I had earlier outlined the problems currently faced by our democracy. To find a solution, I set about researching this topic, and about alternate methods of governance and markets. I came across several great articles, and a book - Democracy : The God that Failed. They really broadened my view, giving me ideas as to why the problem was not just with the Indian democracy, but the system of democratic Government as a whole, although you can see later on that it could perfectly apply to India.
The ideas I present to you now are an amalgamation of various concepts taken from this book, other articles and wikipedia, along with some embellishments of my own. This may sound far-fetched, so read at your own risk. Even I am not entirely sure about them, but suffice to say, it is of great interest to me at least from an academic point of view. I was intending to finish off with this part, but I think that would take too long, and hence this part is sort of a prelude - a definition of various concepts - to the final one, where I propose the method of governance that I cobbled together.
Democracy has become the prevalent method of governance only in recent times, especially after World War I. For a long time, monarchical governance was followed. Thus, governments are basically privately owned or publicly owned. Let's first examine the shortfalls present in the frameworks of both of these.
First, every economy or civilization is brought together by a mutual trading of goods in the local region. Now, suppose there are two methods to produce goods, say A which is less-efficient and gives the goods now, and B which is more-efficient but requires setup time. If there were no current need for the good, naturally B is better to use. But, most goods have a present requirement, hence we always follow a balance, with so much of A and then setting up B to plan for the future. This is time preference. The higher the time preference, the more method A is preferred. This constant can be applied throughout time, with people always inventing more efficient ways of producing goods.
Now for the factors of production. The two main factors are land and labour, everything else is a composite of these, over a period of time if necessary. Taking land, it has a capital value, and the profit we derive from that. If our time preference increases, we look towards profits more, and neglect the land, which leads to its deterioration (overkill of agriculture, industries, etc) and hence capital value decreases.
First, let us see how a monarchy develops. There are a group of people performing a spectrum of goods-producing activities in a small region. Over a period of time, those among them who are more innovative, determined, etc, invent a method B and strike a balance with respect to methods A and B, leading to an increase in their future value. Thus, over a period of time, they increase in influence, and by investing, one of their factors of production - land - increases (remember, we are only considering land and labor here). This is basically survival of the fittest.
Now, the influential people gain respect in the society around them, and we have the formation of local bodies headed by these people to take care of internal matters of dispute, ie, justice. These people do not take payment for these services, instead, their income is derived from the land they own and they perform these as a matter of service. Systems of law that they follow are the immutable private rights of men, which they did not create, but have always existed, being passed down through generations (It is called natural law. Go read about it if you like). Thus, even these arbitrators themselves are protected and bound by them. This system is called natural order, or anarcho-capitalism (I like the first one more, so I am going to use that).
Following this model, societies formed into villages, which formed towns, cities and so on. We have a group of elite presiding over these. In this case, the time preference of the ruling body was not skewed. The elite owned their lands through accumulation by their own efforts, and certainly would not wish its capital value to decrease due to being more present oriented. Now came the problem - when one of the members of the elite stepped up to take on the mantle of governance on himself and became the king.
As the king could not do everything alone, he appointed a group of people, drawn from the elite to assist him in the running of government, and he began paying them to do it. Now, he had no intention of using his own money for this, as he was providing a service to others and wanted to charge for it. Hence, the concept of taxes, or a levy was introduced. Now, the government had income, expenditure and so on, and everyone shifted to a public system of justice, from what had been earlier provided by private bodies. As time wore on, the time preference of these people increased, since their income was derived from lands which they did not own. Hence, the nobles and the king began to exploit the common people to suit their own ends, thus leading to the fall of monarchies and private ownership of government.
Now coming to democracy, we can all clearly see the problems. Once again, the rulers of the country do not own the assets providing their incomes, hence their time preference increases. In this case, it is even more disturbing, since the time period for their ability to exploit is limited to their time in office, and hence they seek to get reelected. This leads to a competition for positions, which in turn ensures that only those who more resemble rabble-rousing demagogues become successful.
Another factor is legislation coming into the jurisdiction of a public government. Earlier, while it used to be a private system of laws common to everyone, now the government exerts control over a huge number of issues, governing every aspect of life of the people under it, and obviously you are not exempt from it even if you don't want it. Voluntary secession to avoid these is unlawful, and this leads to insurgency, and conflicts between the majority and minority.
Then comes the concept of monetary policy. When the government controls money, to fund its own expenditure, it may borrow money. While a king could borrow money as well, he provided his own lands, with intrinsic capital value as security. The government borrows on the country's GDP, which
is the product of not just the public sector, and the officials in charge certainly don't have to pledge their own properties to borrow. To compensate, we have the government printing money, which in turn increases the money supply and consequently inflation. It can be statistically proven that inflation has come so much into play only in recent times (I am not including the statistics here).
I know I am ending abruptly, but there's really not much point in continuing as you can see where I am going with this. If you are interested in clarifying queries, leave them in the comments section and I will answer them to the best of my ability. In the final part of this essay, I will explain how the concept of natural order, adapted to present day, along with the concept of free-market economy, would be ideally suited as an alternative to democracy.