A Mexican Standoff in Georgia

Bidzina Ivanishvili’s Georgian Dream coalition has only held power for a few weeks since its surprise win in last month’s parliamentary elections, but some of its first steps already have me worried about the risk of a reversion to authoritarian rule there. A week ago, Georgian authorities brought criminal charges against Bacho Akhalaia, a former defense minister and close ally of President Mikheil Saakashvili’s, along with two sitting officials in the Defense Ministry. This week, we hear that authorities have arrested five senior officials in the Interior Ministry on charges linked to the October election.

I’m worried about these arrests because I’m watching them through the lens of a theory that sees strategic uncertainty as one the leading killers of new democracies. In my mental model, democracies can revert to authoritarian rule three ways: 1) an executive coup, whereby the ruling party quashes its rivals or otherwise rigs the political system in its own favor; 2) a military coup, whereby state security forces install themselves in government; or 3) a rebellion, whereby one or more opposition parties successfully seizes power by means other than a fair election. Rebellions occur rarely and almost never succeed, but executive and military coups are historically common, and most attempts at democracy worldwide have failed within a decade or two of their start by one or the other of these means (see here, here, and here for some previous posts on these broader points).

The spoils of state power often play a strong role in enticing incumbent officials and military officers to attempt coups, but they aren’t the only force at work. Political factions may also be lured into undemocratic behavior by uncertainty about their rivals’ intentions and fear of the steep costs of guessing wrong.

A game-theoretic model demonstrates this point in a formal way, but you can get the same idea by thinking about a Mexican standoff (and if you don’t know what that is, watch the embedded clip below from The Good, the Bad, and the Ugly for the classic cinematic example). In democracies, the three gunfighters are the ruling party, the opposition, and the military. In some cases, each of these factions may be itching to knock off its rivals as a way to win sole control of some treasure at hand. In other cases, though, some or all of the dueling pistoleros might genuinely prefer to cooperate with the others. Maybe there’s an even bigger treasure up the road that they can only capture if they work together, or maybe they’re just tired of shooting. Whatever the reason, the problem is that this desire for cooperation can’t always overcome the fundamental problem of mutual distrust. Because the stakes are so high, every little turn of the eyes or twitch of the finger is liable to get misinterpreted as a sign of bad intentions, and no one wants to be the sucker who waits a little too long to shoot in hopes that things will work out okay on their own.

Turning back to Tbilisi, the early arrests of Saakashvili loyalists in the state security apparatus are raising concerns that Georgian Dream means to punish its former overlords in ways that push the boundaries of democratic practice. An executive coup is the typical trajectory for new democracies in the post-Cold War period, especially in countries, like Georgia, where politics is sharply polarized. Even if they aren’t aware of those general facts, many observers seem quite sensitive to this risk. “The gloves are off in Tbilisi as the new ruling power takes aim at President Mikheil Saakashvili’s allies,” Molly Corso wrote of the arrests in Business News Europe. According to the New York Times, “some lawmakers feared [the arrests] presaged a wave of reprisals against members of President Mikheil Saakashvili’s defeated government.” And on today’s TBLPOD podcast from Tbilisi, Camrin Christensen noted that, “People here are now probably thinking, ‘Oh, no, am I also on this list?’ and thinking about taking family vacations.”

It’s not the handful of arrests themselves that are so worrisome, of course. It’s what they imply about Georgian Dream’s underlying intentions. In the Mexican standoff metaphor, these arrests are a menacing turn of the eyes and hips in the direction of Saakashvili’s United National Movement (UNM) and its sympathizers in the police and defense establishment.

Maybe those fears are overblown. Maybe Georgian Dream is being straight with us when it says it’s just pursuing legitimate investigations into abuses of power during President Saakashvili’s tenure. Even if that’s the case, though, the resulting uncertainty about its true intentions and growing fear of a self-coup will increase the risk of a military coup or a rebellion by the UNM as these factions grow more concerned about their fading prospects under Georgian Dream. The stronger their belief that Ivanishvili has it in for them, the stronger their incentive to respond fast, before the bullets arrive and score some serious damage.

My judgment might be clouded my affection for the place—I was a Soviet area-studies major as an undergrad; one of my oldest and closest friends is an American expat now living in Tbilisi, and I loved what I saw when I traveled there for his wedding a few years ago—but I’m optimistic that this budding standoff will wind down without any grave injuries or fatal mistakes. Georgia’s rival factions might not like each other, but they hate and fear Russia even more. (The cartoon to the right sums up many Georgians’ views of their 2008 war pretty nicely.) Because of the omnipresent threat from its neighbor to the north, Georgia badly wants into Europe, and entry into NATO is seen as the first door through which it must pass. NATO has sound geostrategic reasons not to admit Georgia while the threat of renewed war with Russia lingers, but Saakashvili’s authoritarian tendencies didn’t help its case, either. The risk of further alienating Europe with a blatant demolition of democracy will probably be powerful deterrent to would-be rebels or coup plotters.

