Monarchy and Economic Growth: An Examination

JW Rich
10 min readAug 7, 2021


The dominant political trend of the past century has been the widespread adoption of democracy. At the start of the 20th century, democracy was seen as a novel and curious phenomenon on the world political stage. There was the United States, of course, but there were few relevant functioning democracies. At the end of the 20th century, the opposite was now true. democracies had become the norm and any other form of government was seen as an antiquated relic of the past. Over the course of one hundred years, the world had truly been taken by a democratic storm.

So strong is the reputation of Democracy that even those countries that in no way could be truthfully called Democracies masquerade as them. North Korea is an authoritarian dictatorship, but the official name of the country is still “The Democratic People’s Republic of North Korea”. One can scarcely imagine any product, service, or concept with better PR than Democracy enjoys.

However, this meteoric rise in democracy’s standing on the world stage was not without casualties. The principal loser of this democratic surge was the alternative political system of monarchy. At the dawn of the 20th century, monarchy held the popularity and traditional weight that democracy enjoys today. It was seen as both natural and beneficial to those living under it. However, as the world started to turn its back on monarchy, opinions started to rapidly change. Today, Monarchies are seen as quite nearly authoritarian just as a virtue of their existence! “No one man should have all that power!” In our age of democracy, the monarch finds himself with few friends, and even fewer advocates.

Nevertheless, are we being too hasty in our condemnation of monarchy? Is it possible that, even in our modern age, monarchy can be a viable and prosperous political system? If we are to embark on finding an answer to such a question, we must first define what would constitute a “successful” political system. Depending on the goals one has in mind, success for a government looks quite different. If one has no other desire than to win wars against other countries, then the only metric of success is how many wars the country wins. If one wishes to exclusively see agriculture flourish, then one would only keep track of the yearly harvest.

All those who live under a political system are impacted by it, for better or for worse. Therefore, its success or failure will have similarly universal impacts. Accordingly, to accurately gauge the success of a political system, our criteria should be broad and encompassing all of society. The best candidate that fits these criteria is that of economic growth. If a country is relatively wealthier over time as compared to its neighbors, we can confidently say that the inhabitants of that country, on net, will be better off. Not all of the benefits of this growth may be distributed perfectly evenly among the population, but we can say that the daily lives of all with be improved to some degree.

Thus, the question before us is: does a system of monarchy result in high economic growth? The best empirical work that has been conducted on this subject is from Mauro F. Guillen, and his extensive study, “Symbolic Unity, Dynasty Continuity, and Countervailing Power: Monarchies, Republics, and the Economy.” Guillen examines not only the economic growth of monarchies, but compares that growth to alternative forms of governmental organization, such as democracies and republics.

The specific understanding of economic growth and the method of examination undertaken by Guillen is worthy of note. He emphasizes that one of the best predictors of long-term economic growth is protection of property rights. Therefore, the question of determining if monarchy can achieve high long-term economic growth is reducible to a question of whether or not monarchy can protect and defend property rights in the long-term. If we answer in the affirmative, then we would expect monarchies to exhibit impressive economic growth. Additionally, if it can be demonstrated that monarchies protect property rights more zealously and systematically than democracies and republics, then we would expect for monarchies to perform better in metrics of economic growth relative to these countries.

The results found by Guillen are startling. He states:

“Our results indicate that, in the contemporary world, traditional forms of
government such as monarchies are not necessarily at a disadvantage when it
comes to economic outcomes. Quite on the contrary, we found quantitatively
meaningful evidence that monarchies outperform republics when it comes to
protecting property rights, which translates into higher GDP per capita. We
found support for each of our hypotheses when comparing all monarchies to all republics. Most of the results held when comparing monarchies to parliamentary republics and democratic republics”

For our modern and democratic ears, our first reaction may be to claim that this study must be some kind of outlier. It certainly cannot be the case that this result is repeatable, is it?

As stated above, Guillen’s study on this subject is the most thorough that currently exists. However, there still does exist other empirical work that can be used to support his findings, even though this field of study is mostly underdeveloped. Carl Henrik Knutsen and Hanne Fjede support the conclusion that monarchy as an institution generally protects property rights very well. Christian Bjornskov and Peter Kurrild-Klitgaard come to a similar conclusion as Guillen concerning monarchy and economic growth.

We are left with the obvious question: why is this the case? Our collective imaginations conceive of monarchy as being a political system operating on the arbitrary power and whim of a singular self-interested ruler. How could such a system produce more robust economic growth than representative democracy? Guillen himself attempts to answer this question as a part of his analysis. He states that there are three different governmental mechanisms that have been identified by the literature that affect the level of protection afforded to property. These are: internal conflict, executive tenure, and constraints on the executive branch of government. The effectiveness of any governmental system in protecting property rights, according to Guillen, largely comes down to how these problems are systematically approached.

Monarchy is in a much better place to deal with all three of these mechanisms than a republic or democracy would be. As such, we would expect monarchy to more consistently protect property rights. To demonstrate this, we will examine each of these three mechanisms in turn.

First, the way in which Guillen uses the term of “internal conflict”, it applies not only to conflict within the government, but also broader internal strife within the country as a whole. These could be ethnic, religious, or economic-motived conflicts. Instituting a monarch as the head of state provides a point of unity for the country as a whole to rally around. Guillen writes:

“Historically, monarchies offered a symbol of national unity, which may be more or less successful at reducing internal conflict…Even in more homogeneous and egalitarian societies such as Sweden, politicians frequently appeal to the sovereign as a symbol of unity. This Nordic country boasts a long
democratic tradition under the monarchical form of government stretching from the late nineteenth century to the present time.”

