Democracy, Free Markets and Habits of the Heart

The collapse of the former Soviet Union and its Eastern European empire has generated much debate among analysts about the process of rebuilding society and facilitating the development of democracy in the post-Communist world. One of the most interesting perspectives on this subject comes from Francis Fukuyama, a consultant with the RAND Corporation in Washington, D.C.

Consolidating Democracy in Post-Communist Nations

Fukuyama has described four levels on which the consolidation of democracy must occur. First: ideology. This is the level of normative beliefs about the rightness or wrongness of democratic institutions. Democratic societies cannot survive for long if people do not believe in democracy as a legitimate form of government. Second: institutions. This sphere includes constitutions, legal systems, political parties, freedom of the press, and much more. It is at this level that most of the recent struggles have taken place in Russia and throughout Eastern Europe, and where U.S. foreign aid is primarily targeted. Third: civil society. This is the critically important realm of spontaneously created social structures which are separate from the state and which underlie democratic political institutions; private sector organizations, such as social clubs and environmental associations, are examples of the entities which make up civil society and which stand between the individual and the state. Fourth: culture. This deepest level includes family structure, religion, moral values, ethnic consciousness, historical traditions, and many other factors.

In recent decades, changes have occurred worldwide on the first and second levels described above. The birth of pro-democracy movements, coupled with renewed interest in the free market, has led to many changes in governments since the late 1970s; in recent years, authoritarian rulers have given up power — or had it taken away — all over the globe. Throughout the 1980s this heightened interest in democracy has been followed by major institutional changes, although the process is still far from complete (F. Fukuyama, “The Primacy of Culture,” Journal of Democracy, January 1995).

Making changes in the institutions which form a civil society and in basic cultural values is a much slower process than toppling an existing government. Unlike parts of Eastern Europe, where civil society has sprung back to life relatively quickly, such as in Poland, Hungary or the Czech Republic, the birth pangs in Russia have been much sharper. In Moscow, old Communist elites are still in charge and continue to staff the new (and not-so-new) institutions of the Russian Republic.

The excitement about democracy which quickly led to changes in normative beliefs generated great expectations that could not be met, because basic cultural values did not change at the same speed. This gap between expectation and reality threatens genuine progress in places like Russia, because people quickly lose their newly-found faith in democracy when things get difficult during the transition. This demonstrates that cultural factors are of critical importance, perhaps the most important, in the development of democratic societies.

Trust as “Social Capital”

In his new book, Trust: The Social Virtues & The Creation of Prosperity (Free Press, 1995), Fukuyama develops these ideas more fully and, once again, offers insights which help us to understand developments in Russia. In his judgment, “One of the most important lessons we can learn from an examination of economic life is that a nation’s well-being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society” (p. 7). Trust is an important part of “social capital”: that is, the ability of people to work together for common purposes in groups and organizations. Association between citizens in a society depends on the degree to which communities share norms and values and are able to subordinate individual interests to those of larger groups.

Fukuyama describes the United States, Japan and Germany as high-trust, group-oriented societies. He also argues that for democracy and capitalism to work properly, they must coexist with certain cultural habits that ensure their proper functioning. Laws, contracts, and economic rationality “provide a necessary but not sufficient basis for both the stability and prosperity of postindustrial societies; they must as well be leavened with reciprocity, moral obligation, duty toward community, and trust, which are based in habit rather than rational calculation” (p. 11).

In the concluding chapter of his book, Fukuyama argues that “a successful capitalist economy is clearly very important as a support for stable liberal democracy. . . there are virtually no wealthy capitalist countries that are not also stable democracies. One of the great problems of Poland, Hungary, Russia, Ukraine, and other former communist states is that they have tried to establish democratic political institutions without the benefit of functioning capitalist economies.” (p. 356).

In Russia, democratic political leaders and their supporters believe in democracy and free markets on an intellectual level, but they and their fellow Russians lack the necessary social habits to create a unified political organization. The “social capital” in Russia has not matured to the point where spontaneous sociability happens. Self-organization and working cooperatively for mutual enrichment is not a common practice in post-Communist Russia. This is not surprising, as these habits were punished by the monolithic power of the Communist Party, which discouraged initiative and fostered the atomization of society.

These are “habits of the heart,” and there is no quick way to change them in Russia or any other societies in transition from Communism or other authoritarian forms of government. Education is one of the most important ways to impact “habits of the heart,” particularly an education which is grounded in religious faith and which integrates morality, ethics, and the academic disciplines.