Public Choice Theory

banaman

We were introduced to this in Social Policy the other day.
I wondered what anyone else thinks about it?
Its main tenets seem to be
1) everyone only acts to maximise their own intersts
2) politicians and bureaucrats only interest is to stay in power
3) politicians will NEVER cut the budgets for fear of upsetting the voters
4) voters are "consumers" of politics and have no ideological interests
5) under this analysis the race for the centre ground is inevitable

I think its a pretty chilling view of both my fellow citizens and our political system. But since it originates in the US perhaps such a Hobbesian view of human nature is not too surprising.

Sand

1) everyone only acts to maximise their own intersts
2) politicians and bureaucrats only interest is to stay in power
3) politicians will NEVER cut the budgets for fear of upsetting the voters
4) voters are "consumers" of politics and have no ideological interests
5) under this analysis the race for the centre ground is inevitable

1) True, but how people define their own interests differs from person to person. An even more cynical view might argue that even altruistic actions are self centered - theres a social payoff in terms of kudos/respect and a "holier than thou" payoff too.

2) Undeniably true - politicians will do anything and everything short of getting caught to hold onto power. Exceptions tend to prove the rule, in that theyre so celebrated or despised.

3) They will, but only when absolutely forced to will they let themselves be caught cutting budgets. Usually theyre pretty clever in hiding it and tend to focus cuts on small, electorally unimportant sectors of the population - pensions are almost never cut for example, whilst grants for some Traveller arts outreach program will vanish without a thought. I would have said that its more readily apparent that politicians will almost never raise taxes - the middle class tend to pay at the top rate so they resent it badly. It doesnt make electoral or economic sense in almost all cases.

4) Yup, this is true. Idealogical parties tend to have fringe support. Non idealogical parties like Fianna Fail, Fianna Gael and Labour best represent the interests of the middle class who are the king makers in politics. The middle class tend to be very conservitive in that they dont like revolutions, and as in point 1 tend to vote for the party that offers them the best deal. Hence fringe idealogical groups that only promise them blood, sweat and tears tend to do badly.

5) Yup - radical leftist socialism is a good deal for the poorest in a society, but capitalism has done a good job of raising living standards to the point where the poor are a minority, and the middle class are a vast and comftable majority. Radical free market idealogy is a good deal for the richest, brightest and most energetic in society but again these are a minority. The middle class wants economic freedom, strong property rights, low taxes - but they will also take any free deals going - like free education, free healthcare, etc, etc. Its a mish-mash of right and left that basically cherry picks the most advantageous parts of both idealogies. The parties that best manage the resulting system, without rocking the boat, will dominate electorally.

I think its a pretty chilling view of both my fellow citizens and our political system. But since it originates in the US perhaps such a Hobbesian view of human nature is not too surprising.

Well, people are humans, not angels or saints. History alone tells us that.

Public choice theory should be judged by the accuracy of its predictions not how realistic its assumptions are.

fly_agaric

banaman wrote:

I think its a pretty chilling view of both my fellow citizens and our political system.

Why? Is the exact opposite of some of those assumptions (generalisations??) much better?

Would you prefer all politicians were idealists say, and the public were motivated in their political choices mainly by ideological purity?

That sounds very dangerous to me!:D

DadaKopf

fly_agaric wrote:

Why? Is the exact opposite of some of those assumptions (generalisations??) much better?

Would you prefer all politicians were idealists say, and the public were motivated in their political choices mainly by ideological purity?

That sounds very dangerous to me!:D

I've been meaning to read up on public choice theory for quite a while, and I suppose this thread gives me the opportunity!

Fly_agaric, I'm not sure what you mean in this post, but I'll go back to banaman's first post.

I've been thinking about the 5 points that banaman made to summarise PCT. They could also be used to describe Marxian analyses of the state around the same time PCT emerged. By the 1960s, analysts argued that states were caught in a vicious cycle of decreasing legitimacy and increasing expenditure.

Around this time, political theory decisively shifted from what government ought to be (normative), to what government actually is (positive theory). Within the Marxian school of thought, well-known explanations of democratic dysfunction included the theories of Nicos Poulantzas, Ralph Miliband and Claus Offe. Other much more well-known theories, less influenced by Marxism, are Jurgen Habermas' Legitimation Crisis and the more liberal approach, Overloaded Government, associated with David Held.

Those 5 points outlined by banaman merely describe problems faced in modern democracies, they don't encompass a theory, except, perhaps for point 4.

