An Economic Theory of Democracy

“Rationality thus defined refers to processes of action, not to their ends or even to their success at reaching desired ends. It is notorious that rational planning sometimes produces results greatly inferior to those obtained by sheer luck. In the long run, we naturally expect a rational man to outperform an irrational man, ceteris paribus, because random factors cancel and efficiency triumphs over inefficiency. Nevertheless, since behavior in our model cannot be tested by its results, we apply the terms rational and irrational only to processes of action, i.e., to means.”

Since Downs’s complete theory is based on the idea of rational action, he needs to be precise as to the meaning of the term in order for he and his reader to share a definition. He sets out the scope of his term: In politics and economics, there are too many different things that people want to acquire with money or power—from material wealth to glory to improving the common good, that no theory can possibly presume to guess the ends which rational actors are pursuing. The best it can do is assume that when someone wants something, they are calculating in their pursuit of it, weighing costs against benefits and seeking to lessen the expenditure of resources.

“Although governments are of crucial importance in every economy, economic theory has produced no satisfactory behavior rule for them comparable to the rules it uses to predict the actions of consumers and firms. Our thesis attempts to provide such a rule by positing that democratic governments act rationally to maximize public support. By rational action, we mean action which is efficiently designed to achieve the consciously selected political or economic ends of the actor.”

Summarizing the overall purpose of the book, Downs is proposing a theory that will bring economics and politics in line with practical behavior and observation. Classical economic theory considers politics to be an entirely separate sphere, imagining the free market as an autonomous sphere operating by its own laws, so that political involvement in the economy can only constitute interference. Since governments in the mid-twentieth century had undertaken an expansive role in the economies of their countries, economics itself needs to drop its laissez faire assumptions and see how the logic of politics might fit its own theoretical precepts.