Democracy between Anarchy and Dictatorship: A Fragile Balance

Abstract

This paper investigates the situation of liberal democracies using a dynamic model originating from biology, the Holling type III functional response, augmented by negative external e ects, between two groups in a society, the elite and civil society. Although we start from observations and basic questions as posed by Acemoglu and Robinson in their work on the "narrow corridor", our approach delivers a greater variety of dynamic behavior and additional insights into challenges for liberal democracy. We analyze the dynamics of an uncontrolled system, a system with one-sided control by the elite, and a game model with strategic interactions between the two groups using dynamic systems theory, bifurcation theory, optimal control theory, and dynamic game theory. A low prevalence of negative e ects between groups, a low inequality of initial endowments, and a low discount rate of future events are helpful for establishing a liberal democracy. Somewhat unexpectedly, the competitive dynamic game model seems to grant slightly better chances for democracy, thereby questioning the idea of Thomas Hobbes' "Leviathan".