PCT comes from a very particular perspective. Again, to examine how democracies actually work, these theorists applied economic theory to the workings of government. Their starting premise is the market - that individuals in a collective acting in their self-interest leads to the betterment of all. Assuming that human beings are rational agents who work to maximise their self interest, they found a paradox. They could not explain why individuals might make a rational choice to not maximise their self-interest in the larger interests of the collective.

Why would a fisherman choose to fish less so as not to deplete fish stocks if it meant that he would be losing out in relation to his competitors? Rationally speaking, his allegiance would be to himself first, and his fellow fishermen second. So this would explain, according to PCT, why it's very difficult to establish institutions to police fishing zones in the public interest.

So, PC theorists 'discovered' that while the market may be very good (efficient at least) in distributing private goods, it's terrible at distributing public goods.

In a democracy, voters are rationally less likely to vote because they know that their vote has only an infinitesimal chance of changing anything. By contrast, a CEO of a corporation would know that, with his money and professional lobbyists, he's more likely to produce a favourable outcome. Furthermore, for all kinds of reasons that have nothing to do with public service, bureaucrats and politicians are much more likely to go with the CEO than the voter because the CEO will offer more of what he wants, for example, prestige, money, future job opportunities etc.

Ultimately, PC theorists would conclude that democracy doesn't work the way people think it does, and that we shouldn't be surprised. They analysed specific features of democracy - such as the US constitution, voting systems etc. - and there are no singular PC theories of democracy, but there are PC studies of particular aspects of it.

A related set of theorists would be the interest group political scientists of the 1960s, which included Seymour Martin Lipset and Robert Dahl. Remarkably, they argued that the fall in public participation in politics (measured as election turnout) was a sign that democracy was working so well! But Dahl famously changed his mind in the 1970s when he realised that the threat from corporate power was so great as to cause the "dysfunction of democracy" in America.

PCT analyses focus on what is 'rational' - what, in any given situation, would a 'rational actor' do to maximise their own interests? A politician, it follows, wants power. A CEO wants money. An industrial worker wants money. A bureaucrat wants influence. And so on.

But I have many problems with the assumptions and premises of PCT, even though it seems a very useful and insightful theory.

First of all, PCT is presented as being free from ideological underpinnings. PCT is a 'positive science' which examines how institutions actually are. But looking at it more closely reveals its ideology.

Firstly, it assumes the free market is good, that is maximises the interests of all, and that economic analysis is sound. Others contest this, in which case, this is an ideological bias.

Secondly, as a corollary to this, PCT implies that government is bad. Or, more specifically, small-government is less bad than big-government. This is a huge bias, since, when used to justify particular policies, its recommendations are pre-determined. PC theorists weren't positively assessing how government actually works, they were using economic methodologies to make a normative argument about how government ought to work. PCT is therefore a highly uncritical approach that works to preserve the status quo.

Thirdly, it ignores power. One central aspect of Marxian and post-modern analyses of democracy is power - how it operates and its effects on a declared (rather than implicit) democratic ideal. Marxian theories may have foundered for reasons such as their unit of analysis - class - as class became less decisive as other social formations, but at least they put power-relations and interests at the heart of their analyses. But PCT replaces interest (a more holistic concept) with preference (a more shallow concept). PCT ignores power by explaining people's and institutions' decisions as purely rational, based as it is on the 'Rational Actor Model' - an individual will make decisions once they have weighed up the alternatives and assigned a preference to each.

Problems with the RAM are that

• it assumes that decision-makers have access to all the information they need to make a sound decision;
• it assumes that individuals have the cognitive ability to weight all choices against the others
• and it assumes that an individual is aware of their choices.

But in a stratified society, not only will particular actors have in interest in preventing particular groups/classes from being capable of making sound decisions, but existing power-relations in a society will over time socialise groups in a way that creates barriers to sound decision-making even when such barriers are not explicitly put in place by other, more powerful, rational actors. So, PCT simply side-steps this issue (and I would imagine this is ideologically driven). But by doing so, it contradicts itself, revealing its essential absurdity: how society and government actually work isn't how they think it works - how can people be 'rational actors' if they are insufficiently informed to make rational decisions, which it encoded in power-relations in a society, which PCT ignores?

Or as Amartya Sen wrote on the absurdity of PCT:

“Can you direct me to the railway station?” asks the stranger. “Certainly,” says the local, pointing in the opposite direction, towards the post office, “and would you post this letter for me on your way?” “Certainly,” says the stranger, resolving to open it to see if it contains anything worth stealing.

