Public choice theory has become one of the main areas of research related to the use of the methodology of neoclassical analysis in relation to the institutional system. It originated in the 1960s as a branch of economics that studies taxation and government spending in the context of providing social benefits. Subsequently, its boundaries have expanded significantly and at present it is interpreted as theory of economic policy.

The representatives of the Italian school of public finance of the late 19th century are considered to be the forerunners of the theory of public choice. Pantaleoni, Mazzola, de Witti and others, Swedish researchers of the early 20th century. Wiksel and Lindahl, who prioritized political processes that would ensure the definition of state budgetary policy. The emergence of the term "public choice" is associated with the publications in 1948 by the Scottish economist Black on the rule of the majority.

A direct impetus to its development was given by the studies of the 1930s and 1940s by such well-known researchers as Bergson, J. Schumpeter, Samuelson, who developed the concept of welfare economics. And the American researcher Buchanan is rightly considered the founder of the theory of public choice. Arrow also made a great contribution to its development.

James Buchanan

James McGill Buchanan (b. 1919) graduated from the College of Education, then the University of Tennessee. During World War II, he fought the Japanese in the Pacific. After demobilization, he studied economics at the University of Chicago under the guidance of F. Knight, where in 1948 he received his doctorate. In 1950 he became a professor of economics at the University of Tennessee, then dean of the economics department at the University of Florida, and also worked at the University of Virginia.

In 1957, Buchanan founded the Thomas Jefferson Center for Political Economy Research, and in 1969 the Center for the Study of Public Choice at George Mason University (Virginia). Buchanan is the author of many works: "Theory of pressure and political economy" (I960), "Formula of Consent: The Logical Foundations of Constitutional Democracy" (1962), "Cost and Choice: Political Applications of Economics" (1972), "Limits of Freedom: Between Anarchy and Leviathan" (1975), "Democracy in short supply" (1977), "The Power of Taxes" (1980), "Freedom, the Market and the State: Political Economy in the 1980s" (1985), "The Political Economy of the Welfare State" (1988) and many others.

In his works, he considered the problems of the theory of "public choice", democracy in the conditions of a budget deficit, the political and legal foundations of the theory of decision making. In 1986, he received the Nobel Prize "for developing the theory of decision-making in the fields of economics and politics, as well as political theories that demonstrate the limited role of government in the economy."

Buchanan at creation public choice theory became the first researcher who chose a completely new direction of economic analysis - non-market solutions, which closely connected him with the neo-institutional direction. His first work on this topic "Pure Public Finance Theory: A Proposed Approach" was published in 1949.

The study of "public choice" was concentrated at the University of Virginia, where in 1969 Buchanan and Tulloch created Center for the Study of Public Choice, which has become the nucleus virgin school political economy. The hallmark of the school was the application of the methods of mathematical analysis to non-traditional areas of study, primarily politics. On this subject, Buchanan wrote: "Public choice is a view of politics that arises from the extension of the application of the tools and methods of the economist to collective or non-market relations." In this regard, the theory of public choice has today another name - new political economy.

According to Buchanan, the theory of public choice follows from two methodological assumptions. The first is that each individual pursues his own interests, that is, according to A. Smith, "an economic man" and selfish; the second is the interpretation of the political process by which "economic man" realizes his interests through the process of exchange. To comprehend the political process as a mutually beneficial exchange for a "man economically" allows individualism, which is of crucial importance in public choice theory.

Thus, the researcher singled out three most important elements on which the theory of public choice is based:

Methodological individualism;

the concept of "economic man";

The concept of politics as an exchange.

The ideal political institutions and processes are those that, like competitive market, allow to pursue individual interests, at the same time ensuring public interests.

Buchanan emphasizes that the interests of individuals in public choice are individual and public goods with externalities, the provision of which through the market turns out to be less efficient according to the Pareto law than due to one or another political process (certain actions of the state). At the same time, the researcher considers the state primarily as a means of implementing social consent, developing rules that ensure social interaction for the benefit of everyone, and not as a simple supplier of social benefits and a corrector of "failures" in the market.

Approach to politics as a mutually beneficial exchange does not mean that there is no difference between the political market and the market for private goods. Buchanan argues that the efficiency of the private goods market increases with an increase in the level of competition, that is, an increase in the number of its participants, and the political market loses its efficiency from an increase in participants. Any political decision will be Pareto efficient when no one objects to it, but as the number of participants in the process grows, the probability of unanimity inexorably approaches zero.

Considering the differences between the markets for individual (consumer market) and social goods (political market), Buchanan introduces the concept of "quality of choice". He proves that the "quality of choice" in the consumer market is almost imperceptible, since people are always sure that they will receive the purchased good. On it, the buyer can choose between many varieties of one good, buy different goods in a variety of variations.

In the political market for social benefits, everything is more complicated, because when voting for a candidate who promises to increase pensions and repair roads, these benefits are not guaranteed even if this candidate wins the elections. Therefore, the political choice is made from a very limited set of mutually exclusive alternatives. From this, Buchanan concludes that the private market should be preferred over the state wherever possible.

However, what to do in a situation where the private market is extremely inefficient? An American scientist proposed a theory for this case "constitutional economics" which requires the fulfillment of two conditions:

All individuals must be parties to the same contract (agreement). Such a social agreement was defined as a "constitution", that is, a basic agreement;

This transaction by all individuals must be unanimous.

If agreement in a society on a "constitutional agreement" is not reached or violated, then such a society will be threatened with anarchy. And the fear of chaos also influences the individual's decision to adhere to constitutional rules.

