Michael Mandelbaum is Christian A. Herter Professor of American Foreign Policy at the Johns Hopkins School of Advanced International Studies. This essay is adapted from his new book, Democracy's Good Name: The Rise and Risks of the World's Most Popular Form of Government.

The administration of George W. Bush has made democracy promotion a central aim of U.S. foreign policy. The president devoted his second inaugural address to the subject, the 2006 National Security Strategy focused on spreading democracy abroad, and the White House has launched a series of initiatives designed to foster democracy across the globe, not least the military engagements in Afghanistan and Iraq. However, in Afghanistan, Iraq, and other parts of the Arab world where the prospects for democracy once seemed promising -- Lebanon, the Palestinian territories, and Egypt -- U.S. efforts have not succeeded. In none of these places, as the Bush administration enters its final 18 months in office, is democracy even close to being securely established. This is a familiar pattern. Virtually every president since the founding of the republic has embraced the idea of spreading the American form of government beyond the borders of the United States. The Clinton administration conducted several military interventions with the stated aim of establishing democracy. Where it did so -- in Somalia, Haiti, Bosnia, and Kosovo -- democracy also failed to take root.

Yet the failure of Washington's democracy promotion has not meant the failure of democracy itself. To the contrary, in the last quarter of the twentieth century this form of government enjoyed a remarkable rise. Once confined to a handful of wealthy countries, it became, in a short period of time, the most popular political system in the world. In 1900, only ten countries were democracies; by midcentury, the number had increased to 30, and 25 years later the count remained the same. By 2005, fully 119 of the world's 190 countries had become democracies.

The seemingly paradoxical combination of the failure of U.S. democracy promotion and the successful expansion of democracy raises several questions: Why have the deliberate efforts of the world's most powerful country to export its form of government proved ineffective? Why and how has democracy enjoyed such extraordinary worldwide success despite the failure of these efforts? And what are the prospects for democracy in other key areas -- the Arab countries, Russia, and China -- where it is still not present? Answering these questions requires a proper understanding of the concept of democracy itself.

DEMOCRATIC GENEALOGY

What the world of the twenty-first century calls democracy is in fact the fusion of two distinct political traditions. One is liberty -- that is, individual freedom. The other is popular sovereignty: rule by the people. Popular sovereignty made its debut on the world stage with the French Revolution, whose architects asserted that the right to govern belonged not to hereditary monarchs, who had ruled in most places at most times since the beginning of recorded history, but rather to the people they governed.

Liberty has a much longer pedigree, dating back to ancient Greece and Rome. It consists of a series of political zoning ordinances that fence off and thus protect sectors of social, political, and economic life from government interference. The oldest form of liberty is the inviolability of private property, which was part of the life of the Roman Republic. Religious liberty arose from the split in Christendom provoked by the Protestant Reformation of the sixteenth century. Political liberty emerged later than the other two forms but is the one to which twenty-first-century uses of the word "freedom" usually refer. It connotes the absence of government control of speech, assembly, and political participation.

Well into the nineteenth century, the term "democracy" commonly referred to popular sovereignty alone, and a regime based on popular sovereignty was considered certain to suppress liberty. The rule of the people, it was believed, would lead to corruption, disorder, mob violence, and ultimately tyranny. In particular, it was widely thought that those without property would, out of greed and envy, move to seize it from its owners if the public took control of the government.

At the end of the nineteenth century and the beginning of the twentieth, liberty and popular sovereignty were successfully merged in a few countries in western Europe and North America. This fusion succeeded in no small part due to the expansion of the welfare state in the wake of the Great Depression and World War II, which broadened the commitment to private property by giving everyone in society a form of it and prevented mass poverty by providing a minimum standard of living to all. Even then, however, the democratic form of government did not spread either far or wide.

Popular sovereignty, or at least a form of it, became all but universal by the second half of the twentieth century. The procedure for implementing this political principle -- holding an election -- was and remains easy. In the first three-quarters of the twentieth century, most countries did not choose their governments through free and fair elections. However, most governments could claim to be democratic at least in the sense that they differed from the traditional forms of governance -- monarchy and empire. The leaders did not inherit their positions, and they came from the same national groups as the people they governed. These governments embodied popular sovereignty in that the people controlling them were neither hereditary monarchs nor foreigners.

If popular sovereignty is relatively easy to establish, the other component of democracy, liberty, is far more difficult to secure.

This accounts for both the delay in democracy's spread around the world in the twentieth century and the continuing difficulties in establishing it in the twenty-first. Putting the principle of liberty into practice requires institutions: functioning legislatures, government bureaucracies, and full-fledged legal systems with police, lawyers, prosecutors, and impartial judges. Operating such institutions requires skills, some of them highly specialized. And the relevant institutions must be firmly anchored in values: people must believe in the importance of protecting these zones of social and civic life from state interference.

