Many new democracies have emerged since the late 1980s following worldwide demands for respect of human rights, accountability and transparency in policy making. Aid donors have promoted the view that democratization improves the quality of public policies and services. However, democratization is occurring at a time when the power of investors and financial institutions is changing both parameters and styles of governance. Financial globalization, high levels of indebtedness and neoliberal prescriptions narrow economic policy options to a limited set of objectives that emphasize fiscal restraint, privatization and liberalization.
In order to meet these objectives, policy making is increasingly restricted to \"technocrats\", or those with highly technical knowledge and expertise whose decisions are unconstrained by political processes. Technocrats tend to work in those executive institutions of government that are the most insulated from public pressure, and therefore the least democratically accountable - such as central banks, and finance and trade ministries.
Technocratic styles of policy making pose problems for democracies. They distort structures of accountability, as governments become more answerable to multilateral agencies and investors than to representative institutions and the public at large. Such styles of policy making also affect responses to employment and social protection, poverty eradication and conflict management. Even though these issues are important in consolidating new democracies, they may be sidelined by policy objectives that emphasize macroeconomic stability. Furthermore, citizens may lose confidence in the democratic process if they believe their votes are irrelevant in decisions that affect their lives.
Yet if governments are to be responsive to citizens' demands, policies - including economic policies - must be decided democratically. The role of legislative institutions in holding the executive accountable is crucial in this regard. In democracies, legislative institutions - parliament or congress - are expected to aggregate and articulate citizens' choices, scrutinize policy proposals and provide legitimacy for policy outcomes. But economic policies affect social groups and institutions differently, and democratic processes and accountability suffer when important decisions about trade-offs are entrusted exclusively to technocrats. Central bank chiefs and ministers of finance and trade, for example, may be beholden to special interest groups in the financial world, which may privilege strategies for inflation reduction, or financial and trade liberalization, over those for employment generation or more inclusive social protection.
Briefing available in english, french and spanish.
United Nations Research Institute for Social Development, Geneva, Switzerland, ISSN 1811-0142, 4 pp.