Economics Discovers Accountability

Paul Collier, renown economist and author of The Bottom Billion, promotes accountability to be one of the two vital public services that a state should provide to its citizens. In his new book Wars, Guns, and Votes (launched this week at the International Monetary Fund) Collier discusses the importance of security and accountability for the success of unstable or weak democracies. Security, of course, is usually perceived of as the most important public good, as every economist will learn in the first semester at college. Accountability, however, only rarely makes it onto the agenda.

This may change now with a leading economist lobbying for the centrality of accountability. Collier argues that accountability is crucial because in a democracy the interests of the elites have to align with the interests of the citizens. This may happen in two ways: Either the elites are indeed accountable to the public, or they are not, but their interests happen to be pretty similar to those of the population. Collier credits the Dutch with inventing accountability - and they did so by introducing a tax system. Here's the author's line of argument: Unstable countries are afraid of their neighbors. Accordingly, they expand their military power, which has to be paid for. The money may come either from the rich (in resource rich countries with a very poor population) or from the citizens - through taxation. Strengthened military power then secures national defense, and the state can worry about other things, such as providing other public services. In this regard, accountability comes with security: People that have to pay taxes for security will demand accountability. Citizens who do not pay any money to their governments are unlikely to ask what is being done with someone else's money.

Collier challenges the international donor community to provide security and accountability to what he calls dangerous democracies. Poor countries will not be able to develop without either. But how to bring accountability to a country? Collier believes in the force of international standards - and he suggests a somewhat radical solution. Here is his scenario: The one thing authoritarian rulers are really afraid of is the military and their ability for coups d'état. Usually, former colonial powers and other members of the international community protect rulers that they support from being ousted by force. Therefore, the international community should develop standards for accountability - for instance, free and fair elections - and ask the states to sign on. If rulers do sign on, the international community will provide protection in case of a coup d'état. If they do not pledge themselves to be accountable - they will stand alone should a military coup happen. 

Now, whatever one may think about this suggestion, one thing is indeed good news for our colleagues and us: economics goes accountability! If economists sign up for our agenda to promote accountability as vital prerequisite for development success, aid may become more effective, providing security to the people while at the same time building stable and fair governance systems. The first step on a long way seems to be taken, and we may put up a little flag at the side of the road to commemorate the occasion.