In the Great American Debate, two questions stand paramount. How large should government be? And how should power be distributed, both within government and the market?

Virtually all political ideologies define themselves by how they answer these two questions. This chapter will address the second question first — how power should be distributed in any organization, be it public or private. The next section will address the proper size and role of government.

How distribution of power is one of the main topics of political science. Control of any institution can take only one of the following five forms:

• No one rules (anarchy)
• One-person rule (dictatorship)
• Minority rule (aristocracy)
• Majority rule (democracy)
• All rule (unanimity)

As you can see, there is a spectrum here, with no one controlling an institution at one end, to everyone controlling it at the other. Let’s take a closer look at each possibility:

In principle, there are two kinds of anarchy. Chaos results when there is an unregulated fight to survive or win, with victory going to the fittest or luckiest. Almost no one advocates this as a form of society, since it is overly destructive and costly, even to the winners. Spontaneous order, on the other hand, is when everyone is a "self-ruler" in a smooth-running system. Individuals are free not only to compete, but also to cooperate, which they do since there are clear incentives to cooperate. Individuals may do whatever they want, join and leave whatever sub-groups they want, and make whatever agreements they want. Anarchists argue that such voluntary cooperation with others should result in a peaceful, ruleful, orderly system. But critics argue that even this type of anarchy — like the anarchic community of nations — is still unstable and often given to violent, unregulated competitions like war. We’ll take a closer look at these arguments later.

This goes by many other names: monarchy, totalitarianism, authoritarianism, imperialism, etc. Dictatorship occurs when one person is the highest lawmaker in the group, whose power is unchecked by any other person or institution. History has recorded the many evils of this system:

1) "Power tends to corrupt and absolute power corrupts absolutely," as Lord Acton famously said. The reason is because individuals are primarily self-interested, and dictators have the power to reward their self-interest at the expense of the group. Such abuse can become extreme: Russian czars, for example, living in palaces of gold, while Russian peasants starve in the streets.

2) Dictatorships are inefficient. A single person may be an effective leader when the organization is small enough for the leader to master all its details. But the larger the group, the more details there are to know and run, and the less one person can handle it all. Those who try to control every aspect of a large organization fail. Dictators therefore must delegate a share of their authority to underlings, but this raises other serious problems. Underlings are also self-interested, and seek to protect their own welfare over the group’s. This leads to the next failure:

3) Dictators receive little accurate information from below. This is critical because individual dictators cannot match the collective wisdom of the group. Groups bring together a much broader array of information, education, viewpoints, specialized skills, experiences and creative suggestions, all of which get aired during democratic debate. There are two reasons why this benefit is significantly reduced under dictatorships:

First, underlings often tell dictators what they want to hear, not the unpleasant truth. That’s because they are afraid to anger a person who has absolute power over them. Even if a dictator encourages people to speak their minds, few will feel genuinely free to criticize an authoritarian regime. In a dictatorship, underlings obey stupid laws out of fear; in a democracy, underlings criticize bad laws and tell their leaders exactly what they want, and the leaders must listen or risk getting thrown out of power. Furthermore, the people’s representatives in government must listen to each other’s positions in order to form compromises. The resulting laws inherently incorporate a greater share of collective wisdom.

Second, dictators usually find it irresistible to impose their own "Absolute Truth" onto the masses, rather than collect truth from them. Almost always, dictators shut down free speech and free press to ensure their own Absolute Truth goes unrivaled. Examples of this conceit include Hitler’s "Ministry of Propaganda and Enlightenment," Lenin’s "party line" and the Catholic Church’s "orthodox faith." People with different opinions are usually branded as "heretics" and persecuted by such "guardians of truth" as the Gestapo, the KGB or the Inquisition. This only reinforces the first problem (telling dictators what they want to hear, not the unpleasant truth).

The problem of learning accurate information in a dictatorship is impossible to understate. Hitler, Stalin, and countless other dictators eventually came to live in fantasy worlds, which were finally shattered only by some reality-based event like a military invasion or revolution. One common aspect of nearly all dictatorships is that their leaders come to believe the "reports" of their own propaganda machines, namely, that the masses are happy, even if in reality they are desperate. Stalin, for example, believed his "Socialist Realism" films that depicted happy peasants singing in the fields, even though actual peasants were resorting to cannibalism trying to survive famine.

