The Calculus of Consent: Logical Foundations of Constitutional Democracy, by James M. Buchanan and Gordon Tullock
The Calculus of Consent by James M. Buchanan and Gordon Tullock is the one of the founding works of public choice theory (Wikipedia) and a delightful read.#
Public choice takes the same principles that economists use to analyze people's actions in the marketplace and applies them to people's actions in collective decision making. Economists who study behavior in the private marketplace assume that people are motivated mainly by self-interest. Although most people base some of their actions on their concern for others, the dominant motive in people's actions in the marketplace—whether they are employers, employees, or consumers—is a concern for themselves. Public choice economists make the same assumption—that although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists, or bureaucrats, is self-interest. In Buchanan's words the theory "replaces... romantic and illusory... notions about the workings of governments [with]... notions that embody more skepticism."
Although the book does contain some academic writing and concepts, because it was written for both economists and political scientists, it contains very good explanations of the concepts employed. The most trouble, I would wager, comes from the game theory discussion, which is most intense in an "optional" chapter. So, if the below sounds interesting, definitely pick it up without fear of it reading like a long journal article.#
Most of what I found interesting in this book was the difference between its perspective on politics and the standard line. Of course, the whole point of the book is to take a different position, I mean to suggest that the distinct results and examples were not as interesting--although I understand their importance in the validity of the argument.#
From the very start, page 4, the authors take an (methodologically) individualistic approach explaining that economists routinely acknowledge that people are different, and thus have different desires, and thus compete over scarce resources, while political theorists ignore this and assume that decision-making is the process of discovering what everyone desires. The authors will, throughout the book, construct a conception of decision making based on what each party can mutual benefit from, but is not the original goal of anyone party, due to compromise.#
With this focus on the situation of the individual, they conceive as the accurate measure of a system of decision making the costs to the individual. They explain that any system of organizing among N people faces an important trade-off: The more supporters required for action, the less costs to the individual (because of the ability to deny support for disadvantaged parties), but the higher costs of organization, due to the requirement of organizing so many people. Thus, the solution to the problem of constitution is not unanimity or completely libertine. (p. 70)#
At this point, the authors remark that there is nothing particularly special about majority rule in this framework. It is one of many possible thresholds of supporters with no guarantees of being optimal. Nonetheless, the remainder of the book focuses on analysis of majority rule, or very close substitutes actually found "in the wild." (p. 81)#
Decision-making costs#
The two types of costs explained in the book are external costs and decision-making costs. External costs are costs of laws themselves, such as the law that I must pay a bridge in Wyoming I'll never see. Decision-making costs are those that are a result of bargaining and reaching agreements.#
There is an interesting quote regarding an explanation of the decision-making costs:
Professor Frank H. Knight has often posed the question: When should an individual rationally stop considering the pros and cons of an issue and reach a decision? This question itself suggests that purely individual decisions involve costs. [And by analogy] it is in the reaching of an agreement among two or more individuals that the costs of collective decision-making are reflected. [p. 97-98]
Both of these costs are a function of the number of individuals involved. A simple result of this is described below:#
Let us suppose there are two collective units, one of which has a total voting population of one hundred citizens while the second has a voting population of one thousand citizens. If our hypotheses about the costs of collective decision-making are valid, there may be several activities which the rational individual will choose to collectivize in the first "country" that he will leave under private organization in the second, and larger, political unit. The expected costs of organizing decisions, under any given rule, will be less in the smaller unit than in the larger, assuming that the populations of each are roughly comparable. For example, simply majority rule in the first "country" will require the assent of only 51 citizens to a decision. In the second "country" the assent of 501 citizens will be needed. The differences in the costs of organizing such majority coalitions may be significant in the two cases. On the other hand, if the two "countries" possess equal ultimate "sovereignty," the expected external costs of any given collective action may not be substantially different in the two units. From this it follows that, for those activities which are collectivized in both units, the smaller unit will normally have a more inclusive decision-making rule than the large unit. [p. 112]
Side-payments and bargaining#
After part III, an important concept becomes that of compensation and the mechanics of bargaining over decisions. The authors note that because many decisions will be made and the intensity of opinion about issues is not equal, then participants are likely to engage in "trade" of votes in order to extract "mutual gains from trade." The authors note that although monetary payment could be conceived for votes, it is not the only method of trading. It is important to note that while the monetary purchase of votes is generally acknowledged as "bad", trading of votes provides the benefit of allowing intensity expression, the relevance of which is explained in the text.#
We see [or you would if you had the book!] that the results of simple majority voting in the model where full side payments [monetary like vote trading] are allowed differ in several essential respects from the results of this rule when such payments are not allowed. First of all, side payments insure that the funds will be invested in the most productive manner. Secondly, there is no requirement that the projects undertaken provide physical services to more than a majority of the votes. As in all of the earlier models, the solutions will embody a symmetrical sharing of total gains among the members of the smallest effective coalition, but note that the introduction of side payments tends to insure a symmetric sharing of gains measured in benefit or productivity terms. [p. 155]
And...
If side payments are not allowed, neither dictatorship not the unanimity rule will produce [results not making any individual worse off] in all cases. The unanimity rule will always result in movement towards [such a case], but there is no assurance that [the optimal result] will be reach. Thus, we find that the Pareto criterion [of no party being worse off] suggests the paradoxical conclusion that open buying and selling of political votes may actually lead to an "improvement" for the group, measured in the extremely weak ethical sense of making everyone in the group better off as a result. [p. 188] [ed--What was removed was reference to Pareto optimality.]
The end result of the pondering about vote trading is given in the second to last chapter:#
The interesting conclusion is reached that, under our behavioral assumptions, vote-trading per se cannot be condemned on the basis of a rational individualistic ethic but that vote-trading under rules for collective choice requiring less than full agreement among all members of the group may be condemned. The fact that the political vote of the individual is wholly different in these two cases makes for an extremely important difference in the attitude of the rational individual toward vote-trading. In the one case, the vote represent the potential power to impose external costs on other individuals in the group, and it is because of the fear that market imperfections may cause this power to become solidified into permanent or quasi-permanent coalitions that the individual may choose to restrict in some way the institution of vote-trading. In the other case, when unanimity is required for action, the vote does not represent the potential power to impose costs on others. No offsetting reason arises to oppose the efficiency reason for allowing full and free marketing of political votes. [p. 279-280]
Interesting diversions#
A comment on parliamentary systems: (for the proof you'll have to refer to the text, but this may provide the bait to do so)#
Most of the small North European democracies, for example, follow a voting system under which the voter opts for a party and then the parties are given votes in the legislature in proportion to their respective totals. Although this systems has its disadvantages, it does have the advantage of providing what amounts to a unanimity system in selecting members of the representative body. All voters, not just the majority of each constituency, are represented in the legislature. Consequently, a majority of the legislature represents a majority of the voters, not just a quarter or more as may be the case in a logrolling or party coalition when the members are selected from single-member constituencies. [p. 222]