An Economic Theory of Democracy

Essay add: 30-09-2015, 13:28   /   Views: 576
This paper is an examination of the book An Economic Theory of Democracy by Anthony Downs.

Anthony Down’s basic tenet is that governments, being enormously powerful economic entities, should be considered at least as much from an economic standpoint as a political one. “But little progress has been made toward a generalized yet realistic behavior role for a national government similar to the rules traditionally used for consumers and producers.” (P. 3). The book, then, is Down’s attempt to construct such a rule for rational governmental behavior along economic lines.
His first step is to define “rational”, which he sees as “efficiently maximizing output for a given input, or minimizing input for a given output.” (P. 5). It’s important to realize that he is not discussing “rationality” and “rational behavior” as we usually do – to describe a logical thinker, or “a man without prejudices, or a man whose emotions are inoperative” (P. 5) – but as an economic quality. In economics, Downs sees a rational man as one “who moves toward his goals in a way which, to the best of his knowledge, uses the least possible input of scarce resources per unit of valued output.” (P. 5) In today’s parlance, the rational man gets the biggest bang for his buck. Or put another way, the rational man acts first in his own self-interest.
Downs is careful to explain that all men proceed toward all goals in much this same way, and his decision to focus only on economic and political goals is completely arbitrary. (P. 7). He ends his introduction by succinctly restating his thesis: although governments are of unusual importance in every economy, “economic theory has produced no satisfactory behavior rule for them comparable to the rules it uses to predict the actions of consumers and firms.” (P. 20). Downs attempts “to provide such a rule by positing that democratic governments act rationally to maximize political support.” (P. 20).
He begins with a study of party motivation, then moves to voting, which of course plays a huge part in any governmental system. He starts with the premise that “citizens act rationally in politics … [and] … each citizen casts his vote for the party he believes will provide him with more benefits than any other.” (P. 36).
He also points out that voters can deviate from this pattern; for example, Democrats may like the Green candidate, but feel that he has no realistic chance of winning. They will then vote Democratic, though they may not believe the Democratic candidate will “provide [them] with more benefits” than the Green. However, the idea is not to defeat the Green but the Republican, who espouses none of the ideals the Democrat favors. In this case the rational man votes in his interests but against his preference. (Pp. 48-49).
From voting, Downs moves to governmental decision-making, which, he says, is based on the same concept as that of economics: the “maximization of social welfare.” (P. 51).
He then begins the second part of his book by turning to a discussion of the idea of uncertainty, which he defines as “the lack of sure knowledge about the course of events.” (P. 81). Uncertainty, and the fear it generates, is a powerful force in the political arena.
No less important is party ideology – the position a political party takes on issues, and with which it becomes identified. Today, rightly or wrongly, Democrats are generally seen as pro-labor, pro-choice, pro-education, pro-national health; a party of the poor and middle-class. The Republicans are generally seen as pro-business, pro-life, pro-home schooling; a party of the wealthy elite. These two opposing viewpoints, which we might boil down to a simplistic “people vs. money” slogan, are ideologies. In order to make party ideology work on economic lines, Downs says it must “bear a consistent relation to its actions and … develop without repudiating the party’s former acts.” (P. 115).
Party ideologies are not static, though; they change over time, and tend to “converge upon the center.” (P. 140.) Over time (as we’ve seen recently in America) voters may come to believe that there is no difference between the parties, a belief which, at least in the U.S., is flatly wrong. However, if we take the economic model into account, then the similarity is neither accidental nor unpleasant to either side. Each wants to appeal to as many voters as possible, so the ideologies become almost identical. This is no accident: “…fostering ambiguity is the rational course for each party in a two-party system.” (P. 141).
In the next two chapters, Downs discusses the problems of maintaining rationality under coalition governments. Here, because a coalition doesn’t represent a single viewpoint, a voter may have significant difficulty casting a meaningful ballot; i.e., he, he will not make a “rational decision.” (P. 163).
The final sections of the book deal with information, and how voters can become, and remain, informed. While professional politicians have access to “unlimited amounts of free information,” the average voter does not. Getting this information means an investment of both time and money on the part of the voter. He may not choose to make that investment, because the effect of one individual vote is vanishingly small.
Downs finishes the book with a recap of his theory, but I’d like to end with a startling conclusion that he makes about the political process: He says that “true political equality is impossible even in a democracy as long as 1) uncertainty exists, 2) there is a division of labor and 3) men act rationally.” (P. 259). In other words, when men act in their own best interests without regard to others, equality becomes nothing more than a dream. However, the economic model is a viable method for examining government.

Downs, Anthony. An Economic Theory of Democracy. New York: Harper and Row, 1957.

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