In the case where there is no unanimity of the political decision, two problems arise, firstly, some members of society will be forced to act contrary to their interests; secondly, a kind of "infinite regression" arises, that is, a return to the initial state with attempts to achieve unanimity (defining the rules for voting, re-voting, recounting, etc.).

Buchanan sees a fundamental difference between the two stages of the political process: making rules (constitutional) and playing with them (post-constitutional). Accordingly, the functions and role of the state differ, according to which the researcher singles out "manufacturing state" (provides society with non-market social benefits) and "protector state" (ensures the game according to the constitutional rules). The ideal social system, according to the scientist, meets the following requirements:

The same approach to all at the constitutional stage. At the same time, the rule of unanimity serves to protect individual rights and ensure full equality;

Actions at the post-constitutional stage of the political process are effectively limited by the rules that are developed at the constitutional stage. This applies to everyone, both ordinary citizens and those elected by the people to all government bodies;

There is a fundamental difference between actions carried out within the framework of constitutional rules and changes to these rules themselves. Changes are possible only on a constitutional basis and are ideally built on unanimity.

In Buchanan's view, to the extent that a country meets these three requirements, it can be considered constitutional democracy, whose institutions have the normative qualities inherent in contractionism.

In his Nobel lecture, Buchanan succinctly reflected his creative credo: "In my fundamental convictions, I remain an individualist, constitutionalist, contractionist, democrat (all these words, in fact, mean the same thing to me), and professionally I am an economist" .

Kenneth Arrow

A research economist who is rightly considered to be a mass attitude to public choice theory Kenneth Arrow(born 1921), Nobel laureate 1972. It was he, together with the Scot Black, who first tried to apply the methods of economic analysis to political processes. In his work "Social Choice and Individual Values"(1951), which at one time caused a great resonance, drew an analogy between the state and the individual and denied the main conclusions of public choice theory regarding the economic role of the state.

Arrow was born in New York, graduated from the local City College, and later from Columbia University. He took part in the Second World War, after which he worked as a professor of economics at Stanford (California) and Harvard Universities.

Arrow is best known as a critic of the "public choice" idea. In the named work, he deduced "Arrow's theorem", in which he proves the impossibility of a society making a "collective" decision about its own priorities, taking into account individual priorities.

The scientist's research is devoted economic development, problems of distribution and relations between the market and the state. Among his scientific achievements is a model of general economic equilibrium, built by him together with Zhe. Debre; theory of optimal reserves (accumulation); the theory of uncertainty (decision making in a situation of incomplete information).

Among the works of K. Arrow, in addition to the mentioned book, it is also necessary to highlight "Existence of Equilibrium for a Competitive Economy" (1954), "Replacement of capital by labor and economic efficiency" (1961), "Public Investments, Rates of Return and Optimal Tax Policy" (1970), "Essays on risk theory" (1971), "Resource Allocation Studies" (1977), "Limits of Organization"(1974) and some others.

Kenneth Arrow received the Nobel Prize in Economics jointly with J. Hicks "for their pioneering contributions to the general theory of equilibrium and the theory of welfare."

The founder of this another important component of neo-institutionalism is James Buchanan (1919), who expressed in terms of economic science the main patterns of political decision-making.

Major works: "The Pure Theory of Public Finance" (1949), "Individual Voting Choice and the Market" (1954), "Consent Calculation. The Logical Foundations of Constitutional Democracy” (1962 together with G. Tulloch), “Public Finance in the Democratic Process” (1967), “The Limits of Freedom. Between Anarchy and Leviathan” (1975), “Democracy in Deficit” (1978, together with R. Wagner), “The Power of Taxation” (1980, together with J. Brennen), etc.

Buchanan, like other representatives of neo-institutionalism, used the economic theory of the neoclassicists as tools of analysis. According to J. Buchanan, this is quite legitimate, since the methods of analyzing market behavior can be applied to the study of any field of activity, including politics, because everywhere people are guided by the same motives. So, in politics they are not driven by altruistic or moral inclinations. Political decisions are the choice of alternatives, and the achievement of political agreement is similar to how it happens in a normal market. The peculiarities of the political market are that if in the ordinary market people exchange money for goods (or product for product), then in politics they pay taxes in exchange for public goods. But although the consumer of public goods is not an individual, but society as a whole, nevertheless, in politics, according to Buchanan, there is still an analogue of free trade. This is the agreement between people inherent in any kind of exchange. In his opinion, the unanimity achieved by the participants in the collective choice in politics is analogous to the voluntary exchange of individual goods in the market.

This is the essence of the economic approach to collective activity. Here, the thesis is called into question that the desire to obtain benefits clearly dominates in the economic sphere, and in the political sphere, supposedly, people do not seek to maximize their utility, but try to realize the public interest, or the common good.

According to Buchanan, a person maximizes utility, both in market and in political exchange (political activity is considered by him as a special form of exchange). In economics, as in politics, people pursue similar goals - to gain benefits, profits. In making appropriate decisions, politicians, according to Buchanan, proceed from their private interests, which do not always correspond to the interests of society. Politicians are thinking about how to ensure success in elections, get votes. The most popular measure is to increase government spending. But this stimulates inflation. This is followed by the strengthening of strict regulation, state control, inflation of the bureaucratic apparatus. As a result, the government concentrates more and more power in its hands. And the economy is on the losing end.

