The Coevolution of Economic and Political Development from Monarchy to Democracy
Abstract: This paper establishes a simple model of long-run economic and political development that is driven by the inherent technical features of different production factors and the political conflicts among factor owners on how to divide the outputs. The main production factor in the economy evolves from land to physical capital and then to human capital, which enables their respective owners (landlords, capitalists, and workers) to gain political power in the same sequence, shaping the political development path from monarchy to oligarchy and finally to democracy with full suffrage. When it is too costly for any group of factor owners to repress others, political compromise is reached and economic progress is not blocked; otherwise, the political conflicts may lead to economic stagnation.
