53 pages • 1 hour read
Anthony DownsAn Economic Theory of Democracy
Nonfiction | Book | Adult | Published in 1957A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Part 1, Chapters 1-4Chapter Summaries & Analyses
Part 1: “Basic Structure of the Model”
Part 1, Chapter 1 Summary: “Introduction”
The first chapter begins with the observation that governments are critical in determining the shape of the global economy, but economic theory has not caught up with this fact. The purpose of the book is stated: to provide a theory of rational economic policy for a democratic government, so as to harmonize the workings of public and private actors. Economic theory, Downs states, presumes rationality, the use of reason to direct means toward a given end. In particular, economics seeks to define the ends being sought and the optimal methods of achievement. It is generally assumed that firms seek to “maximize profits and consumers [to] maximize utility” (5). Rational actors need not be rational in every respect, only in that they apply resources toward a goal to the best of their knowledge and ability. When confronted with several choices, the rational person is able to rank preferences and consistently select the best option. Economic theory cannot posit any specific end as rational, only the means of achieving it. Downs lays out the scope of his treatise: his theory will focus on economic and political goals, although human beings can apply other motives to their economic and political behavior. It does not attempt to describe the fullness of reality, but it can still highlight the primary motivations for voting behavior.
Downs lays out the points of his argument. A rational person can be mistaken without being irrational, as an irrational person fails to make calculations in advance or learn from their mistakes. It is not always possible to distinguish mistakes from irrationality in practice, and human psychology is too complex for such simple divisions, but the task of defining rationality is worthwhile despite its inherent limits. Many forms of politically irrational behavior are revealed to be rational insofar as they benefit the person advocating for such behaviors. A standard of rationality is necessary to inform the social order on which a government relies for the basic functioning of the state. Governments want the support of their people and—given the democratic framework that is the basis of the model—they seek out a majority of votes in periodic elections, The winning party will have considerable freedom of action until the next election; while it cannot infringe upon the rights of citizens or the opposition, the theory assumes that this will include considerable power over economic affairs. It is difficult to act rationally in uncertainty, and so rationality is closely linked to the acquisition of information to reduce uncertainty. Much of rationality might pass for common sense, and so the intent is to take some of the existing wisdom and formalize it.
The theory is meant to be descriptive rather than prescriptive, but it does tie in to some important normative considerations. Rather than view the state as an end unto itself or as a mere vehicle for the fulfillment of individual citizens, it attempts to establish the relationship between the good of the citizen and the good of the government, which may jointly generate a concept of social welfare. The theory cannot explain all the specifics, but it can provide a conceptual map onto which the specifics may be fitted. In sum, the purpose of the book is to define a rational theory of political action, “by positing that democratic governments act rationally to maximize their public support” (20). Both governments and voters are presumptively rational and seek benefits from one another.
Part 1, Chapter 2 Summary: “Party Motivation and the Function of Government in Society”
Chapter 2 begins with defining basic terms such as government and democracy. Drawing on work by Robert Dahl and Charles Lindblom, Downs explores the idea of government as an organization with the power to “enforce an orderly settlement of disputes with other organizations in the area” (22). For the purpose of the theory, government has no specific normative purpose and can do anything other than violate the constitution. Whatever their differences, all governments are the ultimate authority in a society and have a monopoly on the legitimate use of coercion. Democracy features a government chosen by popular election for a fixed term with suffrage available to all citizens without a reasonable cause for disenfranchisement. More than one party competes for power, and they do so within the law. A political party is a group of individuals with overlapping interests who seek to use the machinery of government, through election, to advance their common ends. Downs states that his theory assumes that all members of a party have the same goals, a necessary oversimplification in order to portray the party as a rational actor. “The party” refers specifically to those who are seeking to gain and use power, not just those who might share some of their ideas or vote for them.
Rationality presumes self-interest, and Downs therefore argues that party members want the benefits of being in power, and that policy proposals are purely instrumental for keeping them in power. Just as people work because they have to provide for themselves, the fulfillment of social functions is not the primary purpose for someone to serve in government. Self-interest is the real motivator. The rational party member will not benefit themselves illegally, or put their interests ahead of other party members. Thus the best way for the party to advance its interests is to maximize its share of votes. Downs is not principally concerned with norms, but he admits that many of his parameters, such as one vote for every citizen, reflect a norm in favor of majority rule. The model also deliberately ignores several aspects of political reality, in order to test key variables, and so the more categorical statements refer to the model and not the real world. Downs then summarizes his view of “government” as an agency for enforcing decisions, a “democracy” as a government chosen by election, and a “party” as a theoretically singular group seeking power and needing votes to achieve this. This is a positive theory, not normative or descriptive. It seeks mainly to test whether parties act to maximize their vote share, and how to distinguish between rational and irrational behavior in politics.
