An Economic Theory of Democracy

Chapter 15 compares the model presented in the book to traditional economics as well as to prevailing economic interpretations of politics.

Downs presents what he views as the failure of economic theory to engage meaningfully with political behavior. He argues that traditional economic theory tends to regard government as an intruder upon the organic operations of the market. If economic theorists talk about government at all, is in the normative sense of how it ought to behave, rather than analyzing how it behaves in fact. Others designate specific functions for government, such as the redistribution of wealth or achievement of full employment, thereby reducing its role to a single economic purpose. Economists have so far failed to apply their own theoretical principles to governments, due to a false distinction between private and public action as somehow constituting entirely different realms of behavior and motivation. They look only at functions, and make prescriptions based on how think government should operate. Part of this negligence is due to the assumption that politics is a separate field from economics, or to too readily embracing a view of government that poses no theoretical challenges to economic models. Even when economists reduce the role of government to a single purpose, such as the achievement of social welfare, they cannot define what that is, and so they fail to build upon that concept in a theoretically useful way.