Thus, the myth of the state, which has no other goals than caring for the public interest, is exposed. The state is people who use government institutions for their own interests. The state is an arena of people's competition for influence on decision-making, for access to the distribution of resources, for places in the hierarchical ladder.

The solution to the problem of the abuse of political power, according to Buchanan, lies in the development of the concept of organizing the political market. He proposes to reform political procedures and rules in such a way that they contribute to the achievement of general agreement. In this ideal case, mutual benefits are expected from all parties as a result of collective action, similar to what happens in the market.

In Buchanan's concept, two levels of public choice are distinguished within the framework of political exchange. The first level is the development of rules and procedures for the political game. The second is the formation of a strategy for the behavior of individuals within the framework of established rules.

At the first stage, the rights of individuals are determined, the rules of relationships between them are established. In public choice theory, this is called constitutional choice. The constitution is the key category of J. Buchanan's concept. The term "constitution" refers to a set of pre-agreed rules by which subsequent actions are carried out. For example, the rules governing the ways of financing the budget, the approval of state laws, the taxation system, etc. The current policy is the result of a game within the framework of constitutional rules. And just as the rules of the game predetermine its probable outcome, constitutional norms shape the results of a policy or, conversely, make it difficult to achieve them. Therefore, the effectiveness and efficiency of policy depends to a large extent on how well the original constitution, or, as Buchanan calls it, the constitution of economic policy, was drafted.

But here the most difficult problem arises - the development of rules according to which this constitution is adopted, the so-called pre-constitutional rules. Viewing politics as a process of complex mutually beneficial exchange, Buchanan proposes to organize this exchange in such a way that all participants can expect to receive a net positive result at the level of constitutional choice. J. Buchanan considers this issue from the standpoint of individual members of society who are faced with the choice of alternative rules and decision-making procedures and who know that later they will act within the framework of these rules.

When solving this problem, J. Buchanan puts forward the rule of unanimity for the adoption of the original constitution, since the principle of a qualified and even more so simple majority, even in a direct democracy, can lead to infringement of the rights of the minority. Needless to say, how high the costs of decision-making in conditions of unanimity. The principle of a simple majority allows the choice in favor of an economically inefficient result.

More the situation is more difficult in a representative democracy, when the public choice is carried out at certain intervals and is limited to the circle of applicants who offer their own package of programs. Voters cannot afford the significant expenses associated with obtaining the necessary information about the upcoming elections. There is a kind of threshold effect - the minimum value of benefit that must be exceeded in order for the voter to participate in the political process. A rational voter must balance the marginal benefits of influencing a deputy against the marginal costs. As a rule, the latter are much higher than the former, so the voter's desire to constantly influence the deputy is minimal.

The situation is quite different for voters whose interests are concentrated on certain issues (for example, manufacturers of certain goods). By creating groups, they can significantly offset the costs if the bill that suits them is passed. The fact is that the benefits from the adoption of the law will be realized within the group, and the costs will be distributed to the whole society as a whole. It can be said that the concentrated interest of the few wins over the scattered interests of the majority. The situation is aggravated by the interest of deputies in the active support of influential voters, because this increases the chances of their re-election for a new term. And this is a significant flaw in representative democracy, because in a direct democracy, decisions that are beneficial to them would not be made.

Thus, as Buchanan argues, the omnipotent democratic government, precisely because of the unlimitedness of its power, becomes a plaything in the hands of organized interests, for it must please them in order to secure a majority.

One area of ​​research in public choice theory is the economics of bureaucracy. The economy of bureaucracy, according to public choice theory, is a system of organizations that satisfies two criteria: it does not produce economic benefits and it derives part of its income from sources not related to the sale of the results of its activities. In this regard, the theory of political rent is of interest. Political rent seeking is the pursuit of economic rent through the political process. Politicians, although controlled by voters (because they are forced to consider re-election prospects, secure long-term party and public support for themselves), choose that solution from a set of acceptable alternatives, the execution of which maximizes their own utility, and not the utility of its voters. This choice is one of the main motivations of politicians. In the broad sense of the word, this is their “political income”.

In addition, policy makers are interested in solutions that provide clear and immediate benefits and require hidden, hard to define costs. Such decisions contribute to the growth of the popularity of politicians, but, as a rule, they are not economically efficient.

The described abuses of the bureaucracy cannot be fought by the forces of the state itself. The hierarchical structure of the state apparatus is built on the same lines as the structure of large corporations. However, public institutions are often unable to take advantage of the organizational structure of private firms. The reasons are weak control over their functioning, insufficient competition, and greater independence of the bureaucracy. Therefore, Buchanan and his followers are in favor of limiting the economic functions of the state in every possible way.

Even the production of public goods is not a reason, from their point of view, for government intervention in the economy, since different taxpayers benefit differently from government programs. In their opinion, it is democratic to transform public goods and services into economic goods produced by the market.

The merit of the theory of public choice is the formulation of the question of the failures of the state (government). Failures (fiasco) of the state are cases when the state is not able to ensure the effective distribution and use of public resources.

Typically, the failures of the state include:

1. Limited information necessary for decision-making.

Just as there can be asymmetric information in the marketplace, government decisions can often be made without reliable statistics to make better decisions. Moreover, the presence of powerful groups with special interests, an active lobby, a powerful bureaucratic apparatus lead to a significant distortion of even the available information.

2. Imperfection of the political process. Rational ignorance, lobbying, manipulation of votes due to imperfection of the regulations, logrolling, etc.

