No Need for Democracy: Inter-Elite Conflict and Independence in the Andes

There is an increasing interest on the Political Economy of Democracy, a literature that aims to trace the economic conditions that shaped the emergence of Democracy. However, the motivation and focus of this literature is the experience of Western countries; the results and intuition from this work do not travel well to other latitudes. This paper explains why the breakdown of colonial rule did not bring democracy to newly independent countries. The paper analyses a society composed by two elites (economic and political) and a non-elite that have different sources of income, power and preferences over political institutions. The paper uses a Game-theoretic model that characterizes the conditions for: accommodation between elites, conflict among them (i.e., independence) and the emergence of a non-democracy. Two elements prevent the accommodation between elites and ultimately independence: 1) their similar strength and; 2) the political elite's inability to attract the non-elite. The ability of the economic elite to attract the non-elite to the independence army provided a credible mechanism to redistribute wealth and political power. With this mechanism, an extension of the franchise - democracy - was not needed. This result has implications for development in the long-run, including institutional persistence and state capacity. This framework can help understand why democracy did not emerge in newly independent countries in Spanish America but it can also speak to other cases of after the breakdown of colonial rule.