Anthony Downs, An Economic Theory of Democracy (1957).

Main Argument:

Downs’ goal is to provide a set of behavioural rules of operation for democratic government [3], arguing that previous economic theories of government incorrectly leave out the incentives of the people in government and ignore the fact that the state, as a unit has preferences.

 

 

== Notes ==

 

 

General Idea:

 

– The two basic postulates of the theory are that: parties formulate policies to maximize votes, and citizens behave \”rationally.\” – The rationality involved is a \”selfish,\” \”means\” rationality, not a rationality of ends  [5, 27]

– The theory is, then, \”descriptive\” (Downs calls it \”positive\”), not \”prescriptive\” (\”normative\” is his word)

– The \”good life\” which Downs democratic government provides thus comes, not from natural law or from the moral nature of the citizens, but, presumably, from the \”desires\” of the voters, expressed in an elaborately defined system of free elections [24-25]

 

Chapter 1:

Simplification for the prediction of behaviour [4] as long as:

  1. Calculate the most reasonable way for a an actor to achieve his goals
  2. Assume the way the actions will be selected through the principle of rationality [Definition of rational is non-normative; taken to mean “efficient” [5]; Have to distinguish error from irrationality [9]

 

Rational behaviour:

  1. Always makes a decision when confronted with a range of alternatives
  2. Ranks alternatives by preference
  3. Has transitive preferences
  4. Chooses from among possible alternatives by way of his preference ordering
  5. Makes the same decisions when the same set of options are provided

 

Requires some clear end goal and cost-benefit analysis [6]

Rational behaviour requires a predictable social order (i.e. context has to remain stable)

 

The Structure of the Model:

– Every government seeks to maximize political support [11]

– There are institutional rules that dictate some government behaviour, but economically, there are no limits to the government’s power [12]

– Can be described as a study of political rationality from an economic point of view [14] –> from what we know about political behaviour, we should be able to draw a set of assumptions

 

Chapter 3: The Basic Logic of Voting

 

RC doesn’t preclude altruism despite the self-interest axiom

– voter can’t judge exclusively based on party’s previous record, has to project what party will do in the future

– has to compare present utility [party in power’s performance] with expected outcome

 

Judgements:

– differences in parties’ platforms

– previous running records

– suspected approaches to policy

 

Uncertainty:

– voter will base decision on areas where he can perceive differences [that are pertinent to him] between parties

– party evaluation: information one has on policies + relation of those policies and his conception of the good of society

 

Two v. Multi-party systems:

– rational voting more straight-forward in two party

– multi party may encourage strategic voting to prevent worst possible option

– multi-party requires voter to evaluate preferences of other voters

 

Chapter 15: Comment of Economic Theories of Government Behaviour

 

Axiom 1: government economic theory is inconsistent with private sector

Axiom 2: cannot deal with all forms of government by means of a single economic theory –> would be self-contradictory  or too general to be meaningful [279]

 

Traditional Theory of Government:

– Government disturbs self-regulating role of economy

– Government is solely about bettering social welfare

 

Problems with the Theory:

– Doesn’t take into account self-interest [282]

– Perfect competition mode show how under certain conditions, society gains from selfishness, profit maximization

– Fail to assign motives to people in government  –> government has a motive [power seeking, rent seeking]

– Men are not altruists [287]

– Government is an institution run by men and therefore not an machine-like institutions [288]

– Economic theory of government action is actually political theory –> cannot be based on purely economic actions [290]

– Discussion of self-interest does not preclude charity, selflessness or institutionalised efficiency  [291]

– Making government an endogenous variable does not eliminate the possibility of using governmental actions as corrective measures in the economy

 

Chapter 16: Testable Propositions

 

Develops two sets of propositions:

 

  1. Party-Motivations Hypotheses [296-7] –> parties act to maximize votes
  2. Citizen-Rationality Hypotheses [297-300] –> citizens behave rationally in politics

– These are not independent of each other

 

Voter Turnout:

 

Voting is costly–not only because of the information costs mentioned previously, but also because of the physical costs of getting to the polling place and taking time off work to do so. This leads to a conclusion that rational voters will rarely turn out to vote.

 

The benefits of turning out can be understood in terms of the \”party differential\” mentioned previously. But these benefits are weighted by the infinitesimal probability that one vote will determine the outcome. As such, even small voting costs make turnout irrational.

 

Downs seems perplexed by this result, since it clearly predicts much lower turnout than actually occurs. He suggests that voters might turn out simply to support democracy, knowing that democracy cannot survive long with zero turnout. However, Downs fails to recognize that even this \”solution\” fails to resolve the dilemma, since one persons decision of whether to support democracy has almost no probability of determining whether democracy succeeds.

 

See Riker and Ordeshook (1968) for more on this conclusion of zero turnout.