Preliminary findings from the Economic Democracy Index

The preliminary findings of our Economic Democracy Index are out (Figure 1). The Index measures levels of economic democracy across 32 OECD countries, for the latest available data (2013), minus Turkey and Mexico for which there is too much missing data for an accurate assessment. Our longer term intention is to develop a more comprehensive index that includes countries from the developing economies of the global south.

Figure 1 – Economic Democracy Index: results by country (2013)


Data sources: European Association of Co-operative Banks data, European Values Survey, Fry et al. (2000) and Crowe and Meade (2008) Central Bank Transparency Index, ICTWSS database, ILOSTAT, IMF Statistics, OECD Statistics, World Values Survey, World Wealth and Income database, Worldwide Governance Indicators.

The Index is a composite of 4 different measures of economic democracy: “Workplace + Employment Rights”, which includes levels of employment protection and insecurity, employee participation and managerial attitudes; “Degree of Associational Economic Democracy”, involving levels of trade union organisation, employers organisation and collective ownership, (e.g. % of coops, credit unions); “Distribution of Economic Decision Making Powers”, a range of measures of the concentrated of economic power (e.g. strength of financial sector, geographical concentration of government fiscal powers); and, “Transparency and Democratic Engagement in Macro-Economic Decision Making” (e.g. extent of different social partners in decision making; accountability and levels of corruption, central bank transparency).

For the richer developed economies, what is striking is the basic difference between a more ‘social’ model of northern European capitalism and the more market-driven Anglo-American model. The Index captures the continuing differences between the former, with their higher levels of social protection, employment rights and democratic participation in economic decision-making and the more deregulated, concentrated and less democratic economies of the English-speaking world. The US ranks particularly lowly with only Slovakia below it, but the UK too is only 25th out of 32.

The Index also highlights the comparatively poor levels of economic democracy in the ‘transition’ economies of Eastern Europe; the one very interesting exception being Slovenia which merits further study. Southern European economies also tend to rank below northern European countries, as does Japan.

How and why does all this matter? During an alarming period in world affairs when the basic enlightenment ideals of liberty, fraternity and equality seems to be under threat, with a growing alienation of many from the formal political democratic process and increasing scapegoating of immigrants and foreign nationals, we think that economic democracy might well be the ‘elephant in the room’.

An important set of issues relates to the rise of a more xenophobic politics and its relationship to changing levels of economic participation and empowerment. From a more normative perspective, how far might an agenda around a deepening of economic democracy address the concerns of those who feel they have been left behind by processes of global economic restructuring?

Our research is premised on a set of hypotheses between economic democracy (in our broad definition of the terms) and critical public policy goals; such as tackling inequality; addressing climate change and maintaining economic stability. Other interesting questions that we will be addressing are the changing levels of economic democracy over time, and in particular, the impact of the financial crisis on economic democracy. Although we should stress that our analysis is preliminary, there appears to have been a marked decline since 2010 in economic democracy in Greece, perhaps reflecting the impact of externally imposed austerity measures.

Our next steps are to carry out robustness checks on the data and the start of our statistical analysis. We hope to have more to report in the next few weeks.