succumbed.
Of the 43 monarchies in the world, more than half (23) are among the 50 richest countries. By contrast, of the 157 republics, only 27 are among the 50 richest, a mere 18 percent. Shockingly, if one looks at the 50 countries in the world with the lowest per capita income, the overwhelming majority of them are not monarchies or former monarchies, although it is true that many were colonized by monarchies, and perhaps that is a leading reason why they continue to be poor.
Monarchies are frequently accused of concentrating wealth at the top. So, how do they compare in terms of income inequality? The answer is very well indeed. Of the 113 countries for which data on income distribution (Gini coefficient) are available, seven are among the half with lower inequality, and only four are among the half with higher inequality.
In a nutshell, at least the monarchies that have survived to the present time tend to have high levels of income per capita and low levels of income inequality. But why exactly do they tend to perform better than republics? Is it mostly the constitutional-democratic monarchies that do better, or is it also the absolutist and non-democratic ones? Before we address these questions, it is important to understand how monarchies became “modern,” in the sense of becoming subject to the rule of law.
The main reason behind the economic performance of monarchies in the contemporary world is that the constitutional monarchy represents a compromise between tradition and modernity. It represents a brake on the boundless ambition of politicians. And it works as a mechanism preserving what deserves to remain while incorporating what the circumstances call for. While not alone in serving all of these different purposes, the constitutional monarchy is a beautiful solution to a wide array of governance problems.
In his Spirit of the Laws, Montesquieu wrote that England was “a republic, disguised under the form of monarchy.” One of the ironies about the constitutional monarchy is that it has become associated, first and foremost, with a country that lacks a formal constitution. The United Kingdom, with its unique parliamentary and monarchical traditions, is frequently proposed as the model for everyone else to emulate.
People often argue that the advantages of a constitutional monarchy can be obtained with the parliamentary system that republics offer, that is, when an elected head of state who acts as arbiter and figurehead is combined with that of a prime minister appointed by parliament following the will of the people. One example is Germany, where the Federal President is the head of state while the Chancellor is the head of the executive branch. Nowadays, there are 46 such parliamentary republics in the world, compared to 100 presidential republics, such as France or the United States.
The defenders of constitutional monarchy observe that the ability of the sovereign to play the role of impartial arbiter is much greater than that of the elected head of state in a parliamentary system. Elected presidents, they argue, can more easily become enmeshed in political maneuvering because they were elected to that position, either directly or indirectly, while hereditary sovereigns do not generally have the legitimacy or the constitutional mandate to do so.
A second way in which the constitutional monarch may be better positioned than the elected president-figurehead involves the tendency for politicians to perpetuate themselves in power. Inevitably, longevity in the executive branch tends to result in abuse of power. In my own research I found that the longer the head of the executive branch stays in power—be it a prime minister, president, absolute monarch, or dictator—the more property rights come under attack. My study comparing monarchies and republics between 1900 and 2010 also unveiled that monarchies in general are more effective than parliamentary republics when it comes to minimizing the abusive behavior of leaders of the executive branch who perpetuate themselves in power. The institution of the monarchy includes the idea of dynastic succession as a key element, one that can potentially temper the ambition of politicians. This is an aspect that parliamentary republics with an elected head of state cannot possibly provide.
In my research I also found that democratic-constitutional monarchies are in a better position than non-democratic and absolute monarchies to address the abuses generated by excessive executive tenure. The argument here is that in many countries the monarchy historically became subservient to “clientelism,” something that constitutional arrangements sought to eradicate. In the contemporary world, the trend of “sultanism” in the Middle East and North Africa underpins a system in which the king cannot effectively curtail the abuses of an entrenched executive branch. Limited freedoms and the absence of democratic practices in that part of the world translate into a lack of transparency and accountability that monarchies typically fail to address.
A third way in which a constitutional monarch can lead to a better political process than an elected president-figurehead is by providing an additional check and balance on the overall political system. This is normally referred to as the countervailing power that the monarch can exercise, either under a constitutional system or in the absolutist case, in situations in which the branches of government do not function properly.
The constitutional monarchy is the finest version of an ancient institution tailored to a time defined by nationalism, state-building, and a political dynamic driven by the interplay among conservative, liberal, and socialist ideas. Its intrinsic versatility facilitated a surprising mutation in its very purpose, shifting from protecting the rights of the people against royal arbitrariness to creating an institutional figurehead as head of state who would help constrain the unhinged and self-dealing impulses of elected politicians. As Emperor Franz Josef of Austria-Hungary intimated to U.S. President Theodore Roosevelt in 1910, “The role of the monarchy is ‘to protect my peoples from their governments.’”
It is thus fair to conclude that in the contemporary world, after centuries of framing the role of the sovereign in constitutional terms, and especially in the case of the European democratic-constitutional monarchies, people do better economically under monarchies than under republics, whether they are democratic or not.