A critical review of Downs, A. (1957) An Economic Theory of Political Action in a Democracy, Journal of Political Economy, 65(2): 135-150
In his seminal work ?An economic Theory of Political Action in Democracy? Anthony Downs suggests that traditional economic theory is united in its exclusion of the impact of government as an economic agent. He sets out to address this issue by creating a model that sets key conditions whereby rational choice economic theory can be used to explain certain areas of political decision making. Downs binds a political actor's desire for power with the need to construct policies and a political platform around the preferences of the public ?strictly as a means of gaining votes? (Downs,1957, p.137). His argument uses a positive approach towards public policy and investigates using rational choice theory to inform a set of relative incentives that determine political action. The article offers an interesting insight into the function of government and the economy, much of Down's theory is logical, reasonable and effective. However, there are areas, which are subject to revision. This is inevitable given progress in media, technology and the ability to access high quality information at very low cost.
It is first important to understand and summarize the main points and arguments that are presented in the article. Downs creates a rational understanding into the economics of democracy based upon five key axioms. The series of axioms create a starting point of reasoning which creates the foundation for his model. These include, the primary objective for opposition parties is to seek only election, and that governments and parties have a good understanding of the needs and wants of the electorate.
[...] Downs delivers a thought provoking analysis of the political arena and convincingly applies commercial principles of ?exchange? to the operation of democracy. Clearly Downs is correct in this assertion that economic theory cannot simply ignore the government as insignificant in the general equilibrium theory, it is in fact an integral part of it. This was especially the case in the 1950's when the impact of Keynesian thinking and Roosevelt's New Deal was being fully appreciated (Fraser, Gerstale pg.14). It would appear Downs was rightly frustrated with the absence of academic material supporting this view. [...]
[...] Hay, C (2002) ?Political Analysis, A Critical Introduction' Palgrave Macmillan, Basingstoke Scott, J. (2000). Rational choice theory. Understanding contemporary society: Theories of the present, Sage, London Whiting, R. (2001). The Labour Party and Taxation: Party Identity and Political Purpose in Twentieth-Century Britain. Cambridge University Press. [...]
[...] Whilst clearly appealing to large elements of the ?blue collar' electorate he and his family were personally disadvantaged due to new and rigorous laws relating to inheritance tax. (Whiting pg127) More recently Tony Benn renounced his hereditary peerage and associated titles in order to serve in the Labour government's cabinet. This is perhaps an example of 3 elements of Downs' first axiom being ignored whilst Benn became ever more influential. Nevertheless, the use of this axiom is generally consistent with existing academic literature on the topic. It seems to be the default proposition when analysing politician's motives and actions. [...]