The institutions, skills, and values that liberty requires cannot be called into existence by fiat any more than it is possible for an individual to master the techniques of basketball or ballet without extensive training. The relevant unit of time for creating the social conditions conducive to liberty is, at a minimum, a generation. Not only does the apparatus of liberty take time to develop, it must be developed independently and domestically; it cannot be sent from elsewhere and implanted, ready-made. The requisite skills and values can be neither imported nor outsourced.

While the British Empire did export liberty to India, the British governed the Indian subcontinent directly for almost a century. In many other places where the British ruled, democracy failed to take hold. In the twenty-first century, moreover, the age of empire has ended. Nowhere are people eager, or even willing, to be ruled by foreigners, a point the U.S. encounter with Iraq has illustrated all too vividly. Seen in this light, the spread of democracy in the last quarter of the twentieth century seems not only remarkable but almost inexplicable. For if the institutions of liberty, which are integral to democratic governance, take at least a generation to build, and since nondemocratic governments try, in order to preserve their own power, to ensure that the institutions and practices of liberty never take root, how can democracy be established at all?

THE MAGIC OF THE MARKET

The worldwide demand for democratic government in the modern era arose due to the success of the countries practicing it. The United Kingdom in the nineteenth century and the United States in the twentieth became militarily the most powerful and economically the most prosperous sovereign states. The two belonged to the winning coalition in each of the three global conflicts of the twentieth century: the two world wars and the Cold War. Their success made an impression on others. Countries, like individuals, learn from what they observe. For countries, as for individuals, success inspires imitation. The course of modern history made democracy seem well worth emulating.

The desire for a democratic political system does not by itself create the capacity for establishing one. The key to establishing a working democracy, and in particular the institutions of liberty, has been the free-market economy. The institutions, skills, and values needed to operate a free-market economy are those that, in the political sphere, constitute democracy. Democracy spreads through the workings of the market when people apply the habits and procedures they are already carrying out in one sector of social life (the economy) to another one (the political arena). The market is to democracy what a grain of sand is to an oyster's pearl: the core around which it forms.

The free market fosters democracy because private property, which is central to any market economy, is itself a form of liberty. Moreover, a successfully functioning market economy makes the citizens of the society in which it is established wealthier, and wealth implants democracy by, among other things, subsidizing the kind of political participation that genuine democracy requires. Many studies have found that the higher a country's per capita output, the more likely that country is to protect liberty and choose its government through free and fair elections.

Perhaps most important, the free market generates the organizations and groups independent of the government -- businesses, trade unions, professional associations, clubs, and the like -- that are known collectively as civil society, which is itself indispensable to a democratic political system. Private associations offer places of refuge from the state in which individuals can pursue their interests free of government control. Civil society also helps to preserve liberty by serving as a counterweight to the machinery of government. Popular sovereignty, the other half of modern democratic government, also depends on elements of civil society that the free market makes possible, notably political parties and interest groups.

Finally, the experience of participating in a free-market economy cultivates two habits that are central to democratic government: trust and compromise. For a government to operate peacefully, citizens must trust it not to act against their most important interests and, above all, to respect their political and economic rights. For governments to be chosen regularly in free elections, the losers must trust the winners not to abuse the power they have won. Likewise, trust is an essential element of markets that extend beyond direct local exchange. When a product is shipped over great distances and payment for it comes in installments that extend over time, buyers and sellers must trust in each other's good faith and reliability. To be sure, in a successfully functioning market economy, the government stands ready to enforce contracts that have been breached. But in such economies, so many transactions take place that the government can intervene in only a tiny fraction of them. Market activity depends far more on trust in others to fulfill their commitments than on reliance on the government to punish them if they fail to do so.

The other democratic habit that comes from participating in a market economy is compromise. Compromise inhibits violence that could threaten democracy. Different preferences concerning issues of public policy, often deeply felt, are inevitable in any political system. What distinguishes democracy from other forms of government is the peaceful resolution of the conflicts to which these differences give rise. Usually this occurs when each party gets some but not all of what it wants. Compromise is also essential to the operation of a market economy. In every transaction, after all, the buyer would like to pay less and the seller would like to receive more than the price on which they ultimately agree. They agree because the alternative to agreement is no transaction at all. Participants in a free market learn that the best can be the enemy of the good, and acting on that principle in the political arena is essential for democratic government.