3. The state's inability to fully foresee and control the immediate and long-term consequences of its decisions. The fact is that economic agents often react in a way that the government did not expect. Their actions greatly change the meaning and direction of the actions taken by the government. Measures taken by the state, merging into the overall structure, often lead to consequences that differ from the original goals. Therefore, the ultimate goals of the state depend not only, but often not so much on itself.

The activity of the state, aimed at correcting the failures of the market, itself turns out to be far from perfect. The fiasco of the government is added to the fiasco of the market. Therefore, it is necessary to strictly monitor the consequences of its activities and adjust it depending on the socio-economic and political situation. When applying certain regulators, the government must strictly monitor the negative effects and take measures in advance to eliminate the negative consequences.

To correct the existing situation, according to supporters of the public choice theory, it is possible with the help of a constitutional revolution. Buchanan proceeds from the paramount importance of the formation of constitutional norms and rules. In this regard, Buchanan's substantiated distinction between two different functions of the state is important:

1. "State-guarantor".

2. "State of production".

The first is the result of an agreement between people and a kind of guarantor of their compliance with the constitutional treaty. Enforcing rights in society means jumping from anarchy to political organization.

The second characterizes the state as a producer of public goods. This function of the state arises as a kind of agreement between citizens regarding the satisfaction of their joint needs in a number of goods and services. Here lies the threat of the emergence of an autocratic state. It is the development and strengthening of the state-producer that leads to the strengthening of the influence of the bureaucracy. Buchanan and his supporters consider the reduction of the economic functions of the state and privatization to be a condition for an effective fight against bureaucracy. In their opinion, the state should perform protective functions and not take on the functions of participation in production activities.

Another achievement of the theory of economic choice is the introduction of the concept of the political-economic (political) cycle - the cycle of economic and political activity of the government between elections. Buchanan noticed that government activity between elections is subject to certain patterns. With a certain degree of conventionality, it can be described as follows.

After the election, a number of measures are taken to change the goals or scope of the previous government. These measures are especially radical if a party comes to power that was previously in opposition. Attempts are being made to reduce the state budget deficit and curb the unpopularity of programs. Newly come to power people are trying to fulfill at least part of the election promises. However, activity then declines until the fall in popularity of the new government reaches a critical level. With the approach next elections government activity is on the rise.

The theory of public choice has made a significant contribution to the development of problems of the role of the state and the political system as a whole, revealed the place and role of economic actors in making political decisions and developing the political system of society.

If we talk about neo-institutionalism in general, then the recognition of the merits of the new direction was expressed in the award Nobel Prize in economics to its most prominent representatives - James Buchanan (1986), Ronald Coase (1991), Gary Becker (1992) and Douglas.

Public choice theory is an important part of institutional economics, sometimes referred to as the "new political economy", because it studies the political mechanism of economic decision making. Having called into question the effectiveness of state intervention in the economy, representatives of the theory of public choice consider the process of making political decisions as an object of analysis.

Public Choice Theory- This is a branch of economic science that studies the patterns of choice of ways for government activities in the field of economics and how this choice is made under the pressure of a democratic system. Economics and politics in public choice theory interact with each other; the new political-economic approach considers not only the economic foundations of behavior in the political process, but also political methods of intervention in the market economy.

14.1. Methodology for public choice analysis.
The concept of "economic man".
methodological individualism. Politics as exchange

The study of public choice theory is based on public choice, which is a set of non-market decision-making processes regarding the production and distribution of public goods, which is usually carried out through a system of political institutions. If the market reveals the mechanisms of individual preferences regarding the production of private goods, then the state is an analogue of the market and reveals the preferences of individuals regarding the production of public goods. A feature of this mechanism for identifying preferences is its non-market nature.

J. Buchanan wrote: "Public choice is a view of politics that arises as a result of the extension of the application of the tools and methods of the economist to collective or non-market decisions."

James Buchanan

American economist James McGill Buchanan was born in Murfreesboro, Tennessee. His father, James, after whom J. Buchanan was named, was a farmer, and his mother, Leela (née Scott) Buchanan, was a school teacher before marriage; J. Buchanan's parents were actively involved in local political life. Grandfather John P. Buchanan served one term as Governor of Tennessee; he was nominated for the position by the Populist Farmers' Union. His parents urged him to repeat the path traveled by his grandfather. However, the Great Depression thwarted plans to study law at Vanderbilt University. Instead, he enrolled at Middle Tennessee Teachers College in Murfreesboro, earning his tuition and books by milking cows.

He received his economic education at the University of Tennessee (MA, 1941) and the University of Chicago (Doctor, 1948). He has been a professor of economics at the University of Tennessee (since 1950), the University of Florida and the University of Virginia (since 1956), and has taught at other educational institutions. In recent years, he has worked at the Public Choice Research Center in Fairfax, Virginia.

The name of J. Buchanan is inextricably linked with the science of public choice. For a long time there was a belief that the decisions taken by individual politicians, political and state organizations should be aimed at bringing the greatest benefit to the whole society. K. Wixel in 1897 for the first time defined politics as a mutually beneficial interchange between citizens and public structures. Developing his ideas, J. Buchanan and G. Tulloch in 1962 published a book under a rather unusual title - "Consent Calculation". Their goal is to analyze the process of making economic decisions by mixed methods of economic and political sciences; the initial premise is directly opposite to the generally accepted one - the decisions of politicians and public organizations proceed, first of all, from their own interests. The main goal of politicians, for example, is to get the maximum vote in elections (as a result, before elections they often make unreasonable decisions from an economic point of view), and state bodies - to maximize their size and power. Here you can see an analogy with microeconomics, built on two fundamental assumptions: the consumer seeks to maximize utility, and the firm seeks to maximize profits. When analyzing the market, we operate with the concepts of supply and demand; in public choice, such opposites are groups of voters and lobbying organizations that differ in their goals and requirements, on the one hand, and politicians, on the other. As a result of their interaction concrete political decisions are born. Various decision-making procedures have also been explored, such as voting rules, as well as the structure of the legislatures themselves.

