Democracy, Bureaucracy and Public Choice

Economic Approaches in Political Science

Patrick Dunleavy

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317867227
• Edition: 1
• Topic: Politica e relazioni internazionali
• Subtopic: Politica

First published in 1991. This book initially offers a critique of some key rational public choice models, to show that they were internally inconsistent and ideologically slanted. Then due to the authors' research the ideas are restructured around a particular kind of institutional public choice method, recognizing the value of instrumental models as a mode of thinking clearly about the manifold complexities of political life.

Chapter 1

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INTRODUCTION: INSTITUTIONAL PUBLIC CHOICE THEORY AND POLITICAL ANALYSIS

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In the last twenty years more and more social scientists have begun using concepts and methods derived from economics to explain political phenomena. A new field of research has grown up which attempts to model collective decision-making in liberal democracies much as conventional economists analyze consumers' and firms' behaviour in private markets. This approach is variously known as ‘political economy’ (because it straddles the disciplines of economics and political science); ‘public choice theory’ (because it focuses on public or collective choices as opposed to the private choices of individuals analyzed by conventional micro-economics); or ‘rational choice theory’ (because it develops from the assumption that people are rational actors). There is a basic cleavage within public choice between the more abstract modelling work which I term the ‘first principles’ literature, and the more applied work which I term ‘institutional public choice’.

First principles analysis uses techniques such as game theory and algebraic economics to analyze multiple puzzles about individual behaviour, or to make sweeping assumptions about how large groups of people behave in order to explore a whole society's development. A great deal of this literature does not connect well with the traditional preoccupations of political science. The abstract conjunctures which are modelled are often so stripped down, so uncomplicated and so unambiguously specified, that in many cases it is hard to think of analogous political situations. Even when reasonably close-fitting empirical examples can sometimes be found, translating ‘real life’ into ‘first principles’ analysis is so difficult that we end up able to explain only small slices of the political process disconnected from each other. This literature has added to the political science repertoire some interesting ‘apt illustrations’ and some important insights into isolated pieces of decision-making (for example, Tzserbelis, 1990). But it has not otherwise changed the ways in which political scientists picture the continuous operations of political institutions, nor defined any distinctive picture of the whole political system.

Institutional public choice has had a much broader impact, both on political science and on practical policy-making. A substantial body of work now offers a coherent picture of almost all aspects of the political process and government institutions. Writers such as Mancur Olson, Anthony Downs and William Niskanen do not use very complicated first principles reasoning, nor describe only the behaviour of abstract algebraic entities. Instead, they offer a compelling, applied and relatively detailed account of how the core processes of liberal democratic politics operate. These writers and their imitators and critics have analyzed why people join interest groups, how voters choose between parties at election time, how coalitions form in committees and legislatures, how bureaucracies make policy and how sub-national governments deliver policy outputs to citizens.

THE STRENGTHS AND LIMITS OF PUBLIC CHOICE

This book has three somewhat paradoxical aims: firstly, to broaden awareness of the scope and power of institutional public choice accounts; secondly, to criticize these models by exposing their unspoken and contestable assumptions and right-wing leanings; and thirdly, to reconstruct key public choice models so as to demonstrate that a properly grounded instrumental account need not produce these sorts of conclusions.

The strengths of institutional public choice theory

These insights have seldom been set out in an accessible, compelling and clear-cut way. Most introductions to the field have been written by enthusiastic propagandists of the genre, usually economists, who have concentrated far more on ‘first principles’ elements than on the areas most useful to political scientists (Mueller, 1979, 1989). When applications to empirical political contexts have been made they are generally crudely specified, and show little awareness of or openness to political science research carried out from alternative perspectives (Tullock, 1976). At the same time, the specialized expertise needed to enter the public choice field has created a considerable barrier to analysis by outsiders. Some outside authors have attacked public choice theory's values and philosophical orientation, rather than engaging in any detailed debate with the views being challenged (Self, 1985, pp. 47–8; Etzioni, 1988; Hindess, 1988,1989). Only a few introductory surveys by political scientists avoid these twin dangers – and they are chiefly concerned to expound public choice work rather than to probe its limitations critically (McLean, 1982, 1987; Laver, 1981; Abrams, 1980).