PROMOTING MARKETS, PROMOTING DEMOCRACY

From this analysis it follows that the best way to foster democracy is to encourage the spread of free markets. Market promotion is, to be sure, an indirect method of democracy promotion and one that will not yield immediate results. Still, the rapid spread of democracy over the past three decades did exhibit a distinct association with free markets. Democracy came to the countries of southern Europe and Asia and to almost every country in Latin America after all of them had gained at least a generation's worth of experience, sometimes more, in operating market economies.

Viewed in this light, however, promoting democracy indirectly by encouraging the spread of free markets might seem unnecessary. Countries generally need no urging to recast their economies along free-market lines. Today, virtually all countries have done so, for the sake of their own economic growth. So important and so widespread had the goal of economic growth become in the second half of the twentieth century that the capacity to foster it had emerged as a key test of the political legitimacy of all governments. And the history of the twentieth century seemed to demonstrate conclusively that the market system of economic organization -- and it alone -- can deliver economic growth.

The free market, in this account, acts as a kind of Trojan horse. Dictatorships embrace it to enhance their own power and legitimacy, but its workings ultimately undermine their rule. Indeed, this line of analysis would seem to suggest not only that a foreign policy of deliberate market promotion is superfluous but that the ultimate triumph of democracy everywhere is assured through the universal voluntary adoption of free-market economic institutions and policies.

That, however, is not the case. The continued spread of democracy in the twenty-first century is no more inevitable than it is impossible, as is demonstrated by the decidedly varying prospects for this form of government in three important places where it does not exist: the Arab world, Russia, and China.

THE FUTURE OF FREDOM

The prospects for democracy in the Arab countries are poor. A number of features of Arab society and political life work against it. None is exclusive to the Middle East, but nowhere else are all of them present in such strength. One of them is oil. The largest reserves of readily accessible oil on the planet are located in the region. Countries that become wealthy through the extraction and sale of oil, often called petro-states, rarely conform to the political standards of modern democracy. These countries do not need the social institutions and individual skills that, transferred to the realm of politics, promote democracy. All that is required for them to become rich is the extraction and sale of oil, and a small number of people can do this. They do not even have to be citizens of the country itself.

Furthermore, because the governments own the oil fields and collect all the petroleum export revenues, they tend to be large and powerful. In petro-states, the incentives for rulers to maintain control of the government are therefore unusually strong, as are the disincentives to relinquish power voluntarily. In these countries, the private economies, which elsewhere counterbalance state power, tend to be small and weak, and civil society is underdeveloped. Finally, the nondemocratic governments of petro-states, particularly the monarchies of the Middle East, where oil is plentiful and populations are relatively small, use the wealth at their disposal to resist pressures for more democratic governance. In effect, they bribe the people they rule, persuading these citizens to forgo political liberty and the right to decide who governs them.

Arab countries are also unlikely candidates for democracy because their populations are often sharply divided along tribal, ethnic, or religious lines. Where more than one tribal, ethnic, or religious group inhabits a sovereign state in appreciable numbers, democracy has proved difficult to establish. In a stable democracy, people must be willing to be part of the minority. But people will accept minority status only if they feel confident that the majority will respect their liberty. In countries composed of several groups, such confidence is not always present, and there is little reason to believe it exists in Arab countries. The evidence of its absence in Iraq is all too clear.

For the purpose of developing democratic governments, Arab countries labor under yet another handicap. For much of their history, Arab Muslims saw themselves as engaged in an epic battle for global supremacy against the Christian West. The historical memory of that rivalry still resonates in the Arab Middle East today and fuels popular resentment of the West. This, in turn, casts a shadow over anything of Western origin, including the West's dominant form of government. For this reason, liberty and free elections have less favorable reputations in the Arab Middle East than elsewhere. In view of all these obstacles, whatever else may be said about the Bush administration, in aiming its democracy promotion efforts at the Arab world it cannot be accused of picking an easy target.

The prospects for democracy in Russia over the next two to three decades are brighter. Russia today has a government that does not respect liberty and was not chosen through free and fair elections. The absence of democracy is due to the fact that seven decades of communist rule left the country without the social, political, and economic foundations on which democratic government rests. But Russia today does not confront the obstacles that barred its path to democracy in the past.

The communist political and economic systems have disappeared in Russia and will not be restored. Russia is also largely free of the historically powerful sense that the country had a cultural and political destiny different from those of other countries. Russia's population no longer consists, as it did until the industrialization and urbanization of the communist era, largely of illiterate peasants and landless agricultural workers. Today, the average Russian is literate, educated, and lives in a city -- the kind of person who is eventually likely to find democracy appealing and dictatorship unacceptable.