European officials are keenly aware of this desire and already making good use of their leverage. A few days after the former defense minister’s arrest, RFERL reported that NATO Secretary-General Anders Fogh Rasmussen said he was “extremely concerned” about Georgia’s post-election politics. “It’s for the legal system, the judicial system in Georgia, to sort out these cases,” he told a meeting of NATO’s Parliamentary Assembly in Prague, “but of course it’s important that such trials are not undermined by political interference and we will of course follow that development very, very closely.” As will we.

Will Democracy Survive in Europe? Part 2

In the first part of this two-part post, I stayed close to the statistical evidence from the past half-century to argue that, as dismal as the economic crisis may be, we should expect Europe’s older democracies to survive it. At the same time, I acknowledged that we can’t be sure of that outcome, because the international system that generated the data on which those statistics are based might be have changed.

In this second part, I’m going to venture into more speculative territory by applying my own toy model of democratic consolidation to Europe today. A thorough application of this model would require a lot more time and prose than I can devote to a blog post–this thing’s already going to be longer than my usual missive, and that’s after splitting it into two parts–so I’m going to aim instead for a cursory version that uses a few broad brush strokes in place of lots of case-specific detail. As I do so, I would invite anyone who knows these cases better than I to fill in or correct those details and to identify the alternative futures they might imply.

Much of the thinking in recent decades about how democracy arises and survives is rooted in structural theories of political development. By contrast, my model of democratic consolidation uses game theory to redirect our attention to the strategic concerns of three powerful political actors: ruling parties (the incumbent), their electoral rivals (the opposition), and the military. This redirection is useful because structural conditions don’t really cause change, at least not directly. For democracy to fail, one of these three organizations actually has to break it. Those actors’ motivation to do so is shaped by external conditions, as structural theories suggest, but it is also affected by internal features of their organizations and uncertainty about their rivals’ intentions and capabilities.

This uncertainty turns out to be particularly important. Because of it, democracy isn’t just vulnerable to the machinations of groups who stand to benefit directly from a return to authoritarian rule, as we generally (and correctly) assume. In this version of the world, democracy can also be undermined by the fears of groups who would prefer to see democracy survive but must worry that their rivals will steal it out from under them. Under these conditions, even committed democrats may decide to strike preemptively to avoid getting stuck with their least-preferred outcome, namely, a dictatorship led by one of their political rivals. As a result, the risk of democratic breakdown will often be greater than we realize when we concentrate on things like economic development or popular attitudes.

What does this model suggest about the survival of democracy in Europe now? Since the end of the Cold War, most democratic breakdowns have occurred when ruling parties have rigged the system to ensure that they remain in power, so we can start by considering the likelihood of this sort of self-coup.

Viewing the scene from high altitude, I’d say the risk of self-coups remains extremely low in contemporary Europe for reasons that Douglass North, John Wallis, and Barry Weingast (NWW) enumerate in their excellent book, Violence and Social Orders. NWW locate the fulcrum of political and economic development in the (still-rare) transition from “natural states,” characterized by oligarchy and rent-seeking, to open access orders, characterized by competition and impersonal exchange. For thinking about the staying power of democracy in Europe, their crucial point is that, once established, open access orders are resilient because openness across the various parts of the system–political, economic, and social–is mutually reinforcing.

Open access orders exhibit a virtuous circle linking the control of violence and open access. The political system limits access to the means of violence; open economic and social access ensures that access to the political system is open; credible prohibitions on the use of violence to compete maintains open economic and social access; and political and judicial systems enforce prohibitions on the use of violence. Similarly, open access to organizations in all systems sustains competition in all systems. Competition in all systems, in turn, helps sustain open access.

Would-be autocrats have the most to gain by usurping power in situations where the state directly commands, or controls access to, lucrative economic assets–things like oil or mining contracts, large industrial enterprises, or valuable real-estate markets. Absent those ready sources of revenue, it’s hard to extract a profit from political power. In open access orders, those economic disincentives are reinforced in the political sphere by the presence of well-organized interest groups outside of ruling parties and dynamic competition within them. In the economic sphere, they are also reinforced by price mechanisms and international markets which quickly impose costs on sharp policy changes. In Europe today, the status quo may be quite painful, but the depth and breadth of openness and competition means there’s little profit to be won by grasping at oligarchy, and the direct and indirect costs of breaking democracy only make the expected payoff down that pathway look even worse.