As a result it is still very common outside the United States for political scientists who do not themselves use public choice methodology to dismiss it as of marginal interest for the discipline as a whole. Even in the US the prominence of public choice in leading political science journals is based on a fairly small group of authors and studies. Public choice theory is widely seen by political scientists as simply another abstruse specialism produced by overdeveloping particular techniques without putting equal effort into showing how they can add to our substantive knowledge about central topics in political life. Public choice may be a legitimate field to work in ‘if you like that kind of thing’, but it is still not regarded as a basic intellectual position which has to be regularly or seriously considered in describing the behaviour of political systems and structures. This stance sits very oddly with the diffusion of soft public choice concepts across most areas of contemporary political science, and the extensive acceptance of public choice reasoning and conclusions by other policy-relevant professions and some types of politicians. By setting out institutional public choice theory in a convincing way I hope to show why its assumptions and conceptions have increasingly come to dominate both a large area of ‘forefront’ research in political science and many policy debates in practical politics.

Public choice premisses

In the existing literature these assumptions are presented as few, parsimonious and uncontentious. The ‘rational actor’ model at the heart of all public choice accounts assumes that:

• people have sets of well-formed preferences which they can perceive, rank and compare easily;

• their preference orderings are transitive or logically consistent, so that if someone prefers socialism to liberalism, and liberalism to fascism, then they will also prefer socialism to fascism;

• people are ‘maximizers’ who always seek the biggest possible benefits and the least costs in their decisions. They act rationally when they pursue their preferences in an efficient manner and maximize benefits net of costs. On this formal definition, someone behaves ‘rationally’ if they optimize their preferences in a consistent fashion, however substantively ill-advised we may judge their preferences to be; and

• people are basically egoistic, self-regarding and instrumental in their behaviour, choosing how to act on the basis of the consequences for their personal welfare (or that of their immediate family).

Public choice exponents commonly defend these premisses as uncon-troversial and not implying any substantive value judgements – even when the argument that people are basically self-interested in their behaviour is held to apply irrespective of the social role that people may be occupying (for example, as voters, interest group members, politicians or bureaucrats).

However, there is an increasing recognition even among economists that their notion of ‘rational economic man’ (or woman) is too often ‘introduced furtively’ and left under-specified. The rational actor is usually ‘an abstract and shadowy figure’ who ‘lurks in the assumptions’ rather than being explicitly described (Hollis and Nell, 1975, pp. 53–5). In addition to the assumptions above which are formally described there are typically a whole series of additional subtle and diffuse premisses which are not often explicitly acknowledged. In consequence non-expert readers may have little idea what these hidden assumptions are, or how much they skew or limit public choice analyses. For example, I show in later chapters that virtually all public choice theories involve very restrictive premisses.

On the demand-side:

• they assume that people possess a great deal of prior knowledge in making political decisions, equivalent to assuming that they are perfectly informed; and

• they require people's preferences to be fixed exogenously and to be unaffected by their participation in the political choice processes being analyzed.

On the supply-side:

• they make ‘heroic’ assumptions about the extent to which collective entities (such as firms, parties, or bureaucracies) can be treated as unitary actors for the purpose of analysis; and

• they model political decision-makers as actors with only a single maximizing course of action open to them.

The mechanisms for coping with these and other problems remain hotly contested in debates about the methodology of conventional economics (Blaug, 1980; Caldwell, 1984). However, translating these assumptions into political contexts – applying them to choices about issues remote from people's everyday experiences and made in collective processes radically different from economic markets – clearly raises difficulties of a new order of magnitude.

The conservative value-bias of public choice theory

Implicit or unacknowledged premisses largely account for this characteristic political linkage. Over the last two decades institutional public choice has played a significant role in the development of political debates in the United States, Britain, Australia. New Zealand and Western Europe. It has been taken up enthusiastically by the key intellectuals and pressure groups who have drafted arguments, policy proposals and speeches for strongly conservative politicians such as Ronald Reagan and Margaret Thatcher. Throughout this book I use the description ‘new right’ as a useful summary label for their combination of economic neo-liberalism and social conservatism which seemed so politically successful in the 1980s (King, 1987, Chapters 2 and 7; Green, 1987; Barry, 1987a; Hoover and Plant, 1988). Particularly important in securing a rapid breakthrough for new right approaches has been public choice theory's fusion of positive theory and empirical work on the one hand, and of prescriptive theory and policy analysis on the other. Long-running right-wing suspicions of liberal democracy have been rephrased in intellectually attractive terms, considerably extending their social appeal and mass media plausibility.

