Economic Performance Is a Second-Order Good

As with Vincent Geloso’s initial essay, I broadly agree with the argument of Mauro F. Guillén’s response. However, I have a serious problem with the way the argument is presented, and in addition I think that both this an the initial essay have a misplaced emphasis in their account of why ceremonial monarchy is to be welcomed, one that reveals a foundational assumption all too common among economists, but which I reject.

In the first place, I think Mauro’s case suffers from a fallacy of argument–the argument made does not demonstrate the case. The central element is the (correct) statement that most of the world’s wealthiest and most economically successful countries are monarchies. However, this by itself is not enough to establish a causal connection, and the mechanism by which the one (a political settlement involving a constitutional monarchy) leads to the other (economic flourishing) is not set out. There are a number of obvious rejoinders to the argument as it is made: firstly, there are examples of economically successful republics and, secondly, the correlation observed reflects not so much the political settlement as it does these countries’ geographical location. The great majority of the ceremonial monarchies in the argument are found in Europe, plus Japan, and these are parts of the world that are wealthy and fast-growing and have been so for some time. Regardless of how that geographical distribution is explained, we could equally conclude that ceremonial monarchy is in this case a consequence rather than a cause, as wealthy countries are more likely to have the kind of politics in which institutions such as a ceremonial monarchy survive or have popular support. Personally, I believe that argument to be false, for reasons that should become clear, but it is not enough to simply point to a correlation in order to refute it.

The substantive point is that if we look at the mechanism, as the lead essay starts to and this one hints at, there is a hidden variable that directly explains economic success over time, and the challenge is to connect that with the institution of ceremonial monarchy. The hidden variable is good governance, and there is a much stronger argument that good governance has a direct connection to economic performance. What though do we mean by good governance? This is not the same thing as small or limited government; even though a case can be made that large or extended government is less likely to display the quality of good governance, there are still many cases of good governance where the role and size of government are extensive and large. Good governance means the following: the practice of government is rule-bound and done in accordance with clear and known laws, so it is not arbitrary or unpredictable; political activities such as elections are conducted according to known and accepted rules and norms with the outcomes being accepted—there is a loyal opposition but not an insurgent one; government activities are not predatory or predation is minimized; clientelism and nepotism (which are human defaults from what history tells us) are minimized; public discourse and policy are concerned with the medium and longer term as well as the immediate; and there is general free discussion and a plurality of views, reflecting pluralism among the population.

The coherent argument is that a political order with a ceremonial monarchy is more likely to feature good governance and that, crucially, it is having a ceremonial monarchy that makes good governance more likely and more resilient to shocks. The claim is probabilistic (more likely) because of the existence of republics such as Switzerland that clearly enjoy good governance. This argument does attempt to show a mechanism or reason for ceremonial monarchies as a rule being economically successful, but that requires a further argument that good governance will tend to produce good economic outcomes: this, though, is much easier to make. There is also a complementary argument, looking at the cases of countries that do not have either ceremonial monarchies or good economic performance. The argument here is that revolutions and unstable or zero-sum politics will lead to bad governance, where the rule of law is weak, corruption and clientelism are widespread, and government is often predatory with much of the debate about who is to be preyed on and who is to be predator. This means that countries that have had revolutions or political upheavals in which monarchies have been overthrown (e.g. Greece, Iran, or Ethiopia) are more likely to have bad governance. The further argument is that monarchies that are not ceremonial and confined to the sacral power but in which the monarch has a lot of the effective power, are also likely to have poor governance, as the three examples just given all show. This is because of two factors: the problem of the hereditary principle throwing up unstable or incompetent rulers, whom you are then stuck with; and the lack of legitimacy for effective monarchs in the modern world, resulting in opposition to their existence and abrupt ruptures in politics. The only case where this would not apply would be the small number of countries where the monarchy commands overwhelming consent and support.

