Democracy's "stress-test": three perspectives

Frank Vibert
23 October 2007

The debate between James S Fishkin and Arthur Lupia in openDemocracy's dLiberation blog is like a choreographed professorial wrestling-match. In one corner of the ring are those (like Fishkin) who emphasise that democratic debate can help persuade, can change minds, can develop understanding of the important underlying issues, inform voters of the attitude of others with whom they may disagree and encourage compromise - all virtues in a democratic context.

In the other corner are those (like Lupia) who emphasise the findings of studies of actual behaviour at the polling booth (for example where people may simply vote against an incumbent politician or party) and point to the limited time and effort that people will put into reflection on public policy and politics - and often end up preferring to stay with their traditional voting loyalties, if they bother to vote at all.

Like any choreographed match-up, the moves are well rehearsed, the spectacle is entertaining but the contest is not entirely credible.

An experiment with value

In my own writings on European Union democracy I have followed another path: that is, to focus on the way in which "institutions matter". In my most recent book, The Rise of the Unelected (Cambridge University Press, 2007) I draw attention to the increasing importance of unelected bodies in most democratic countries around the world, in the EU, and at the international level. Their rise is significant both for those who believe in the transformative power of deliberation and for those who stress the imperfections of actual electoral behaviour. It has important lessons for the EU too.

Frank Vibert is director of the European Policy Forum. He is the author of Europe Simple, Europe Strong: The Future of European Governance (Polity, 2001) and The Rise of the Unelected: Democracy and the New Separation of Powers (Cambridge University Press, 2007)

Among Frank Vibert's articles on openDemocracy:

"The future of Europe - simplify, simplify"(12 December 2001)

"The new cosmopolitanism"(20 March 2003)

"French referendum lessons"(11 May 2005)

"'Absorption capacity': the wrong European debate" (21 June 2006)

"Germany's presidency: an odd couple" (25 October 2006)

"The European Union in 2057" (22 March 2007)

"A modern crematorium: absence in Buddhist India" (15 August 2007)

Unelected bodies are relevant to the message about the virtues of deliberation because, if structured correctly, they provide an additional setting, outside elective politics, for public reasoning. They offer an important means of separating different types of reasoning about public policy (in particular they can help clarify the evidence-base underpinning public policies).

The rise of the unelected is equally significant for those who stress the limitations of electoral politics, because specialised unelected bodies provide a more focused approach to public policies than do generalised party politics. In practice, many people are motivated by particular policy concerns rather than by any general interest in politics. For those with a concern about a special subject - for example, the treatment available for sufferers from Alzheimer's disease - an unelected body may provide a specialised avenue for communication and redress that lies between elective politics and the legal system.

All of this is fairly abstract and difficult to relate in any concrete way to the kinds of behaviour and attitudes that enter into debate on matters of public policy in the EU. For this reason, the fact that James S Fishkin has helped frame a "town-hall" meeting - in this case, the "Tomorrow's Europe" initiative - to test the role of deliberation in an EU context is to be welcomed. So too are Arthur Lupia's cautions about the methodology of this type of deliberative project.

The scepticism that such town-hall-type meetings generate partly derives from the normative elements that surround them; they tend to be framed in such a way that suggests they are designed to prove a point. In the context of Tomorrow's Europe, the experiment is informed by two substantive normative considerations: it is "good" to show that people can connect to an EU- wide debate in a reasoned way; it is also "good" to show that people have reasoned views about what kinds of policies should be pursued at the EU level.

This highly value-loaded context means that a range of methodological questions about this Europe-related deliberative project - about the setting, the participants, the questions, the procedures and the scaling-up of the results (from a small sample to the EU as a whole) - cannot be avoided. If Lupia is correct in asserting that these procedural questions have not been answered with sufficient rigour so as to enable the test results to be examined and replicated by other researchers, then the the experiment indeed has a fundamental shortcoming.

Northern Rock: a democratic "stress-test"

Financial markets are accustomed to the phrase "stress-testing": that is, checking on the robustness of management systems in times of crisis. This approach might be extended to "stress-test" three different perspectives on democracy - deliberative democracy, bounded rationality (emphasising the limitations of electoral politics), and an institutionalist view - in the context of a particular crisis.

Accordingly, I offer below an imaginary outline of how each of these three approaches might be applied to a recent crisis in public policy: the panic surrounding the British mortgage-lender Northern Rock where in mid-September 2007 thousands queued to withdraw deposits in fear that their life-savings might be lost.

The affected area of policy in the Northern Rock crisis is typical of modern democracies because it involves three layers of government:

* the national layer (it was British citizens who queued in panic and the British government which had to intervene to guarantee deposits)

* the European Union layer (EU directives on state-aid and takeovers helped frame the response of the authorities to the unfolding crisis, and the European central bank [ECB] was an actor in the wider European financial market)

* the global layer (the crisis originated in the United States sub-prime market, and Northern Rock was the victim of a "contagion" spreading across the global financial marketplace).

What follows is a stylised perspective in which the contrasting possible reactions to the Northern Rock crisis are outlined: deliberative democracy (DD), bounded rationality (BR), and an institutionalist view IN).