4) Dictatorships waste enormous resources on security. Dictators often require a large army, internal police force and security apparatus to thwart rivals, stifle criticism and stay in power. In a democracy, free rivalry and criticism actually help to drive incompetent or corrupt leaders out of office. Democracies do have other costs, like periodic campaign advertising and elections, but these are usually far less than a permanent security force policing the entire population.

Society has recognized the shortcomings of dictatorship in government, but, curiously enough, dictatorship still thrives in many private institutions.

This occurs when an elite minority controls the institution. Aristocracies suffer the same problems as dictatorships, if only to a slightly lesser degree. Like dictatorships, aristocracy was rejected as a form of government long ago, but it still thrives in many private institutions.

Aristocracies take several forms. They can be combined with dictatorship, in which a dictator delegates power to a small, limited and fixed elite, as Hitler did with the Nazi Party. Or the aristocracy can be run by democratic vote. Unfortunately, this describes the U.S. shortly after the American Revolution. Only wealthy white male landowners could vote in the newly formed republic. Voting was denied to the vast majority of Americans, including landless white males, females, Native Americans, blacks, young people and other minorities. The United States evolved from an aristocracy to a true democracy only as various constitutional amendments eventually gave the right to vote to everyone over 18.

This comes from two Greek words: demos, meaning people, and kratos, meaning rule. Democracy is therefore "the rule of the people." Everyone has a vote, and the majority of any vote decides policy.

Democracy occurs on a spectrum, with direct democracy at one end, and representative democracy (or republicanism) at the other. In a direct democracy, voters vote on their laws directly, without representatives. To the extent that government officials even exist, their only function is to enact the decisions of the voters. By contrast, in a republic, citizens elect representatives, who are delegated with enough authority to run things. The representatives must remember the will of the people or risk being voted out of power.

Most scholars reject strong forms of direct democracy on the grounds that it is unworkable. Democracy only works if the people are educated, but voters would become overwhelmed trying to educate themselves on thousands of defense contracts and systems, the regulation of thousands of pollutants, and trade policies with each of 200 nations. Obviously, no system could withstand so many ignorant votes. (And at any rate, it’s impossible to build a "pure" direct democracy, since the officials who enact the voter’s decisions will still have to be delegated some degree of autonomy, like what contractors to use, what office space to buy, when to take their lunch breaks, etc.) Historically, democracies on the more direct end of the spectrum have been unstable, short-lived, and given to mob rule. When the American Founding Fathers considered what type of government to build, they rejected direct democracy. Indeed, the Founders had a white-knuckled fear that their republic would be as short-lived as the rest.

Still, there are some limited forms of direct democracy that are workable and good, like voter initiatives, referendums and recalls. Switzerland is a country that greatly relies on these methods, and its popularity and long-term success prove that more direct forms of democracy are not only feasible, but good.

Since there is no such thing as a pure direct democracy, all democracies are actually representative democracies, or republics. Even so, the spectrum remains, ranging from more "direct" forms to more "representative" forms of republicanism. A more direct form is the U.S. House of Representatives, where legislators represent small districts and serve two-year terms. A more republican form is the U.S. Senate, where legislators represent entire states and serve six-year terms. The extreme in republicanism is the U.S. Supreme Court, where judges represent the entire United States and enjoy lifetime tenure.

In designing a well-functioning republic, the main goal is to avoid making it so direct that voters become overwhelmed by its requirements, but not so republican that representatives can rule impervious to the will of the people, like dictators. Somewhere in the middle there is an optimal balance.

This is a system where laws must enjoy 100 percent approval to be passed. Unfortunately, universal consent almost never happens in real life, and requiring it would only paralyze any group seeking to undertake collective action.

First, we should note that choosing the best system depends on the situation. A common observation is that dictatorship seems to work best in times of extreme emergency. In fact, the word dictator derives from ancient Rome, which suspended democracy during times of crisis to allow a temporary dictator to run things. Even modern democracies practice this, as in the case of the Presidential War Powers Act. The reason is because decisions need to be made quickly in a crisis, and democratic debate is too slow and ponderous. If democratic debate could be speeded up, or, better yet, carried out beforehand, the decisions that emerge would surely be wiser, fairer and more effective than the temporary dictator’s.

But what is the best system in general? Most people agree that we should choose whatever system maximizes citizen agreement over rules and policy. Ideally, individuals should consent to the laws that govern them; if they do not, the law is coercive or tyrannical. There are many reasons to seek maximum consent to law. First, people perform their duties much more enthusiastically when they comply willingly rather than resentfully. Second, individuals generally consent to laws which benefit themselves, so maximizing consent means maximizing the well-being of the many rather than the few. That results in a higher functioning society in the long run. Third, the more unpopular the law, the more society must waste resources trying to enforce it.