The interesting case is that of countries, usually post-colonial states, where monarchy has never existed or was abolished as a part of the independence process or exists but without constitutional recognition. Latin America and parts of the Greater Middle East illustrate the first case, much of Africa the second. In such states we frequently find that the political system as a whole lacks legitimacy and is fragile, as indicated by things such as frequent constitutional change and coups. In a polity of this kind because the system as a whole lacks legitimacy (which ceremonial monarchy and its sacral function helps to provide) the important idea and institution of a loyal opposition is weak or absent. This makes politics a very high-stakes all-or-nothing matter and the consequence is chronically unstable and corrupt politics. Brazil is a classic exception that tests the hypothesis because (unlike the former provinces of the Spanish Empire) it gained independence as a constitutional monarchy and remained one for a considerable time. Its politics was more orderly and the quality of governance higher under the monarchy than it has been since, illustrating the role a ceremonial monarchy can play. (Revealingly there is strong popular support for the restoration of the monarchy in that country).

So, the main point of the argument should be that ceremonial monarchy as part of a political settlement can play a central part in creating the preconditions for good governance in a way that revolutionary politics does not. Good governance in turn will generally lead to better economic performance. This though is the point where it is worth standing back and thinking about what it is that justifies making good governance a desired outcome and ceremonial monarchy a desirable institution because of the part it plays in that. Although good governance does appear to lead to better economic performance, this is not inevitable—there have been polities that were well-governed and with a good quality of life that nevertheless had low rates of economic growth. Overall, the range of economic performance among ceremonial monarchies is wide, even if mostly positive. Conversely, there are countries that have economic dynamism and growth despite poor quality governance—Nigeria is a classic example, but we could also point to contemporary China. The big point is that we should not justify or defend a type or form of political order primarily by its impact on economic performance. To do so gives economics a disproportionate and unwarranted importance. It also opens the way for arguments that authoritarian or tyrannical government is at least ok and maybe even desirable if it corresponds with economic growth and development. We can see this argument made about contemporary China and historically about Imperial Germany for example.

The primary end or goal should be good governance because of its consequences for human flourishing of all kinds, not only the economic. Superior economic performance should be (correctly) seen as a secondary or consequential benefit of stable and orderly politics and governance, and the key argument is that ceremonial monarchy encourages good governance, not that it encourages the second-order good of economic growth. The benefits of having a ceremonial monarch to exercise the sacral power are not reducible to consequential and second-order goods such as economic performance; we should rather focus on the benefits it can bring for the political order itself.

Also from this issue

Lead Essay

  • Why keep a monarchy that’s largely or purely ceremonial? One possible answer is that a ceremonial monarch is much better than a real tyrant. More to the point, where monarchy has survived, it has commonly been by adapting itself successfully to the rise of liberal democracy. Thus, while we should neither create new monarchies nor expand the powers of existing ones, Prof. Geloso argues that constitutional monarchs have paradoxically produced effective constraints on governance over time.

Response Essays

  • Of the 43 monarchies in the world, 23 are among the 50 richest countries. Contrary to their reputation, they show high levels of economic equality and income per capita. Mauro F. Guillén argues that this is because “the constitutional monarchy represents a compromise between tradition and modernity” and “a beautiful solution to a wide array of governance problems.” He finds it particularly important that monarchs act as a check on the otherwise boundless ambition of elected executives.

  • Stephen Davies argues that monarchy fulfills one of the key functions of government, which moderns are apt to overlook. Monarchies are symbolically unifying, and—as long as we must have a head of state—a monarch fills that role while serving as a symbolic and relatively apolitical link to the past and the future of the nation.

  • Rok Spruk argues that proponents of constitutional monarchy have reversed the causality: Countries that began the modern era relatively wealthy were more likely to keep their monarchies over time than those that did not. Because wealthier countries could keep their institutions, their monarchies came along for the ride. Those that suffered wars or revolutions were also more often forced to reconsider their systems of government, monarchies included.