Academically also, institutional public choice work has formed the core of a coherent and influential new right theory of the state (Dunleavy and O'Leary, 1987, pp. 72–135). Perhaps as important, however, the elements of institutional public choice which have most extensively crossed over to influence the development of mainstream political science have been preponderantly right-wing in their political coloration. A subtly skewed development of knowledge about liberal democratic processes has been fostered by the overwhelming predominance of new right and neo-con-servative thinking amongst exponents of public choice theory. Illuminating those public choice concepts and implicit assumptions is a key objective of this book.

Public choice methodology, however, is not intrinsically tied to right-wing political values. There have been some smaller counter-currents in the public choice literature, developed by authors who do not share the views. Some key writers on institutional public choice have been pluralists (such as Downs and to a lesser degree Tiebout) or élite theorists (such as Olson in his early work). Most recently, the potential for reaching diverse conclusions from public choice methods has been demonstrated by the growth of analytical Marxism whose key exponents use rational choice techniques to clarify, extend and revise the central tenets of Marxist theory. Much of this work is first principles analysis (for example, Roemer, 1986; Elster, 1985, and see O'Leary, 1987a). But there are also important contributions to institutional public choice, especially in explaining the behaviour of trade unions, labour movements and socialist parties (Waller-stein, 1989; Przeworski, 1985; Przeworski and Sprague, 1986).

My own view is that the political values previously associated with public choice theory were only contingently linked to the models developed, in many cases on the basis of mistaken or unanalyzed assumptions. Despite the problems which beset the application of economic concepts and methods in political contexts, the rational choice approach is too powerful an analytical tool-kit to neglect or abandon. Instead, the most interesting intellectual challenge is selectively to remove or alter contestable premisses in rational actor accounts and to examine the implications of replacing them with acceptable assumptions. The new or reconstructed models thus developed remain within the boundaries of a public choice approach, but yield radically different explanations of political phenomena.

To highlight the contestable and partial quality of these revised accounts, I describe them as instrumental models – indicating that they start from assumptions of individually self-interested behaviour. Instrumental models of this kind will never capture the whole of social behaviour adequately. They can only be sensibly used as theory-advancing and information-economizing devices, to see how far we can go with relatively parsimonious and deductively constructed theories before needing to shift gear to a more inclusive or descriptively compelling form of analysis.

The individualistic basis of public choice

Outside critics frequently allege that the individualism of public choice presents a fundamental intellectual obstacle to any effort at reconstruction of the type made here. On this view rational actor premisses are inherently individualistic, and incapable of including structural pressures and constraints on people's actions. Yet, as the Austrian school of political economy has never ceased to complain, individual actors in conventional neoclassical economics are presented simply as disembodied bearers of preferences whose decision-making behaviour is strikingly homogeneous once we can ascertain what their preferences are.

Conventional economics is not about choice, but about acting according to necessity. Economic man obeys the dictates of reason, follows the logic of choice. To call this conduct choice is surely to misuse words, when we suppose that to him the ends among which he can select, and the criteria of selection are given, and the means to each end are known… . Choice in such a theory is empty. (Shackle, 1969, pp. 272–3)

Indeed, public choice theory, as much as conventional micro-economics, is the opposite of individualistic in brooking no diversity in the decision procedures followed by actors. In the neo-classical system agents are treated as if they are mindless automata who respond in a fully programmed fashion to external stimuli such as price and quantity signals' (Jackson, 1982, p. 87). Hence reconstructed public choice models can be produced which are perfectly consistent with a structuralist view of the determination of social behaviour (see Blau and Merton, 1981).

The instrumental accounts of group-joining, party competition, bureaucratic operations and sub-national government developed in the rest of the book are also radical models. They are based on realist and critical values and perceptions which stress the continuing inequalities of contemporary capitalist societies and the limitations and imperfections of liberal democracies. These radical accounts are intended to confront or contest key elements of new right and pluralist thinking based upon public choice methods. They also lead to conclusions sympathetic to democratic socialist positions in practical politics. Theory construction cannot take place in a vacuum, but the political values which provided the initial basis for these models need not limit their applicability or appeal. The arguments set out here are themselves open to being reconstructed as well as empirically falsified....

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Contents
• Figures
• Tables
• Preface
• Acknowledgements
• Chapter 1 Introduction: Institutional Public Choice Theory and Political Analysis
• Part I Democracy
• Part II Bureaucracy
• Bibliography
• Author Index
• Subject Index