Guidelines for a Democratic Financial System


Case Study: Switzerland It is interesting to note that in Switzerland residents of each town are expected to vote for everyday issues such as the appointment of a school principal; the demolition of a local bridge or the construction of a new museum. Tis oſten means that residents journey to their local town hall each Saturday to cast their vote. It is also interesting that in 1987 some areas or cantons, still did not allow women the vote! Tis is probably more out of tradition than out of political persuasion.


Two systems exist which allow decisions to be made collectively – that is with the goal of having all or as many citizens as possible involved. Tese two systems are: • Consensus decision-making; • Majority decision-making.


Consensus Decision-Making


Consensus 1. An opinion or position reached by a group as a whole or by majority will: Te voters’ consensus was that the measure should be adopted.


2. General agreement or accord: government by consensus.


• A community must be small enough in order to allow each taxpayer to participate in the final decision-making process;


• General agreement between all parties must be possible; • It is a very expensive model because it is very difficult to satisfy everybody concerning every issue.


Majority Decision-Making • All taxpayers still participate but only the decision of the majority rests; • Majority: 50% + 1 vote – this means that 49 pay for something they don’t want; • Te wishes of the minority are oſten ignored.


Financial Decision-Making in a Representative Democracy


Te Wicksellian model (devised by Swedish economist Knut Wicksell) is widely accepted as the ideal democratic decision-making model – where the purpose is general consensus, the taxpayer- cum-voter participates directly. But as we have seen, this is very difficult and also very expensive in larger communities. Although the model itself which encourages direct participation in the decision-making process, is not workable, the principles are still adhered to.


In large political systems, such as a large country, the system mentioned above is simply too impractical; consensus is too difficult to reach, and it is far too expensive for each taxpayer to participate directly. Te voter-cum-taxpayer still wishes to take part in some way and so he/she is encouraged to vote for representatives who then act on behalf of their voters.


Here the following maxim which is clearly expressed in the Magna Carta and which was entrenched by the American War of Independence, should always apply: no taxation without representation.


Te key principle here, especially in countries with very large populations, is that while it is almost impossible for each citizen to participate directly in the decision-making process, they are able to do so through someone on their behalf. And so the modern system of elections has developed.


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