NEW WORKING PAPER with Martin Paldam: A new monthly measure for political capitalism is introduced. It covers 2001/23. Democracy is measured by the annual polyarchy index. It has a jerky structure with long spells of constancy and occasional jumps. The study uses this structure to identify a set of natural experiments, where polyarchy is stable for ten years but has a jump in the middle. Thus, the jump must be in the gap 2005/18. Due to rarity of jumps and the short gap only 41 cases are found. Causality is suggested by lags. If political capitalism changes during the 60 months before the democracy jump political capitalism may cause the jump. Only a very small effect appears. If political capitalism changes during the 60 months after the democracy jump democracy may cause the change in political capitalism. A clear, but modest effect of an 8% change in the level of political capitalism appears in the direction expected.
Please note that this paper will be updated in the future months. So please refer to the latest version if you want to quote it.
You are welcome to download, share, or comment on the following working paper:
- Paldam, M., & Saadaoui, J. (5 November 2026). Political capitalism and democracy in the short run.