Few would doubt the proposition that political institutions matter for economic development. Yet robust generalizations and systematic evidence on how exactly they do so are lacking. In this paper, attention is drawn to regularity in the cross-national data that has received little attention to date: participatory political regimes are associated with significantly lower levels of aggregate economic instability. After presenting some of the evidence, it is speculated that the reason has to do with the propensity of democracy to moderate social conflict and induce compromise. Three distinct arguments as to why this may be the case are presented.