If a country is experiencing a period of instability, the monarchy can provide a figure of stability and constancy against a tumultuous environment. These periods of uncertainty generally work to erode property rights. It may become politically popular to look the property of one group of individuals and redistribute it to another. Taxes may be greatly increased, and property could be destroyed or confiscated. A monarch is able to restrain the passions and impulses of individuals or groups and provide stability to the ship of state. As such, a monarch helps to protect property rights during these periods of conflict more than a president or parliament would be inclined.

Guillen states that executive tenure and protection of property rights have an inverse relationship. The longer the tenure given to the executive, the stronger its protection of property tends to be. While this may seem paradoxical at first, further reasoning shows that this is exactly what we should expect. For a president that serves a four-year term, the state of the country anytime after those four years is of little interest to him. Therefore, if he is in a situation where great benefit can be bestowed upon him now, but ruin will come to the country later, he is likely to choose the short-term benefit for his own gain. For a king, the situation is quite different. He will preside over a country for the course of many years, if not many decades. Thus, if he is faced with the prospect of short-run benefit with long-term disaster, he is much less likely to pursue that course of action. In all likelihood, he will still be the king in the long-run, at which point it will be his disaster to fix! Even if he dies, it will be his son or other relative left to deal with this potential catastrophe. As such, monarchies have a much broader view of the effects of their policies and the results they may bring. As such, violations of property rights that may be politically popular in the short run but impoverish the country in the long run will tend to be avoided.

Having constraints on the executive branch of government is a core tenant of many constitutional democratic systems. Even so, monarchies may be able to provide better checks and balances to a governmental system. A president may be very limited in his power to check a parliament on congress that is out of control. A king, as both an individual with power and one with influence, is much more able to be able to provide a balance to a legislature. As such, a king is in a much better place than a president would be to be a bulwark against the potential violations of property rights that could be perpetuated from a congress. Guillen states:

“In sum, monarchies can impose limitations on policymaking, that is, mitigate
the discretionary behavior of an unconstrained executive branch so that its
potentially abusive behavior is kept in check, especially when it comes to confiscating property.”

Guillen’s arguments are quite interesting, and deserving of some degree of analysis in and of themselves. However, other arguments for the superiority of democracy have been raised by other intellectuals as well. Hans Hermann-Hoppe has argued in favor of monarchy as a system of government over democracy in his work, “Democracy: The God that Failed”. Hoppe argues that democracy represents a view of “public” ownership of the government, while monarchy represents “private” ownership. The owner of any particular good is highly incentivized to maintain that good so as to not lose the services it can provide. This dynamic also applies to government as well. Hoppe writes:

“The institution of private government ownership systematically shapes the incentive structure confronting the ruler and distinctly influences his conduct of government affairs. Assuming no more than self-interest, the ruler tries to maximize his total wealth, i.e., the present value of his estate and his current income. He would not want to increase cur-rent income at the expense of a more than proportional drop in the present value of his assets. Furthermore, because acts of current in-come acquisition invariably have repercussions on present asset values (reflecting the value of all future expected asset earnings discounted by the rate of time preference), private ownership in and of itself leads to economic calculation and thus promotes farsightedness.

While this is true of private ownership generally, in the special case of private ownership of government it implies a distinct moderation with respect to the ruler’s drive to exploit his monopoly privilege of expropriation, for acts of expropriation are by their nature parasitic upon prior acts of production by the nongovernmental public. Where nothing has first been produced, nothing can be expropriated, and where every-
thing has been expropriated, all future production will come to a shrieking halt. Hence, a private owner of government (a king) would avoid taxing his subjects so heavily as to reduce his future earning potential to the extent that the present value of his estate (his kingdom) would actually fall, for instance.”

Thus, a monarch, as the “owner” of the government and country he rules over, would be highly incentivized to protect property rights as much as possible. This leads not only to greater economic growth for the country at large, but also to increased wealth and status for the monarch himself as a corollary. Being the king of a rich and prosperous country is undoubtedly more desirable than the ruling over a poor and barren land. Additionally, as the “owner” of the government, the general population is going to be much more wary of any attempts by the monarch to extend or increase his power. Unlike a system of democracy, there is no pretense about the government really being “the people”. Any increase in taxation, and subsequent erosion of property rights, will principally benefit the monarch exclusively. As such, the general population will be relatively less willing to submit themselves to any confiscation of property by the monarch.

What conclusions can we draw from the empirical work and arguments surrounding monarchy and its propensity to increase economic growth? Guillen’s paper on this subject is the best and most thorough by far, as was stated above. However, solid empirical work in this area is few and far between. Guillen, along with other research in this field, have presented solid data to back up the monarchy-growth relationship. His arguments, along with those presented by Hoppe and others, give an intellectual basis for why this may be the case and may be repeatedly verifiable. However, we must come to the unsatisfactory conclusion that more evidence is needed to definitely say that monarchies do lead to stronger economic growth. All the data and theory we have leans in that direction, but the argument in its favor is not yet definitive. Given more time and work, however, it is quite possible, and one could say quite probable, that this relationship will be firmly established once and for all.