No.7 Market, Democracy, and Diversity of Individual Preferences and Values

This paper looks at the institutions of market and democracy from the perspective of diversity. It is argued in the paper that if in a society there are communities whose command over pecuniary wealth is low, but which have other forms of wealth, a system which is essentially that of injurers not being liable for harm can result in the destruction of non-pecuniary wealth of these communities and thus lead to both immiserization and loss of diversity. With respect to the method of majority decision, one of the most important elements of democracy, the viewpoint that is put forward in the paper says that, when individuals are self-regarding, while diversity of preferences might make a formal difference, it is unlikely to make a substantive difference; but, if individuals' motivations are collective or sub-collective in nature, then it is able that the method of majority decision works better, from the perspective of resulting in a socially optimal outcome, when there is less diversity compared to when there is more diversity.