Conclusion

As a field of study, economics has evolved a distinctive method based on the adaptation of scarce resources to competing ends. When applied to politics, the central assumption of the economic approach is that private and public decision makers can be described in the same way.

In this approach, voters are consumers choosing among different candidates and policies; politicians maximize the interests of their organizations (parties) by pursuing median voters; bureaucrats are agents whose objective functions include budget maximization, expansion or protection of personnel, and dis­cretionary behavior. Laws are rulelike structures that affect how individual goals may be pursued as well as products of self-interested calculations them­selves. As developed in economics, the overall approach is demand driven, with consumers pursuing their political goals and politicians passively sup­plying public goods (Buchanan, 1979:177). Models developed by political scientists (such as Levi, 1988) have allowed for a distinctive set of goals on the part of the state agents.

The economic approach to politics has forced analysts to disaggregate the state and to focus on its numerous constituent components and processes. Echoing Bentley, we might say that there is no need at all for the state as an entity. Once we have specified the relevant agents, resources, goals and rules, politics is the analysis of choice in political settings, often concerning public goods.

While focusing on particular political actors in various strategic settings is valuable, the approach does have limitations. We focus on three.

First, there is the issue of whether politics, specifically democratic politics, is better described by the ends pursued by citizens or by the modes of activity in which citizens participate.

Disagreement over the relevance of the economic approach to politics may turn in part on disagreement about the nature of politics. If politics refers to goal seeking in political environments, then the approach is clearly relevant. However, an alternative conception exists that identifies politics with pro­cesses through which individuals discover themselves, learn about their pref­erences, engage in debate, and shape (and are shaped by) opinions of others. The process itself (the democratic political process) shapes citizens’ beliefs, especially about how they fit into a society with other individuals, and thus modifies what they might want as private agents.

A limitation of the economic approach is that it misses the transformative potential of politics. Politics is not just a process by which predetermined and unquestioned preferences are converted into policy “outputs.” Individ­uals do not simply act on given preferences throughout the political process. As Barber put it in The Conquest of Politics:

The journey from private opinion to political judgment does not follow a road from prejudice to true knowledge; it proceeds from solitude to sociability. To travel this road, the citizen must put her private views to a test that is anything but epistemo­logical: she must debate them with her fellow citizens, run them through the courts, offer them as a program for a political party, try these out in the press, reformulate them as a legislative initiative, experiment with them in local, state, and federal forums, and, in every other way possible, subject them to the civic scrutiny and public activity of the community to which she belongs.

The second limitation of the economic approach to politics concerns its effort to explain institutions and institutional change. We noted two different ways in which institutions can figure in economic analysis. Institutions can be taken as given (much as preferences and endowments can) and the con­sequences of different institutional arrangements explored. Alternatively, in­stitutions can be treated as phenomena to be explained. The former approach “merely” specifies what has always been implicit in the neoclassical model. The task is to elaborate the comparative incentive structure of various insti­tutional arrangements and to assess the consequences for allocative behavior. The latter approach is more ambitious in that it attempts to derive institutional changes from a model of intentional action.

Were this effort to be successful, the claim that economics rests (and must rest) on a noneconomic bottom would be challenged (Field, 1979; 1984). Institutions, or rules, refer to noneconomic phenomena that affect allocative behavior, yet cannot be (or at least have not yet been) explained by that behavior. According to this view, institutions, while ultimately changeable, confront choosing agents as historical givens, as part of the architecture defining the choice situation rather than as something to be chosen.

If institutions become the object of explanation, can the economic model logically account for them without a prior (different) specification of insti­tutions? Neoclassical economics sees institutions largely as rules. Interpreted in this way, institutions prescribe, rule out, and permit. As such, they are relevant for the feasible set of actions, those that are possible. Thus they are relevant for explaining choice behavior, including the choice of institutions. Without an antecedent specification of rules, an explanation of consequent rules would seem impossible. This is not an argument against attempting to explain institutions with the economic model, but it does suggest that the attempt can work only to the extent that it relies on prior exogenously given rules.

A third limitation of the economic approach to politics concerns institutions and preferences. If institutions, including political institutions, serve merely to facilitate (efficiency in) want satisfaction, how do wants arise? What part can our social lives play in the formation and not just satisfaction of wants? With the extension of self-interest calculation to the design of institutions, we lose any sense of an enduring social world within which persons find themselves, discover their identity, their sense of self, and the wants appro­priate to that sense of self.

Institutions, in part, make up that enduring social world. Our institutions allow for a frame of reference that is not contingent on exogenous preferences. If institutions are to take on this role, self-interest cannot be exogenous to them, or at least not to all of them. At a minimum, this suggests a division between those institutions aimed at serving self-interest, and thus for which exogeneity might be a reasonable assumption, and those institutions that participate in the formation of interests, for which the exogeneity assumption is inappropriate. To the extent that political institutions fall into the second class, political economy might concern itself with clarifying the necessary distinction.

Even on the basis of an appropriate distinction between the two kinds of institutions, however, problems arise for the rational choice approach. That approach is specially tailored to address the relation of pursuit of self-interest to collective outcomes. It takes for granted the motivation implied in the notion of self-interest. Adherents of this approach often write as though their conclusions follow so long as we accept the primacy of self-interest and rational calculation (that is, instrumentally rational calculation) in individual motivation and behavior.

By accepting pursuit of self-interest as a goal in exchange (and to a lesser extent in government) we do not thereby accept the way of thinking about self-interest and rationality typical of the rational choice framework. Self­interest is not, after all, such a simple matter (see Kohut, 1977). In order to be an agent and make choices, the individual must have a cohesive self to which to refer and out of which to define his or her ends. Furthermore, the nature of that self will determine the nature of the choosing undertaken by the agent, for example whether or not it can meaningfully entail ranking of alternatives into a preference ordering. Before we too easily assume that choice and rationality are about ranking and preference, we need to look more deeply into the nature of agency itself and into the qualities that make an agent capable of choosing.

It is worth noting in this connection that the classical approach sidesteps the problems of agency and choice by focusing on pursuit of profit rather than utility maximization. This focus arises from the fact that the classical theory is primarily a theory of the growth of wealth and not of its static allocation. The classical economists do not much concern themselves with consumer choice and devote themselves instead to the implications of profit seeking for the growth of wealth. In so doing, they give less attention than they might to the role of demand in the functioning of market economy, but they also avoid the dangers of interpreting the world in terms of scarcity and rational choice.

When we make political institutions derivative of self-interest, we in effect make the self an irreducible prior condition of social interaction, and this makes it difficult to consider analytically the social determinants and insti-

tutional framework of self-interest. This observation has a bearing on one of our central themes: the link between political economy and the depolitici­zation of society, the displacement of politics by civil society. A claim that we consider the necessary part played by political institutions in establishing an enduring framework for want formation could place limits on the erosion of the state associated with the traditional project of political economy.