With this bit of philosophy as our guide, let’s look at each system:

For starters, we can dismiss unanimity, which is impossible to achieve and clearly utopian. It is natural for people to have different opinions, because everyone has different experiences in life and is an expert on different things. Thomas Jefferson wrote, with his usual insight:

So the best we can hope for is maximizing consent, or what some call minimizing coercion. In that respect, majority rule obviously coerces fewer people than minority rule and one-person rule. In other words, democracy is superior to both aristocracy and dictatorship.

Democracy does have its critics, mostly on the right. One objection is that democracy results in the "tyranny of the majority." The short answer to this objection is that the best-designed democracies have constitutions that protect minority and individual rights.

The long answer is that viewing democracy as a "majority" and a "minority" is a bit of false dichotomy. Democracies have two inherent safeguards: first, everyone has the vote, which means that everyone exerts influence. Second, everyone belongs to minorities based on age, race, sex, special interests, religion, etc. Democracies need coalitions of minorities to form majorities, and the horse-trading that goes on is one of the best defenses against the tyranny of the majority. We can see the relative success of this system in the vastly different treatments that democracies and non-democracies reserve for their minorities. Non-democracies have a long and bloody history of minority genocide, like Nazi Germany slaughtering the Jews, or Turkey slaughtering Armenians. By comparison, democracies treat their minorities significantly better.

Critics then point out that democracies do not have perfect histories, either. The U.S. had slavery, for example. But here it’s crucial to note that America has evolved from a weak to strong democracy. The U.S. inherited slavery from a completely non-democratic institution, the British monarchy. And, as noted above, the U.S. began not as a true democracy, but as an aristocracy of land-owning white males. As various minorities won the right to vote, their greater influence considerably reduced their oppression. This gave rise to the common observation that "the problems of democracy are solved by greater democracy." In a strong democracy, any pro-slavery movement that swept through the white male population would be crushed at the polls, not only by the votes of blacks, but by every other minority who saw their rights threatened next. For this reason, strong democracies have greatly reduced the oppression of minorities.

In a democracy, the majority's wishes are often ameliorated to accommodate the minority's wishes. One could say the "tyranny of the majority" is counterbalanced by the "tyranny of the minority." This system, based on agreeable compromise, is the optimal way to minimize coercion.

Besides democracy, anarchy is the only other feasible alternative to maximizing public consent to law. Under anarchy, the only organizations that you belong to are ones that you’ve joined of your own free will. So doesn’t this achieve 100 percent consent?

No, not by a long shot. Take the example of a worker deciding to join a business firm. Anarchists claim that the worker voluntarily obeys the rules of the firm, and if the worker ever disagrees with those rules, he can leave. The problem with this reasoning is that the worker doesn’t have to agree with every rule to decide to stay. We all disagree with at least some of the rules in our workplaces. It’s only when the rules become bad enough, and our disagreement over them great enough, that we decide to leave. So anarchy doesn’t really eliminate all coercion; it only minimizes it, much like democracy.

In a democracy, voters may not agree with every law that their representatives pass, even though they elected them. It is only when representatives pass too many unwanted laws that the voters will remove them from office.

One selling point of anarchy is that individuals become "king of their own castles." No one can tell you what to do with your property. That may sound nice, until you consider that this makes dictators out of business owners and landlords, and subjects out of workers and tenants. Anarchists argue that the free market will prevent owners from abusing their power. Mistreat your underlings, they claim, and your underlings will simply move elsewhere. Unfortunately, market failures, monopolies, flukes in supply and demand and other external factors may lead to a far different result. We may decide to join a firm even though we disagree with every rule in it, because we don’t want to starve to death by being jobless. In this case, the boss’s absolute power allows him to exploit the situation, by forcing us to work for sub-poverty wages. This type of exploitation would be impossible in a democratic workplace, where an elected supervisor who exploited workers would be voted out of power. Thus, anarchy risks the abuses of dictatorship in a way that democracy inherently cannot.

And this is not to mention the other shortcomings of dictatorship: the inefficiency, the yesmanship of underlings, the limited wisdom compared to groups, and the resources wasted on maintaining the dictatorship.

Even without defining the various political ideologies, these first two chapters should make clear that society needs government to provide the many goods and services that the market cannot provide well, and that this government should be democratic.

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