Opposition parties confront all the same disincentives, only with several added degrees of difficulty. For an opposition party to usurp power, it has to organize and pull off a successful revolution, and it turns out that’s really, really hard to do. In the past half-century, there have only been a dozen or so democratic breakdowns by revolution, and most of those involved civil wars and state collapses in which the rebellious opposition never managed to gain control of central authority. These disincentives don’t mean we won’t hear calls for rebellion or see more social unrest and even terrorism. They just mean that those calls and acts will fail to snowball into well-organized political movements that realistically threaten to seize state power by non-democratic means.

Last but not least is the military, the chief agent of democratic breakdown during the Cold War. There are basically two situations in which military leaders are tempted to try a coup: either they covet power for themselves, or they want to prevent a rival from clinging or coming to power. The former fits many of the coups in Africa in the 1960s and 1970s, while the latter applies to cases like the anti-Communist coup in Greece in 1967, the “coup by memorandum” in Turkey in 1971, and the Thai coup of 2006.

As far as I can tell, the militaries of contemporary Europe have little appetite for political power. Appeals to organizational culture sometimes feel like hand-waves to me, but in this case I think the concept is quite relevant. European and American armed forces routinely extol the importance of civilian control, and that norm is now deeply embedded in these organizations and the societies from which their members come. Tellingly, in November 2011, when Greece’s defense minister sacked his service chiefs, it was left to opposition parties to decry the move as a politicization of the military; as we would expect from professionalized services, nary a peep was heard from the officers themselves.

What seems more plausible are scenarios in which military leaders are tempted to inject themselves into politics by fears that parties they consider radical will win power, or that political paralysis will sow prolonged disorder. In Greece, for example, politically conservative military officers might see the growing electoral appeal of far-left parties as a profound threat and decide that they need to prevent those parties from forming a government. This is the problem of strategic uncertainty identified in my game-theoretic model, and it’s potentially significant at a time of radicalization and polarization.

Even here, though, the benefits of that preemptive strike would have to be weighed against the expected costs of governing and aggressively suppressing popular unrest. Financial markets often punish coups, and those officers will probably recognize that governing and policing will be hard and thankless work, especially in the depths of an economic crisis with no obvious exit path.

In short, I think it’s very unlikely that we’ll see any military coup attempts in Europe in the near future, even in the countries hit hardest by the Euro crisis. As bad as the status quo gets, it’s hard to imagine a scenario in which direct military rule looks any better to the people who would actually have to pull it off than stumbling along the current track.

Considering all of this theory and evidence together, I expect that democracy will survive the current crisis in Europe, even if the politics sometimes takes ugly turns in response to the disruptions of a deep recession and the structural changes that will have to ensue. Consideration of the base rate for democratic breakdown among rich countries and my beliefs about the incentives facing European parties and militaries today leads me to guesstimate the odds of democratic breakdown in even the most troubled countries—Greece and Spain for now, but maybe Italy or Portugal soon, too—at less than 1:50 (and you can hold me to that if you like).

Democratic Consolidation, Meet Prospect Theory

Psychologist Daniel Kahneman was awarded the Nobel Prize in Economic Sciences in 2002 for some of the work he did with Amos Tversky over many years on the study of human decision-making. Dubbed prospect theory, the part of Kahneman and Tversky’s research that led to a Nobel Prize identifies certain cognitive biases that cause actual humans to deviate in their decision-making from the mathematical rationality of expected-utility theory. In his fantastic new book, Kahneman (p. 282) discusses the three “cognitive features” underpinning prospect theory.

  • We evaluate potential gains and losses in relation to a neutral reference point. Under expected-utility theory, $10 is always $10, and $20 is always twice as much as $10. It turns out that’s not really how we think about gains and losses. Prospect theory shows us that, to a real-live human decision-maker, the value of $10 and the magnitude of the difference between $10 and $20 depend on their relation to some prior reference point that shapes the decision-maker’s expectations. As Kahneman writes, “For financial outcomes, the usual reference point is the status quo, but it can also be the outcome you expect, or perhaps the outcome to which you feel entitled, for example, the raise or bonus your colleagues receive.”
  • Our sensitivity to changes in wealth diminishes as values increase. “Turning on a weak light has a large effect in a dark room. The same increment of light may be undetectable in a brightly illuminated room. Similarly, the subjective difference between $900 and $1,000 is much smaller than the difference between $100 and $200.”
  • We dislike losing more than we like winning. Psychologists call this principle loss aversion. As Kahneman reports, “When directly compared or weighted against each other, losses loom larger than gains. This asymmetry between the power of positive and negative expectations or experiences has an evolutionary history. Organisms that treat threats as more urgent than opportunities have a better chance to survive and reproduce.”