The revolutions in transportation and communication have made it far more difficult for Russia's rulers to close the country off from the outside world. In particular, Russians today are far more aware of the ideas and institutions of the democracies of the world than they were during the centuries when absolute monarchs ruled the country and during the communist period. Finally, Russia in the twenty-first century faces far less danger of attack by its neighbors than ever before. Monarchs and commissars from the sixteenth century through most of the twentieth justified gathering and exercising unlimited power on the grounds that it was necessary to protect the country from its enemies. That rationale has now lost much of its force. A countervailing force must be set against these harbingers of a more democratic future for Russia, however. The country's large reserves of energy resources threaten to tilt Russia in the direction of autocratic government. Post-Soviet Russia has the unhappy potential to become a petro-state. Russia's democratic prospects may therefore be said, with only modest exaggeration, to be inversely related to the price of oil. Of all the nondemocratic countries in the world, the one where democracy's prospects matter most is China -- the world's most populous country and one that is on course to have, at some point in the twenty-first century, the world's largest economy. The outlook for democracy in China is uncertain. Beginning in the last years of the 1970s, a series of reforms that brought many of the features of the free market to what had been a communist-style economy set in motion a remarkable quarter-century-long burst of double-digit annual economic growth. Although the core institution of a free-market economy, private property, has not been fully established in China, the galloping pace of economic growth has created a middle class. As a proportion of China's huge population it is small, but its numbers are increasing rapidly. More and more Chinese live in cities, are well educated, and earn a living in ways that provide them with both a degree of independence on the job and sufficient income and leisure time for pursuits away from work.

Along with the growth of the economy, the sorts of independent groups that make up civil society have proliferated in China. In 2005, 285,000 nongovernmental groups were officially registered with the government -- a tiny number for a country with a population of 1.3 billion -- but estimates of the number of unofficial groups ran as high as eight million. Furthermore, twenty-first-century China emphatically fulfills one of the historical conditions for democracy: it is open to the world. Communist China's founding leader, Mao Zedong, sought to wall China off from other countries. His successors have opened the country's doors and welcomed what Mao tried to keep out.

The dizzying change that a quarter century of economic reform and its consequences have brought to China has therefore installed, in a relatively short period of time, many of the building blocks of political democracy. As Chinese economic growth proceeds, as the ranks of the country's middle class expand and civil society spreads, the pressure for democratic change is sure to increase. As it does, however, democracy advocates are just as certain to encounter formidable resistance from the ruling Chinese Communist Party (CCP).

Although it has abandoned the Maoist project of exerting control over every aspect of social and political life, the party remains determined to retain its monopoly on political power. It squelches any sign of organized political opposition to its rule and practices selective censorship. Explicit expressions of political dissent and any questioning of the role of the CCP are prohibited. Its efforts to retain power are not necessarily doomed to fail. The CCP has greater staying power than the ruling communist parties of Europe and the Soviet Union enjoyed before they were swept away in 1989 and 1991. Because it has presided over a far more successful economy than did its European and Soviet counterparts, the CCP can count on the tacit support of many Chinese who have no particular fondness for it and who do not necessarily believe it has the right to govern China in perpetuity without limits on its authority.

Popular indulgence of communist rule in China has another source: the fear of something worse. Recurrent periods of violence scar China's twentieth-century history. The Chinese people certainly wish to avoid further bouts of large-scale murder and destruction, and if the price of stability is the continuation of the dictatorial rule of the CCP, they may reckon that this is a price worth paying. The millions who have done particularly well in the quarter century of reform -- many of them educated, cosmopolitan, and living in the cities of the country's coastal provinces -- have reason to be wary of the resentment of the many more, mainly rural, residents of inland China whose well-being the economic boom has failed to enhance. The beneficiaries may calculate that CCP rule protects them and their gains. Finally, the regime can tap a widespread and potent popular sentiment to reinforce its position: nationalism. For example, it assiduously publicizes its claim to control Taiwan, a claim that seems to enjoy wide popularity on the mainland.

Whether, when, and how China will become a democracy are all questions to which only the history of the twenty-first century can supply the answers. Nonetheless, two predictions may be hazarded with some confidence. One is that if and when democracy does come to China -- as well as to the Arab world and Russia -- it will not be because of the deliberate and direct efforts at democracy promotion by the United States. The other is that pressure for democratic governance will grow in the twenty-first century whatever the United States does or does not do. It will grow wherever nondemocratic governments adopt the free-market system of economic organization. Such regimes will adopt this system as part of their own efforts to promote economic growth, a goal that governments all over the world will be pursuing for as far into the future as the eye can see.

Copyright 2007 by the Council on Foreign Relations, Inc. All rights reserved.)