Mueller, Dennis C. Capitalism and Democracy: Challenges and Responses in an Increasingly Interdependent World.

• Author: Friedman, Barry D.
• Position: Book Review

Mueller, Dennis C. Capitalism and Democracy: Challenges and Responses in an Increasingly Interdependent World. Cheltenham, UK: Edward Elgar, 2003. 379 pp. Cloth, $110.00.

This volume is a collection of fourteen journal articles published between 1996 and 2002 and two previously unpublished papers. While Mueller specializes in economics, he possesses an insightful cause-and-effect understanding of how political institutions and rules create various policy outcomes.

Mueller observes that democracy has become an assumption of life in Western nations, but has yet to find a receptive audience elsewhere, with a few notable exceptions such as Japan. For countries seeking to develop democracy, Mueller offers some independent-dependent-variable relationships. He notes that proportional-representation election rules produce multi-party legislatures. Mueller also states that federalism effectively matches "demands for local public goods and services and their supply" (p. 116). Finally, he maintains that geographical-representation systems with single-member districts drive up the costs of lobbying by interest groups compared to the expenses of interest groups in influencing the "Government" in a parliamentary system.

Other prominent themes in the collection include taxation, redistribution of wealth, and antitrust policies. Here, Mueller addresses several independent-dependent-variable relationships. First, where adjacent governments are concerned about tax competition that would result in "a race to the bottom" (i.e., governments might cut tax rates to attract industry, thereby suffering erosion of tax revenues), those governments are well-advised to seek "tax harmonization" agreements. Second, sin taxes...