J. Buchanan in 1986 was awarded the Alfred Nobel Memorial Prize in Economics "for the study of the contractual and constitutional foundations of the theory of economic and political decision making." The decision of the Royal Swedish Academy of Sciences stated that "J. Buchanan's main achievement is that he constantly and persistently emphasized the importance of fundamental rules and applied the concept of the political system as an exchange process in order to achieve mutual benefit."

http://gallery.economicus.ru

The main areas of analysis in the theory of public choice are: the electoral process; activity of deputies; theory of bureaucracy; regulation policy and constitutional economics. An important role in their development was played by J. Buchanan, D. Muller, W. Niskanen, M. Olson, G. Tulloch, R. Tollison, F.A. Hayek and other scientists. By analogy with the market of perfect competition, they begin their analysis with direct democracy, then moving on to representative democracy as a limiting factor.

The problems of public choice theory can be formulated as a series of questions:

Is it possible to find a fair collective solution?

· How to "measure" the opinion of individual voters?

· How to influence fellow citizens to make the right decision?

· What are the goals of public welfare? In the interests of whom should society develop in the first place?

· Why do the interests of consumers prevail in verbal disputes, but the interests of producers control politics?

· How to create a coalition government? What are the reasons for the stability of coalitions?

· How do people benefit from the political process?

· Why does the law degenerate into arbitrariness? How to prevent the transformation of democracy into an authoritarian regime?

These questions show that, moving from the simple to the complex, it is possible to analyze various aspects of the modern political system by economic methods.

The main assumptions of public choice theory are:

methodological individualism;

the concept of economic man;

· Politics as an exchange.

Public choice theory is a special case of rational choice theory, which develops the concept methodological individualism, incorporated in the works of T. Hobbes, B. Mandeville, A. Fergusson, K. Menger. This concept consists in the fact that people acting in the political sphere strive to achieve their personal interests under the restrictions imposed by operating system political institutions.

A person in a market economy, identifying his preferences with a product, seeks to make decisions that maximize the value of the utility function, i.e. his behavior is rational. The formulation of the concept of "rationality" is considered not only in a strict form (maximization principle), but also taking into account the time limit, when people strive to provide a certain level of their needs and are guided in their activities, primarily by the economic principle, comparing marginal benefits and marginal costs. . Therefore, public choice theory is based on the concept of "economic man".

Another of the methodological approaches of the public choice theory is the approach to politics as a mutually beneficial exchange based on the analogy between the market for goods and the political market.

Politics as exchange

Politics is a complex system of exchange between individuals in which they collectively seek to achieve their private interests, since they cannot realize them through ordinary market exchange. There are no other interests, except for individual ones. In the market, people exchange apples for oranges, and in politics, they agree to pay taxes in exchange for the benefits that everyone and everyone needs: from the local fire department to the court.

Buchanan J. Constitution of economic policy //

Questions of Economics. - 1994. - No. 6. - S. 108.

In the market, people express their preferences in the consumption of goods as a buyer, forming the demand for goods and services, and consumers of public goods express their interests as voters through the voting mechanism. Vote- this is a peculiar form of taking into account individual preferences, in accordance with which the will of the participants is carried out.

Unlike private, public choice is carried out at certain intervals, limited by the circle of applicants, each of whom offers his own program. Voters are more limited in their choice than buyers of goods in the market, primarily in terms of the information they have.

Participants in the political process are also politicians and civil servants (administrators, officials, bureaucracy).

Politicians define development goals and means to achieve them, seek approval for the programs they have formulated and, if supported, seek ways to implement their programs. Politicians are a kind of entrepreneurs; however, they are interested in the demand for their products not from buyers, but from voters; in their activities there is not the principle of self-sufficiency, but the need for re-election; they maximize not profit, but prestige.

A politico-economic circuit is formed, similar to the circuit of goods and services, where households and firms are replaced by voters and politicians, and instead of markets for goods and resources, the political market and the market for public goods are used (Fig. 14.1).

In the simplest model, voters shape social preferences. In the political market, the most popular politicians are selected, to whom voters delegate their powers by voting. Politicians, in turn, legislate and organize the supply of public goods to voters.

Rice. 14.1.Political-economic circuit

This model can be complicated by the inclusion of bureaucrats (Figure 14.2). The term "bureaucracy" is used in the Weberian sense of the word - as a designation of the rational activity of professional civil servants. Voters who voted for politicians are directly subordinate to the bureaucrats. The behavior of bureaucrats is determined not only by legislators, but also by job descriptions, defining their rights and obligations, their minimum goal is to maintain their position, the maximum is to increase their status.

Rice. 14.2.Political-economic circuit with the participation of the bureaucracy

Thus, the main problem of public choice is the problem of rational behavior of voters, and lies in the fact that from the standpoint of an individual it is irrational to make significant efforts in order to extract information that contributes to a more rational public choice.