Part 1, Chapter 3 Summary: “The Basic Logic of Voting”
Chapter 3 states that parties recognize the correlation between governing behavior and voting patterns. A rational citizen will vote for whomever they believe will benefit them the most. Everyone defines their benefits, or their “utility income,” (37) in different ways. Furthermore, they do not always recognize the benefits they receive or the government’s role in providing them, and the theory can only take into account benefits of which voters are aware. Downs presents a model of rational voting in which the voter calculates which of at least two parties will provide more benefits during their time in office, based on an estimation of their political capacity and not just their campaign promises. To make a fair comparison based as much as possible on actual accomplishments in a given time period, the voter calculates how the opposition party might have performed in the same period in which the incumbents have been in power. Since the voter must take some account of the future, they may adjust their weights based on whether they think the incumbent’s performance improved or declined over time. Given the difficulty of predicting how either the incumbent or opposition would govern in the next term, those doing well may preserve the status quo while those who are not will desire change, even if the party platforms are too similar to anticipate which policies will remain or change. Voters evaluate governmental performance based on an ideal assessment of benefits they could expect to receive during that same period of time. If there is no way to determine which party is preferable, they will not vote at all.
In order to arrive at the proper voting choice, the voter must study all the differences between the parties, how those differences would affect them personally, and weigh the aggregate costs and benefits of each party being in power. In reality, voters cannot do this so they make estimates based on a smaller number of issue areas to which they assign particular significance. This also hinges on the information at their disposal. Downs’s theory assumes that every voter has a fixed idea of what is good and is trying to gather information to decide which party platform is closest to that vision. In a multiparty system, someone may vote for a party they don’t prefer based on the estimation that their preferred party has no chance of winning. This is still rational, since the party they like does not have the political wherewithal to deliver on its platform. This calculation requires some degree of knowledge regarding the behavior of other voters, as well as a goal of keeping out their least-preferred party. A person may still vote for a party with no chance of winning, and do so rationally, on the basis that a strong showing may improve its chances in future elections.
Part 1, Chapter 4 Summary: “The Basic Logic of Government Decision-Making”
Chapter 4 reiterates the principle that those in power care only about staying in power, not for any policy or social good for its own sake. Once in power, a government will try to correlate spending with the popularity of the project, until the level of spending offsets the anticipated voting benefit. They also have to anticipate the proposals of opposition parties, who have the advantage of reacting to whatever the incumbent party passes. New governments also preserve a great deal from the previous administration, and voters make their decisions based on marginal differences in benefit, not on fundamental differences in the way that government operates. The model assumes a centralized governmental authority capable of examining marginal impacts of policy decisions and making choices independently of one another. It presupposes a choice of two options for each policy, that only one party is in opposition, and that governments know voters’ preferences just as voters know the impact of government decisions. The government must try to appeal to the majority on every single issue, or else that one issue can be the cause of its defeat. In response, the opposition party can win by identifying issues where a sufficient number of citizens feel more strongly about one alternative proposal than any incumbent policies they might support. By putting together a coalition of supporters for various minority positions, which tend to receive more fervent support than majority positions, oppositions have a chance of winning, especially when they have the advantage of reacting to incumbent proposals. So long as there is one position where more than half of voters are sufficiently supportive of a minority position, the opposition will win, although once they do so they immediately cede the advantage to the new opposition party. This is why rotations in office are frequent. Any government that has been in power for a long enough time has made enough enemies that the opposition has at least a chance of patching together a victorious coalition of minority positions. When there is a larger variety of party choices—not just a policy and a single alternative—the electorate will be sufficiently divided that the opposition can likely mobilize a majority of voters against the incumbent, even when they disagree on the specific alternatives. Voters may recognize this as a play for votes, but that is all the more reason to vote for the opposition.
