In a stimulating and thought-enriching essay, Vincent Geloso presents a plausible, polemic, and incredibly well-articulated case for the preservation of the ceremonial monarchies. The core of the argument emphasizes the organic process of the institutional adaptation of constitutional monarchies to both internal and external shocks that culminated in a greater propensity to preserve both formal and informal facets of liberal democracy. In doing so, Professor Geloso argues that ceremonial monarchies have better safeguards on executive power-holding that supposedly restrains the opportunistic tendencies of legislatures and prime ministers, provides more robust levels of political stability, and is thus open to sustained economic growth and social development more broadly. The essay concludes by presenting a case for not getting rid of the monarchy, as such an institutional switch would lead to slower economic growth and reduced standards of living.
The institutional advantages of the constitutional monarchies should not be left to the empiricist’s neglect. Some of the richest and most successful countries in Europe, such as Denmark and the Netherlands, are constitutional monarchies enjoying high levels of social trust and envious living standards. However, the fact that rich constitutional monarchies have evolved over centuries in a handful of countries located in Northern Europe does not per se comprise a plausible case for preserving monarchies in general.
If one accepts the notion that monarchies provide more successful institutional arrangements in terms of the strength of property rights, executive constraints, and the ability to peacefully resolve internal conflict, the proliferation of the republican form of government in the twentieth and twenty-first century is puzzling. The fundamental question concerns the ability of each to impose growth-enhancing constraints on the arbitrary power of government. As such, it cannot be properly answered without paying attention to reverse causation therein. Do constitutional monarchies provide the set of institutional arrangements that foster economic growth better than republics? Or are richer countries simply better able to afford constitutional monarchies? In a recent working paper with Nuno Garoupa of George Mason University, we tackle this reverse causation in the relationship between the constitutional monarchy and economic growth. In a nutshell, we suggest that long-run economic growth explains the survival of constitutional monarchies rather than vice versa.
The cornerstone of our theoretical argument is straightforward. When the monarchic regime is unable to produce enough economic growth, it collapses and is replaced by the republican form of government that promulgates substantially more egalitarian social arrangements. The wealthier European countries remained monarchies in the twenty-first century not necessarily because constitutional monarchies intrinsically develop better safeguards against arbitrary executive power but precisely because they were able to achieve relatively high levels of per capita income prior to the major shocks such as World Wars I and II. In particular, countries with per capita GDP prior to both wars at the 75th percentile and above in the world distribution that remained constitutional monarchies, such as Belgium and United Kingdom, have significantly better long-run growth than others. On the other hand, countries with a pre-war per capita GDP either at the median or below in the world distribution that remained constitutional monarchies for some time in the post-war period, such as Greece and South Africa, have consistently slower long-run economic growth after remaining monarchies in the midst of world wars. Poorer countries that have suffered heavily from a military defeat, such as Germany, Italy, Austria, and several others have become republics precisely because their monarchies failed to redistribute the payoffs to generate sufficient level of wealth for the monarchic institutional arrangements to survive. Our counterfactual analysis shows that if the poorer countries becoming republics after the wars had preserved the old monarchies, they would be even less successful in terms of per capita GDP.
These findings further corroborate the evidence in favor of the argument that the institutional advantages of the constitutional monarchy are path-dependent and should be interpreted in country-specific context. The institutional strengths of the British monarchy are by and large impossible to ignore. The United Kingdom is recognized as one of the most liberal, participatory, and egalitarian democracies according to a recent V-DEM index of democracy. At the same time, a non-trivial number of non-monarchies boast even more inclusive political regimes in terms of liberal, participatory, egalitarian, or electoral criteria, such as Costa Rica, Switzerland, Uruguay, Italy, Germany, and Estonia, to name a few. None of these countries is a constitutional monarchy. Moreover, twenty out of thirty countries characterized by having a very high inequality-adjusted human development index are republics rather than constitutional monarchies.
The survival of the constitutional monarchies can be seldom discussed in isolation from the level of wealth attained prior to the major turning points in both the twentieth and twenty-first centuries. The survival of monarchies seems to occur only when the level of wealth, either through the lens of per capita GDP or any other more plausible metrics, is sufficient to generate widespread support for the consolidation of monarchic institutions. When a high level of wealth is sustained, constitutional monarchies can promote a successful adaptation and generate a more effective compromise, and they may even provide stronger property rights. But in the sheer absence of a sufficient level of wealth, effective comprise is hardly possible since the monarchical institutions cannot afford to redistribute resources among the economic and social groups constituting the electorate. Instead they tend to collapse, which brings an institutional transition to a republican regime. Examples of collapsing constitutional monarchies in the presence of comparably low levels of per capita GDP relative to the United States—often punctuated by military defeat—include the end of the Ancien Régime in France in 1792, the fall of the Portuguese monarchy in 1910, the abolition of monarchy by the Greek military junta in 1973, the birth of Weimar Republic in 1918, and the institutional transition to a republic in Italy in 1946.
Given the obvious strengths of the constitutional monarchy, it might be worth asking why some of the most successful economies, such as the United States, have opted for a republic. The notion that ceremonial monarchies have superior executive powerholding safeguards can hardly be taken for granted. The safeguards fostered by constitutional monarchy may also thrive elsewhere, as the common law tradition demonstrates. Moreover, the question pertaining to whether monarchies have substantially better safeguards against the abuse of executive power is unclear both theoretically and empirically. Strong safeguards can be found among monarchies and republics alike inasmuch as weak or seemingly nonexistent safeguards are perceivable across both regimes. If constitutional monarchy usually promulgates successful adaptation mechanisms, an accelerated rise in the number of republics in the twentieth century would be puzzling all by itself. Since one institutional dimension does not fit all, the notion that Britain should stay a monarchy whilst the United States has nothing to gain from becoming one need not be a subject of widespread dispute. If the gains from constitutional monarchy were both apparent and tangible, constitutional monarchies should consistently have more growth-enhancing policies in place with considerably fewer anti-growth biases than republics. Perhaps somewhat paradoxically, economic policies that received wide support from majorities, but which eventually hurt their interests, flourished both in constitutional monarchies such as the unfortunate and costly saga of Brexit in the United Kingdom, as well as in republics, exemplified by the detrimental four years of the Trump presidency in the United States. Would the unfortunate episodes of Brexit and the Trump administration still have unfolded had both countries switched from one regime to the other? The answer should be self-evident; economic policies that either promulgate market-preserving federalism or foster patronage preservation can be found among either monarchies or republics.
Limited policy implications can nonetheless be drawn from the British monarchy, which served as a good executive powerholding constraint given the obvious and intricate path-dependence involved in the process of institutional discovery. Part of the answer may be sought in counterfactual analysis. One of the obvious candidates to study is the case of Ireland, which had been subject to British control until mid-twentieth century. Given that Ireland used to be described as the poorest of the rich by The Economist—and it today boasts one of the highest levels of per capita GDP worldwide, performing exceptionally well on several metrics of inclusive social and economic development—it remains unclear whether a British republic would encounter slower growth and a reduced standard of living compared to the British monarchy.
 The only remarkable exception is the case of Spain where the transition to constitutional monarchy has been linked to the institutional failure of the second Spanish republic in 1930s as well as to the very specific nature of the 1970 transition from dictatorship to democracy.