Spreading system methods research is accompanied by the development of economic and mathematical modeling. Public choice theory is dominated by statistical and econometric methods based primarily on positivism. The most widely developed econometric techniques are structural equation models, time series analysis, and non-linear estimates.

14.2. Model of interaction between politicians and voters.
Public choice under direct democracy.
Median voter model. public choice
in a representative democracy. The Voting Paradox

Unlike an authoritarian society in a democratic state, political decisions are evaluated and approved by the people, which takes place both directly in referendums and indirectly, through alternative elections. The main features of democracy are manifested in: participation in government; realization of constitutional freedoms; equality of opportunity for the development of each person.

Let us consider how public choice is carried out in conditions of direct and representative democracy. direct democracy- this is politic system in which every citizen has the right to personally vote for a political course or program.

With an increase in the number of voters and an increase in problems that require constant solution, direct democracy is impossible. There is a need for representative institutions and the selection of candidates for them. Representative Democracy is a political system in which citizens periodically elect representatives to elected bodies.

unanimity rule suggests that a certain alternative can be said to be preferred only if it is preferred by all individuals in the group. Thus, the decision is made only if all those participating in the voting vote for it. It is rather difficult to achieve such a solution, since the preferences of individuals differ from each other; as a rule, this requires time, money, search for compromises.

In order to reduce the decision costs associated with the unanimity rule, the majority rule is used. J. Buchanan and G. Tulloch proposed a model for determining the optimal majority (Fig. 14.3).

Rice. 14.3.Optimal majority according to J. Buchanan and G. Tulloch

Buchanan J., Tulloch G. Consent calculation. Logical foundations
constitutional democracy // Buchanan J. Works. – P. 99–105.

The costs incurred by the team when making a decision can be divided into internal (deviations in utility levels from those values ​​that could be achieved with a unanimous decision) and external costs. In order for a decision to be made, the individual must spend some time and effort to develop a collective choice and achieve agreement in the group - these are external costs (curve FROM). A rational individual at the moment of a constitutional choice will try to make a decision that will allow him to minimize the amount of costs associated with its adoption. Optimal Majority (K/N) is determined by the number of voters that minimizes the total cost.

simple majority rule assumes that of the two options proposed for consideration, the one in favor of which more than half of those participating in the procedure will speak out will be chosen. It is optimal for a group in which the opportunity cost of time is of great importance.

Condorcet's rule according to which the voting options are compared in pairs. The option with the most votes is better than any other (by comparing each option with each other) wins.

Board rule allows for a single application of the procedure to make a choice between several different alternatives. At the same time, each agent ranks the states of society and assigns numbers (ranks) to different states in accordance with their preferences: 1 is assigned to the most preferred one; 2 - next, etc. According to the rule, the winner is the alternative with the smallest sum of ranks over all individuals.

The rule of choice "by tradition" assumes the presence of some given preferences, which are considered traditional. With any preferences of individuals, the choice will be made in accordance with traditional preferences.

In conditions of direct democracy, when decisions are made by a majority of votes, it is possible to choose in favor of an economically inefficient result; all decisions tend to be in the interests of the median voter.

Median voter model- a model that characterizes the tendency according to which decision-making within the framework of direct democracy is carried out in accordance with the interests of a person occupying a place in the middle of the scale of interests of a given society.

A rationally acting politician seeks to secure the support of the largest possible number of voters; however, it can be found by sticking to the central part of the political spectrum.

Let there be some set of alternatives located on the same scale (Fig. 14.4). These may be, for example, different amounts of total budget expenditures or the parameters of a particular social program.

Rice. 14.4.Scale of political alternatives

in letters (A, B, C, D, E, F, F) we denote the alternatives, each of which is most preferable for one of the voting individuals (or groups of voters of the same size). If out of three politicians one advocates an alternative BUT, second G, and the third D, then in elections held in several rounds, the first will be clearly uncompetitive, and the third will ultimately yield to the second.

The advantage of the third politician is that his position coincides with the point of view of the median voter, on both sides of which there is on the scale equal number alternatives supported by other voters. It should be noted that the position of the median voter is not necessarily located exactly in the center of the scale; it is important that he occupies a middle position among the voters. In this case, he is provided with the possibility of a coalition with at least half of the remaining voters, which means that the alternative approved by him will receive the majority of votes.

When comparing alternatives G and D everyone who is "to the left" G(these are supporters of the position BUT,B,AT), support G, and when compared G and BUT the coalition with the “median voter” will be joined by everyone who is “to the right” of him ( D, E and AND), and perhaps also B and AT. The latter already depends on the ratio of "distances" on a scale from these points to BUT and G. The defining role of the “median voter” is a real and very important trend in political life and the development of the public sector. It is especially noticeable in stable, relatively homogeneous societies. They are characterized, in particular, by successive electoral victories of two or three moderate parties, whose programs diverge approximately within the same range in which the preferences of the “median voter” can fluctuate.

The median voter model is also relevant for representative democracy, but in this case the situation becomes more complicated. A politician, in order to achieve his goal, very often has to make significant adjustments to his original program or abandon its original principles.

In a representative democracy, the voting process becomes more complicated, but it also has a number of advantages. Elected deputies specialize in making decisions on certain issues; Legislative assemblies organize and direct the activities of the executive power, monitor the implementation of decisions made.

However, public choice theory shows that one cannot fully rely on the results of voting, moreover, the very democratic procedure of voting in legislative bodies does not prevent the adoption of inefficient economic decisions.