If incumbents are aware of the opposition’s advantages, they will see that any appeal to the majority is self-defeating. However, the model only works under conditions of perfect information, and does not admit psychological factors such as discouragement or fear. Yet even within a fully rational framework, there are voters who weigh issues more heavily than others and—if there is a passionate majority on a particular issue— it will be much harder to build a coalition of minority positions. Passion here is not weighed by the degree of emotion, but rather by the number of voters willing to refuse tradeoffs with their other preferences. A passionate majority can also serve to reduce the range of available choices, such as the particular method of implementing a program rather than debating the existence of that program. At the same time, a modern society features a division of labor, and individuals are more likely to care about their own specialized areas and will not always recognize the importance of areas beyond their expertise. There will therefore be a majority consensus on certain issues with the perennial possibility of minorities exploiting other areas of weakness to win power for themselves. In drafting budgets, governments pass any measure where the balance causes more pleasure than the pain of their costs. Similarly, since different measures will impact voters differently, governments must judge whether the aggregate costs and benefits of all their proposed measures will net a satisfied majority; they may be willing to cause pain on a minor issue in the knowledge that they will retain overall support. In sum, governments make policy in anticipation of voter preferences and opposition strategy, and votes follow policies and proposed alternatives. There is a circularity between government and voter, a relationship of mutual dependence which lies at the heart of democratic politics.
Part 1, Introduction-Chapter 4 Analysis
An Economic Theory of Democracy is a major modern example of the rationalization of political theory. Downs’s work reflects a rationalizing tendency that can be traced to the Enlightenment (roughly the late 17th through the 18th century), when political philosophers such as Thomas Hobbes and John Locke sought a scientific understanding of politics. Authority had traditionally relied on fragile social factors such as heredity, conquest, or claims of divine favor. With the rise of scientific understanding, these thinkers argued that an empirical understanding of politics would create a more stable system of authority and social order. Key to this thinking was the acknowledgement that human beings do not behave predictably, and that the exercise of reason could establish generally true propositions to inform the laws and norms of social conduct: this tradition underpins Downs’s theme of Rationality and Uncertainty.
A rational approach to politics culminated in a theory of liberalism, a politics built around the rights of individuals. In this view, a rational society was one that kept its people safe and gave them the freedom to prosper. In the Declaration of Independence, Thomas Jefferson famously declared the rights of life, liberty, and the pursuit of happiness to be “self-evident,” and therefore the main purpose of government was to secure those rights. Over time, these patterns of thought in the Western philosophical tradition solidified into a view equating the use of reason with the pursuit of self-interest, and which saw self-interest as a useful tool for predicting—and controlling—public behavior. Structures and Incentives became increasingly aligned, as to gain and maintain power required the support of a self-interested populace.
Downs does however recognize that politics is prone to irrationality, with voters often preferring a candidate based on moral values, appearances, or habit. In this, the definition of self-interest in politics is more complex and nebulous than economics, where the incentive is the same for all actors in all situations: financial gain. Downs avoids the reduction of political self-interest to the terms of classical economic theory, but he boldly states that—just as firms seek to maximize profits—citizens are ultimately concerned with their self-interest and view political activity as a means to that end. At the same time, he is very explicit in framing these assumptions as part of a theoretical model designed to highlight the focal points of his study, and that he is not attempting to portray an exhaustive account of how the world works in fact. As Downs freely concedes, irrational behavior does exist in politics. Rather than arguing that all individual political decisions within a rational schema, Downs is arguing that rationality is a useful way to view behavior in aggregate, capturing it as a series of measurable and predictable patterns. Down’s broad definition of rationality also works to support the fit of his theory onto the disorder and complexity of real-life variable. As he states in Chapter 5, “there can be no simple identification of ‘acting for one’s own greatest benefit’ with selfishness in the narrow sense because self-denying charity is often a great source of benefits to oneself.” (37) By refusing a narrow definition of self-interest, Downs can square the circle of how a political actor may find fulfillment within a community without having to rely on short-term metrics of success.
Downs’s theory is reliant upon normative real-life categories have less to do with the metrics of self-interest, and more to do with cultural, ideological and moral structures. This is particularly true in that the scope of his theory is limited to democracies—and to rather idealized democracies at that. Within his model, parties do not lie or break the law in order to maximize their votes. The parties are committed to the principle of majority rule, even when they are patently unable to rally majorities to their side. Parties may not care about the public good for its own sake, but they have an honest fear of violating the public’s trust, and so self-interest is enough to compel a degree of integrity. All of this is rational only insofar as certain moral principles are already upheld by a society, particularly the democratic right of citizens to play the primary role in determining the composition of their government.