I first encountered prospect theory in graduate school, when Kahneman and Tversky’s groundbreaking article in Econometrica (pdf) was one of many required readings in an excellent course on organization theory taught by Jonathan Bendor. Most of my work since then has involved statistical analysis of cross-national data, so I haven’t had much cause to think about how these cognitive biases shape political behavior.

A couple of year ago, though, I wrote a book on democratic consolidation that uses game theory to help understand when and why attempts at democratic government usually fail. The formal model at the heart of that book construes those failures as the result of choices made by political organizations–rival parties and the military–in the face of uncertainty about future gains and losses and the likely actions of their competitors. Re-reading the outlines of prospect theory now, I can see a couple of ways that the cognitive biases it identifies might help explain some of the empirical patterns I observed in failures of democracy.

First and most interesting to me, I can see how loss aversion would strengthen the temptation for incumbent office-holders to diminish civil liberties and manipulate elections in order to preserve their power. Prospect theory teaches us that fears of large losses drive people to do all kinds of things to protect themselves against those losses, even when the costs of that protection seem to outweigh the expected gains. One of the two ways democracies usually fail is by executive coup, where the party that won the last election fixes the game to ensure it doesn’t lose the next one. (The other, of course, is military coup.)

It’s not hard to imagine situations where the spoils of power would tempt incumbent officials to try to lock themselves into office, but it’s also not hard to think of significant risks and costs associated with those efforts, especially if they fail: never-ending payoffs to cronies, loss of property, prison time, and so on. Prospect theory helps me see how the experience of holding power might reset actors’ expectations and then lead them to weigh the expected costs of losing power more heavily than the actual costs of trying to sustain it. In the world described by prospect theory, the spoils of power wouldn’t have to be all that grand, and the threat of losing the next election or being ousted in a military coup or rebellion all that large, to tempt incumbents to try to lock their status down. As Kahneman writes (p. 316),

When you pay attention to a threat, you worry–and the decision weights reflect how much you worry…The worry is not proportional to the probability of the threat. Reducing or mitigating the risk is not adequate; to eliminate the worry the probability must be brought down to zero.

In the context of democratic government, bringing the probability of a loss of power down to zero means breaking the democracy.

Second, I can also see how what Kahneman and Tversky call the possibility effect might increase the temptation to attempt a military coup. Military coups fail much more often than they succeed, so the puzzle here is why officers keep trying in spite of the long odds. Apparently, loss aversion doesn’t mean that people never chase long shots. Instead, psychologists have found that people tend to prefer big payoffs with long odds over smaller payoffs with much better odds in paired choices when the outcomes of the safe play is framed as a loss.

This cognitive quirk leads us to make decisions that rational-agent theory says we shouldn’t make, like chasing unlikely profits from business ventures into which we’ve already sunk a lot of money. Military leaders facing slashed budgets or loss of status and prerogatives confront a similar choice: stomach the losses associated with continuation of the status quo, or gamble on a coup bid that probably won’t succeed but might stem those losses if it did. Through the lens of prospect theory, we can see more clearly why they might pick Door Number 2, even if the expected payoff from that pathway is worse.

The possibility effect is connected to a pervasive human bias toward optimism. As Kahneman puts it (p. 255), “Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be.” In addition to being overly optimistic about our own skills and prospects, we tend to reward other people who exude self-confidence, even when that confidence is unwarranted by past performance. As a result, “Optimistic individuals play a disproportionate role in shaping our lives. Their decisions make a difference; they are the inventors, the entrepreneurs, the political and military leaders–not average people.”

The reference to military leaders caught my eye when thinking about the risk of coups. Military leaders are not a representative slice of the general population. As Kahneman notes, they are more likely to be risk-seekers who overestimate their own skill and downplay the chances of failure. These traits probably serve them well in combat and make them appealing leaders, but they could also lower the cognitive barriers to making a grab for power in shaky democracies.

Those are two ways that prospect theory might deepen our understanding of the forces behind the two most common forms of democratic breakdown. Structural conditions might determine the size of the gains and losses political decision-makers can expect to realize under different future scenarios, but cognitive biases will affect how they weigh those gains and losses, and how they evaluate their chances of insuring against or capturing them. Prospect theory doesn’t “prove” anything about the causes of democratic breakdown any more than my own little model does, but it’s comforting to see that an informal application of the former to the latter seems to amplify rather than undercut the lessons we might draw about why democracy fails so often.

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