The situation in which a stable collective choice is not feasible is described, in particular, by the well-known voting paradox. This is a contradiction that arises from the fact that majority voting does not provide for the identification of real public preferences.

Assume that there are three equal groups of voters, or parliamentary factions (I, II and III), who have to choose from three alternatives, one of which is, for example, a tax cut. (H), the other is an increase in defense spending (O), and the third is the expansion of the health protection program (Z). Table 14.1 presents two of the possible preference profiles. preference profile is a description of the order in which the participants in the choice rank the available alternatives.

Table 14.1

Preference profiles

First option	Second option
I: N, O, Z	I: N, O, Z
II: O, N, Z	II: O, Z, N
III: N, Z, O	III: Z, N, O

In the first variant, group I prefers tax cuts most of all, the strengthening of defense is less highly valued, and the development of health care is even lower; for Group II, defense comes first, tax cuts come second, and healthcare comes third; for group III, tax cuts are most important, followed by health care, and defense is the least attractive. In whatever order the alternatives are put to the vote H, O, W will receive support H. For example, if you first compare O and W, then by votes I and II, support is given to O, and then when comparing O and H victory will go H by votes I and III. The same result will be achieved if first matched O and H or H and W. Alternative H will be chosen, and if the decision is made in some other way (but with the preservation of the majority principle), for example, if the least popular alternative is cut off first, and then the remaining two are compared.

However, if the preference profile corresponds to the second option, then round robin, which is the content of the paradox. If the second option compares H and O, votes I and III give preference to H. At the next step, when comparing N and Z, support is received by W by votes II and III. However, if we compare W and O, then the advantage will go to the alternative rejected at the very beginning O, after which a new cycle of comparisons will lead to the same unstable results.

In this case, preferences are not transitive, in which the selection process can continue indefinitely without providing a stable outcome. If the procedure involves stopping, then two cases are possible: either the order in which the alternatives are compared is chosen at random, in which case the result of the choice is arbitrary, or the order of comparisons is controlled by one of the participants, in which case this participant is able to achieve the result that he prefers, those. the result is manipulated. In both cases, the procedure is difficult to recognize as rational. It is customary to call a choice rational, which is characterized by both completeness and transitivity.

The paradox of voting shows that the generally accepted approach to the implementation of the collective choice, based on the principle of the majority, does not provide rationality, i.e. the requirement of rationality is incompatible for him with the requirement of universality. The answer gives impossibility theorem, proved by K. Arrow. Arrow's theorem states that there is no social choice rule that simultaneously satisfies the following requirements (axioms):

unanimity;

the absence of a dictator;

· transitivity;

coverage (completeness and universality);

Independence from outside alternatives.

In other words, the impossibility theorem reveals that for any choice procedure, if it is collective (there is no “dictator”), there can be such preference profiles for which there is no stable, unmanipulable voting outcome.

From this point of view, collective choice is more vulnerable than individual choice. The absence of a collective decision that would not be arbitrary or manipulated is the more likely, the more significant the dissimilarity of individual positions and conflicts of interest, and the heterogeneity of issues contained in one program, the multiplicity of criteria used.

14.3. Special interest groups. Lobbying. Logrolling.
bureaucracy model. Seeking political rent

Politicians and civil servants cannot be equally familiar with all aspects of the problems they are solving. Moreover, they, like voters, are characterized by rational ignorance. So, if a member of parliament is elected predominantly by the votes of rural residents, is interested mainly in their support and deals primarily with agricultural issues, then, participating in voting, for example, on amendments to the copyright law, he is unlikely to study in detail the history of the issue, the advantages and disadvantages of possible solutions, etc.

Interest groups often concentrate their efforts on forming the position they need not so much of the voters themselves as of the authorities. This is achieved through lobbying. Lobbying- these are attempts to influence representatives of the authorities in order to make a political decision that is beneficial for a limited group of voters. Explicit abuses aside, the point of lobbying is to explain to the authorities the position of the group concerned and to present arguments in its defense.

If lobbying becomes widespread, it becomes a sphere of competition for groups that defend divergent, sometimes opposing interests. Each of the groups is forced to oppose its own arguments and methods of influence to the arguments and actions of rivals. In principle, multidirectional influences can be balanced. But differences in the activity and cohesion of special interest groups, and most importantly, in their resource capabilities, can give rise to noticeable shifts in the positions of authorities.

A great contribution to the analysis of special interest groups and the theory of lobbying was made by the permanent head of the Center for the Study of Collective Choice of the University of Maryland, Professor Mansoor Olson (1932–1998).

In legislative activities, politicians seek to increase their popularity by using a system logrolling("rolling the log"). This is the practice of mutual support for political decisions through the trading of votes. Each deputy chooses the most important issues for his voters and seeks to obtain the necessary support from other deputies. A deputy buys support on his own issues, giving his vote in return in defense of the projects and programs of his colleagues. Not all vote trading is a negative phenomenon, sometimes with the help of logrolling it is possible to achieve a more efficient distribution of economic resources. However, the opposite effect cannot be ruled out.

The classic form of logrolling is the "barrel of bacon" - a law that includes a set of small local projects that various groups of deputies are interested in adopting.

The interaction of voters and politicians, as well as the decisions of representative bodies, usually determine only general strategies for the development of the public sector. Its concretization and implementation are the tasks of the executive authorities. At the direct disposal of these bodies is the legal right of coercion, which distinguishes the state from other subjects of the market economy.