I don't dispute the observations in banaman's post that politicians won't cut taxes in case they lose votes - however, since the 1980s, politicians have regularly cut government spending in response to the problems outlined above (overloaded government/legitimation crisis). Debates over budgets are now over spending priorities rather than volumes per se. And politics post-Cold War is moving towards the centre, but that says more about the social impacts of changes in the political economy, which politicians must respond to. Since today's political economy is dominated by neoliberal market discourse, the net effect has been a widening of the middle classes and an increase in inequality between the super-rich and very poor. With the collapse of distinct ideological camps - represented by left & right political parties - new identity politics and a rise in politics below and above the state (and hemorraging of political party members), parties have no other strategic option but to move toward the centre. But I don't think PCT is capable of explaining why this is so, and what is really happening.

Are citizens consumers of politics? Maybe this needs more discussion. I'd like to know more about this sub-branch of PCT. I assume this means that citizens see their role in society now as customers of public services rather than participants in a society. The locus of power in society has shifted toward private institutions rather than public ones. Consequently, democracy has been hollowed out. The result is that people have never been so vulnerable in modern history.

fly_agaric

DadaKopf wrote:

Fly_agaric, I'm not sure what you mean in this post, but I'll go back to banaman's first post.

Don't worry about it. Just having some pathetic childish fun.:) I'll stop now.

I've never heard of "public choice theory" and don't know if banaman's summary [the part of it not having an out-of-nowhere pop at the US of A;)] is accurate, half right, or completely wrong.

Just wondering, what places are you generally referring to in the last 2 paragraphs ("democracies", the "West", Western Europe and the US, the "Anglo" countries -US/UK/IRL/AUS/CAN)?

m1ke

I think many of the 'main tenets' of PCT seem very reasonable, depending on whatever it is you are researching. Obviously the propositions don't all apply at all times and I don't think PCT is even intended to explain all actions and decisions. Instead, it is a pretty powerful mid-range theory that is very effective for uncovering why government policies are often sub-optimal. Its main propositions are probably hold true, most of the time.

In response to some of DadaKopf's criticisms:

PCT does not assume the 'free market is good', it does not even assume that a perfectly functioning market, free of market failures is good. Even the majority of economic theory does not assume the free market is good, is assumes that perfectly functioning markets free of market failures allocate things more efficiently than otherwise. PCT is more concerned with the public sphere and assumes that public goods are distributed more efficiently in the absence of 'government failures' (similar to market failures but in the public sphere). This is not really a broad ideological position, it is just one very specific underlying assumption.


PCT does not imply that government is bad or even that small-government is better than big-government, indeed many scholars in this tradition have called for strong government in order to defeat special interest groups that would otherwise had a negative effect on society in general. These interest groups can inhibit the efficient allocation of public goods (See Olsons Logic of COllective Action/Rise and fall of nations).

PCT does not focus on power, but interests and preferences are often connected in some way with power. If you extend the theory too much, it looses all predictive power, and PCT has a lot of applications. Marxian and postmodern / critical theories have really disappointed in terms of predictive power.

RAM can be very useful but it is only as strong as its underlying assumptions. When they are chosen carefully, usually the end result can explain much of the world, especially when it aggregates the actions of many individuals - this is where its success lies, and it has been far, far more successful and beneficial to human kind than Marxian/postmodern analyses.

johnnyskeleton

DadaKopf wrote:

In a democracy, voters are rationally less likely to vote because they know that their vote has only an infinitesimal chance of changing anything. By contrast, a CEO of a corporation would know that, with his money and professional lobbyists, he's more likely to produce a favourable outcome. Furthermore, for all kinds of reasons that have nothing to do with public service, bureaucrats and politicians are much more likely to go with the CEO than the voter because the CEO will offer more of what he wants, for example, prestige, money, future job opportunities etc.

Could it not then be argued that, in the Irish context, the lobby group rules supreme, and voting is just a secondary consideration?

For example, could it not then be argued that if there are lobby groups for a greener environment, better health, a higher standard of education etc, then they would produce better results than voting would.

Because if that is the case, and if people recognise it as such, could not people put their money where their mouth is (or their time, influence etc). What I'm saying is that rather than spend money supporting minor political parties, or protesting, why not pay a lobby group to canvass for that particular aspect of government?

DadaKopf

Then there would be no democracy. The richest and most powerful will therefore always reign supreme.

In the Irish context, I would say the 'lobbyist' and the 'voter' reign supreme because of our voting system. PR-STV, IMHO, is the most democratic because any individual voter or small group can genuinely influence politicians if organised enough. However, it is also a system open to abuse by powerful lobby groups.

As always in democratic theory, it is a question of balance, and the right mechanisms for the job.

But I think this discussion is already veering away from PCT. Suffice it to say, the issues PCT deals with are important, but its conclusions are crazy.