53 pages • 1 hour read
An Economic Theory of Democracy
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Themes
Rationality and Uncertainty
Economic theory assumes that all actors are rational, to the extent that certainty can be achieved in the real world. The correlation between rationality and uncertainty is therefore an essential theme in Downs’s application of economic theory to democracy and political behavior. His approach runs coherently through his treatise, and requires the continual assertion of his frame of reference. This is particularly significant because a choice-based study of human political behavior must embrace more cause-and-effect uncertainty than economic theory is required to do. Downs performs a balancing act to show that the principles of economic theory can be applied to rationalize the highly variable and uncertain field of political science. Bringing his economic, empirical background to the study, Downs seeks to embrace uncertainty as a key part of his paradigm rather than as a barrier to achieving one.
Throughout his book, Downs acknowledges that not all people act rationally all the time, that irrational behavior does not always preclude beneficial results, and that no understanding of rationality can inform the ultimate goals of political action. Despite these limits, his argument relies on the premise that a rational voter will seek the best material or ideational benefits possible from a government, and a government will maximize its vote share in order to enjoy the benefits of acquiring and holding office. Under “ideal” conditions—i.e., those with certainty—voters will know the government’s record on all relevant issues, evaluate how that record has impacted them personally, and engage in a delicate calculation of how contending political parties might have performed under similar circumstances. Likewise, a party should know everything about voter preferences and the relative weight they assign to various issues, and therefore adjust their platform to build a majority, or if necessary a coalition of minority positions that can still add up a majority of the electorate.
Downs’s “positive” theory relies on his real-world acknowledgment that citizens and governments operate with severe limits on the ideal expression of their rational functions. All rational actors deal with uncertainty, and an election magnifies these conditions. No one can reliably predict whether a government will be able to live up to its promises, even if it is being sincere, a government or party cannot anticipate the results of an election, even if they engage in an expensive and sophisticated polling effort, which at its best captures a snapshot of opinion that is transient at best and inaccurate at worst. The challenge then is to rescue a model of rationality from suboptimal decision-making conditions. Governments must find ways of discerning majority opinion without having to undergo the impossible task of consulting the majority, and voters must make an informed decision without needing to learn every detail about party platforms and be able to run experiments in their heads over how each party is likely to fare in power. For all the challenges to achieving a clean and coherent theory, Downs is able to conclude with a readily-testable set of propositions. With this approach, Downs grounds his theory in the testable empiricism of science and mathematics, moving away from the traditional methods of social sciences. Declaring a number of hypotheses, he argues that, with respect to parties and governments, a two-party system will feature ideological convergence, even as they represent themselves as polar opposites. However, this “makes it more difficult for each citizen to vote rationally; he has a hard time finding out what his ballot supports when cast for either party” (136). A multiparty system will feature real ideological diversity since the winning party needs only more votes than the next party, which may fall well short of a majority. Citizens will vote for a party whose most recent record suggests the ability to deliver, except in cases when they will vote for one party as a signal to another to change its behavior.
Uncertainty is insurmountable but acknowledging its effect lays the groundwork for the government and citizenry to communicate their preferences to each other, however imperfectly, and for political science to improve its understanding of apparently infinite variable.
Interests and Information
Downs’s book engages closely with the ways in which the interplay between interests and information impacts potential voter behavior. He looks in close detail at the ways in which information can determine self-interest, and vice versa, to trace a complex web of observable behavioral trends. He also shows interest and information to be on a cost-benefit relationship with each other, a key application of economic theory. Downs also challenges the qualitative value judgments of political theory which held that a more informed vote or voter held more moral value than a less informed one. By applying a quantitative, rational approach, Downs’s argument is a democratizing one.
Downs acknowledged that traditional ideas of democracy—especially in the 1950s, relied on value judgments around the idea of the informed voter, an ideal citizen who understands the interrelationship of public affairs and their own lives. A modern society has such a plethora of interests and experiences that without a substantial commitment by the citizenry across each sector of politics and the economy, there is a real danger of people not enjoying real representation even if the composition of the government technically embodies the will of the majority. With each election cycle, there are intense efforts by both public and private agencies to make voters better-informed and presumably more inclined to vote. Such efforts especially target groups that traditionally vote in smaller numbers, such as young people and traditionally marginalized groups, reflecting the hope that greater engagement will help to reverse their disadvantaged position. Downs gives no indication that he opposes this project on normative grounds, and his own advocacy work suggests that he would strongly support it.
Yet, since the theory operates entirely within the dispassionate framework of rationality, Downs arrives at some challenging conclusions on the relationship between voter interests and the efforts to procure the information with which they can make an informed decision. The first is that voters are busy. Since parties generally agree on the basic structure of government and the provision of fundamental government services, the differences between one party and another are likely to be marginal. In the meantime, the costs to voting may be high, especially for populations, an injustice which presumably endures because it enjoys bipartisan support. The voter does not merely measure their interest through voting-as a person with considerations beyond politics, they must measure the overall costs of engaging in politics against the benefit they are likely to accrue. Downs concludes that for a large portion of citizens, the tradeoff is simply not worthwhile, and so it is entirely rational for them to remain ill-informed. In this, his application is rationalization has a humanizing and compassionate effect. As Downs points out, “ignorance is not the result of mere apathy; rather it stems from the great cost of obtaining enough information to exert effective influence” (253). Voters may have an interest in voting to affirm the basic value of democracy, even if democratic norms are barely recognizable in day-to-day practice. If anything, there may be a normative benefit to limiting voter knowledge so that they may retain a faith in egalitarian democracy which the facts do not sustain. There are few, if any, sources of information which are not parroting the views of the government or other elite interests, a citizen might be better off looking out for themselves rather than taking the advice of those who would ultimately direct them to someone else’s benefit.
Structures and Incentives
Downs’s theory of politics based on economics was designed to escape the limitations of traditional political science research, where the findings were limited to the particulars of each case studied. For example, an expert on the Constitutional law of the United States can say very little about the United Kingdom or Germany despite their vast wealth of knowledge. Downs instead seeks a universal theory of human behavior in democracies, abstracting from all particulars to illustrate a concept of democracy that needs nothing more than competitive elections to provide a test for real-world examples. In order to establish a universal model, he does not ignore basic structural variations which have a profound impact on the implications of the model; they must be embraced by it. The main difference that he examines is that between a two-party system, like that which prevails in the US and the UK, and a multiparty system, as one sees in Israel and Germany. In a two-party system, the winner is presumably the one capable of winning 50% of the electorate, plus one vote. Given the breadth of the electorate and the short list of choices, parties have an incentive to win as broad a base of voters as possible, even as they paint the other side as reckless extremists. This means that there will be significant overlap in party platforms, while the parties conceal this in obscure ideological formulations so as to maintain the illusion of a more decisive choice. In a multiparty system, more genuine ideological rivalry is likely to emerge because parties only need to win the most votes, not a majority. This means they can win by mobilizing a smaller and more passionate base of voters, who furthermore recognize that other parties are similarly motivated, raising the prospect of a dreaded ideological opponent winning the election. These parties have to form coalitions to run the government, establishing the legislature as an intermediary between the voters and the government, which “makes rational behavior difficult for parties as well as voters…if citizens’ opinions are widely diversified, voters may be driven to cast their ballots purely as preference indicators, thereby leaving the whole job of designating a government to the legislature” (156). Voting thus becomes important due to the multiplicity of possible results and less important insofar as the voter has no way to tell how their vote will translate into the final composition of the ruling coalition.
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