One of the principal mechanisms linking ethnic divisions with the breakdown of democracy is the so-called “outbidding effect.” According to theories of ethnic outbidding, ethnic divisions inevitably give rise to one or more ethnic parties. The emergence of even a single ethnic party, in turn, “infects” the political system, leading to a spiral of extreme bids that destroys competitive politics altogether. This article argues that such pessimism about the effect of ethnic parties is unwarranted. It makes the counter-intuitive claim that ethnic parties can sustain a democratic system if they are institutionally encouraged. The institutionalized encouragement of ethnic politics, I suggest, can reverse the outbidding process by replacing the unidimensional ethnic identities assumed by the outbidding models with multi-dimensional ones. The argument originates in a close study of the anomalous case of ethnic party behaviour in India. It implies that the threat to democratic stability, where it exists, comes not from the intrinsic nature of ethnic divisions but from the institutional context within which such politics takes place. Institutions which artificially restrict ethnic politics to a single dimension, other things equal, are likely to threaten democratic stability. Conversely, institutions which attach incentives to the mobilization of multiple dimensions of ethnic identity are likely to sustain rather than endanger a democratic system.
India meets the classic definition of an ethnically-divided society: it is divided at least on the basis of language, tribe, caste, region, and religion. Parties based on these divisions have been salient in Indian politics at one time or another. While these parties have often engaged in an initial spiral of outbidding, however, this has typically been reversed in favour of a longer stretch of centrist behaviour. The roots of this reverse spiral lie, paradoxically, in the institutional encouragement of ethnic politics by the Indian state. Acting upon the inherent multi-dimensionality of ethnic identities, such encouragement forces initially extremist parties towards the centre and keeps them there. This article identifies the mechanism by which institutionalization produces moderation in ethnic party behaviour, and illustrates it using data from ethnic party behaviour in the north-Indian state of Uttar Pradesh. — Kanchan Chandra, Ethnic Parties and Democratic Stability