BR: summary justice

Expected behaviour from a bounded-rationality perspective:

The Northern Rock crisis is salient to many voters who are also savers and/or mortgage-borrowers; once the immediate crisis has faded they may simply want to punish the government of the day for perceived incompetence in letting the panic happen in the first place.

"Reasonable" electoral behaviour:

It does not require sophisticated reasoning for voters to understand that the government went wrong somewhere along the line. It is therefore "reasonable" for the national electorate (British) for whom the crisis was salient (to want to vote against the incumbent (British) government.

Perceived weakness of approach:

The approach accepts "short-sighted", rule-of-thumb behaviour that is illogical if the government of the day is not really to blame (thus, forward to the need to deliberate before voting).

DD: let's chat

Preferred behaviour from a deliberative-democracy perspective:

Let's talk through the different aspects of the crisis; distinguish between the different types of risk that were relevant in the crisis (credit risk, liquidity risk and capital-adequacy risk); and understand the EU and international dimensions of their management (for example, Northern Rock was vulnerable to liquidity risk as a result of contagion from abroad, but the European central bank arguably did a better job than the Bank of England in meeting the liquidity needs of other vulnerable banks and credit institutions without rescuers falling foul of EU directives).

Frank Vibert's article continues openDemocracy's "Democracy and deliberation" debate, which also features:

James S Fishkin, "Deliberative polling: distilling the crowd's wisdom" (12 October 2007)

Matthias Benz, "Democratic vote or deliberative poll?" (13 October 2007)

John Jackson, "From deliberative to determinative democracy" (15 October 2007)

Tony Curzon Price, "The cheap-talk challenge: what is debate really for?" (16 October 2007)

"Reasonable" electoral behaviour:

After debating the different aspects of the crisis, the electorate better understands the causation of the crisis (particularly the EU and international dimensions). As a result, voters might better appreciate the importance of voting for a government that can cooperate effectively at the EU and international level in lesson-learning from the crisis. This more considered approach might modify the tendency of electors simply to "vote against", and (if the elector doubted the ability of opposition parties to cooperate effectively at the international or EU level) lead an informed elector possibly to vote for the incumbent British government rather than against.

Perceived weakness of approach:

It is "unrealistic" to expect the average saver/voter to distinguish between the different types of risk, to spend time on apportioning responsibility between different layers of government, and to apply their overall assessment to their own individual voting behaviour (thus, back to "summary justice" or forward to the institutionalists).

IN: send for the "grey suits"

Preferred behaviour from an institutionalist view:

The Northern Rock problem arose not within the political system but at the interface between the market and the unelected regulators, and at the interface between the regulators and elected ministers. A considered approach involves central bankers, financial regulators and finance ministers meeting to review the mis-pricing of credit risk on complex instruments by all market actors, and the incentive structures affecting the behaviour of mortgage originators (banks and savings institutions), mortgage packagers (investment banks), appraisers of mortgage packages (rating agencies) and bond buyers. Did the regulators and central banks contribute to the mis-pricing?

"Reasonable" electoral behaviour:

Voters should vote against any politician, in government or opposition, at any level (national or European) who promises a "quick fix" through new market regulation. New crisis-management structures or legislation (such as insolvency laws) might eventually require political action, but again there is no short-term trick through politics or the electoral system that can solve the issue.

Perceived weakness of approach:

Who and what are the BIS, FSF and IOSCO (the institutions and places where the "grey suits" - established professionals in senior positions with recognised expertise - meet and decide what eventual actions to take) and how do they fit within a democratic framework at any level of government (national or European)? The answer, according to the institutionalist view, is that a fresh approach towards analysing modern democracies is needed, one that goes beyond simply looking at electoral behaviour, whether deliberative or not.

Europe vanishing, the unelected arriving

This very simplified tripartite "stress-test" carries two implications. The first is that it is quite difficult for voters to detect the relevance of the EU's bodies other than the European central bank. At the national level, the crisis is evidently pressing and urgent, and the national government and national regulators are visible in the frontline. It is also likely to be clear to voters that the global international dimensions of the crisis are relevant even if the details are a blur.

By contrast, the role of the intervening EU layer (other than the ECB, relevant as a benchmark to judge the actions of the Bank of England) is left obscured or allegedly even unhelpful. The consequence is that the electorate's perception of the EU body-politic is surrounded by genuine difficulties, which cannot be short-circuited by experiments in town-hall meetings.

The second implication of this "stress-test" is that in modern democratic settings, unelected bodies are just as important as elected ones in circumstances that require problem-solving. It is therefore important not to focus on a single potential mechanism for deliberation (the romanticised town-hall) but to take a more encompassing look at how quite different arenas and procedures (such as the consultations organised by a financial regulator) come into play.

It is also important to look more broadly at how unelected bodies relate to elected bodies so that each branch of government does what it can do best and is kept within its proper sphere. This is also a lesson that applies to the structures of the European Union (where the commission plays both a political and regulatory role) and also cannot be wished away by exercises in town-hall talk. Institutions matter.

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