Schumpeterian political economy and Downsian public choice: alternative economic theories of democracy

Abstract

Joseph Schumpeter is often regarded a founder of Public Choice. Looking closely at mainstream Public Choice and Schumpeter's writings on democracy, this claim is rejected. But I not only want to "get the history of ideas right". I also address some uneasy foundations (e.g. voter rationality in low-cost environments) and still neglected issues (e.g. political leadership and opinion-formation) of Public Choice theory. First, Schumpeterian democracy as a competitive struggle for leadership is contrasted with Downsian models, where parties adapt to given median positions within given issue spaces. Then, areas of research are identified that do address Schumpeterian issues: (cognitive) economics of bounded political rationality and (evolutionary) economics of political leadership and opinion formation.

Entrepreneurship and institutional change

“…In these cases, the political entity may turn into a political leader whose actions will indeed be entrepreneurial. (Wohlgemuth 2005). Unless the political process is characterized by low friction, an institutional lock-in may take place, leading to unfavorable outcomes in situations in which all parties to the political process would have been better off had the change taken place.…”

Electoral reforms, entry barriers and the structure of political markets: A comparative analysis

“…Followers of the Schumpeterian tradition, by contrast, emphasise ex post accountability as, according to their view, voters lack well‐defined preferences that could serve as the basis for ex ante accountability. In this context, the policy agenda, as well as public policies, are set by incumbent parties (Wohlgemuth : 24–25).…”

“…At least two different streams made use of the notion of political markets as core concepts of their theoretical framework: the Downsian and the Schumpeterian traditions. Followers of the former tradition define the political arena as a market determining which party will take control of government (for an overview, see, e.g., Wohlgemuth : 24; Strøm ; Körösényi ). Followers of the latter tradition, by contrast, describe the top‐level competition in question as a bidding process for the ‘natural monopoly’ of government (Tullock ; Wohlgemuth : 274; Wohlgemuth : 24–25).…”

Los presupuestos psicológicos en política. Una revisión introductoria de la literatura

“…la teoría de Schumpeter fue catalogada como una que asume la "irracionalidad" de los votantes (Prisching, 1995;Wohlgemuth, 2007). En mi opinión, si bien el autor usa el término "irracional", lo aplica para describir los efectos del sistema institucional sobre la conducta particular del votante, antes que para describir las cualidades cognitivas de éste.…”