Myron of Working Towards Something That Makes Sense (a very interesting fellow) suggested to me the other day the idea that democracy is a superior form of government in that by allowing all members of the polis to vote, one incorporates the collective knowledge of many more people than are involved in an oligarchy or monarchy.
The idea is attractive to me in that it ties in with what I find attractive about a free economy and decentralized approach to charitable action: that people in a given situation are more likely to know the details of what is the best choice than is some distant, centralized authority. People often fail when they try to centralize or re-engineer important functions in society, because the centralizers seldom are able to know enough about all the different situations their actions will affect to correctly account for all of them. An open market (or a decentralized system of charity/safety net institutions) thus incorporates the knowledge and decision making capabilities of many more people and is able to achieve better solutions.
However, when it comes to democracy, I'm not sure that that argument works as well. (My own reason for preferring democracy is the more negative precept that democracy gives the people the government they deserve.) Here's the reason: In a democracy of any real size, the people as a whole are not deeply involved in drafting laws and policies. Rather, they either vote to elect leaders (in a republic) or in a more direct democracy vote on laws and policies which are crafted by a relatively small governing set or class.
The act of voting, in itself, does not do much to collect information from the populace as a whole. Nor can I think of any practical means (in a democracy of any size) whereby one could easily harness that information.
It seems to me that the only way to take advantage of this collective knowledge is to keep the number of things administered at the national level to a minimum, while allowing the most intrusive services (in which I would put education, health care and unemployment/poverty alleviation) to be administered at the most local level possible. (Preferably something rather smaller than most cities these days.)