In the theory of public choice, the state apparatus and its employees are usually denoted by the term "bureaucracy". The bureaucracy does not produce economic benefits and extracts part of the income from sources not related to the sale of the results of its activities. In this case, those deliberately negative associations that are associated with this term in Russian are not necessarily implied. In particular, constant conscious deviations from the performance of duty are by no means assumed.

While entrepreneurs are guided by a profit margin that can be accurately measured, politicians have ultimately quantified criteria for success (electoral victory); the state apparatus is busy with the implementation of heterogeneous, often amenable to not quite unambiguous interpretation of the decisions of representative bodies. It is easier to fulfill this mission, the more resources are at the disposal of the bureaucracy. At the same time, there are usually no clear and universal criteria for evaluating performance.

The apparatus of executive bodies not only implements the adopted political decisions, but actually participates in the preparation of most of them. At the same time, the bureaucracy shows its interest in easing resource constraints and not defining tasks too rigidly. Employees of specialized state bodies have significant advantages in being informed on specific issues, which allows them to form the opinions of politicians. Often there are informal coalitions between specialized bodies and interest groups advocating the adoption of the same projects.

The bureaucracy is not interested in conflicts with active special interest groups. The position of civil servants, especially high-ranking ones, depends on the approval of politicians and the public. Those government agencies and officials who have managed to enlist the sympathy of active influential groups can count on their support even in the event of a clear failure.

Bureaucracy is most often characterized by the desire for stability. An entrepreneur is often ready to take risks and make fundamental changes, since, on the one hand, he manages his own resources, and on the other hand, if successful, the result will be his profit. It is more difficult for civil servants to undertake major innovations because they spend public funds and are constrained by regulations. If the innovation brings a huge return, the employee who proposed it is likely to receive only a relatively modest bonus or another position.

The greater the advantages of bureaucracy in terms of information and its real influence on political decision-making, the more likely, all other things being equal, the excessive expenditure of resources in the public sector and the conservation of non-optimal options for its development.

A certain interest in economy and innovation is created by competition between bodies that perform similar or interchangeable functions. Each of them, seeking to expand the scope of their competence and increase the degree of influence, can look for the most effective solutions.

Public choice theory considers several models of bureaucracy.

U. Niskanen for the first time approached the study of the activities of bureaucratic institutions from the standpoint of a cost-benefit analysis. The focus of his attention was on the questions: what is the volume of output? what are the costs of its production? How do inputs and outputs change with changing conditions? In relation to the firm, this meant the ratio of budget and output.

William Arthur Niskanen: From Practice to Theory of Bureaucracy

William Arthur Niskanen was born in 1933. He graduated from the University of Chicago in 1957 and worked as a staff economist for five years (1957–1962) at the RAND Corporation, the largest public welfare and safety research center. USA. In this “thinking tank”, quite large economists dealt with the problems of the military-industrial complex, among which Armen Alchiyan, George Danzig, William Sharp and others can be mentioned. Over the years, he not only noticeably succeeded in matters of military logistics, but also prepared a doctoral dissertation “ Demand alcoholic drinks”, which he defended at the University of Chicago.

Since 1962, U. Niskanen has been working at the US Department of Defense, where he directs special research in the Systems Analysis Department. In 1964, he was appointed director of the Department of Economic and Political Studies of the Institute for Defense Studies. It was at this time that his interest in public choice theory was born. In 1971, his monograph "Bureocracy and Representative Government" appeared. From September 1972 to July 1975, U. Niskanen was professor at the School of Public Policy at the University of California (Berkeley). From 1975 to 1980, he again becomes a bureaucrat, but this time in a private company, holding the post of director of economics for Ford. From 1981 to 1984, he was one of the economic advisers to the Reagan administration, which served as the basis for his book Reaganomics (1988).

However, the desire for political and economic research gradually began to prevail over the vocation of a political analyst. From 1985 to the present, William Niskanen has served as chairman of the board and staff economist at the Cato Institute in Washington. The Cato Institute is a non-governmental institution that analyzes the American economy from the standpoint of classical liberalism (libertarianism). It was during these years that his theory of bureaucracy became one of the main areas of research in the new political economy. Continuing the traditions of G. Tulloch and E. Downes, U. Niskanen creates an original model of a maximizing bureaucrat, which he significantly refined and developed in his works of the 1990s. His great contribution to the development of the new political economy was recognized by his election as President of the Public Choice Society (1998–2000).

The development of Niskanen's concept went through two phases; the original version was reflected in the 1971 book Bureaucracy and Representative Government; a more general model was formulated in 1975. Its essence was that a bureau is an organization that supplies a given amount of public goods for a monopoly buyer of its services. This buyer is usually a group of political officials. In turn, the bureau is also a monopoly. There is a situation of bilateral monopoly, a feature of which is the exchange of promised products for the budget allocated by the bureau. As with any bilateral monopoly, there is no single equilibrium. The conclusion from the model, which is by no means indisputable, was that, except in some special cases, the output from budget maximization was carried out efficiently by the bureaucracy.

Niskanen's model gave a broad impetus to the study of the behavior of bureaucracy. However, she left aside questions of the institutional environment in which the bureau operates. Therefore, the issues of further development of the theory of bureaucracy are closely related to the development of the problems of constitutional economics.

Unlike U. Niskanen, G. Tulloch (1974) approaches the analysis of bureaucracy as a dynamic process. He is interested in the growth factors of the bureau. It uses an exponential growth function for this. The maximization of the budget by a rational individual is expressed in an increase in the number of employed bureaus.

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PUBLIC CHOICE THEORY

Introduction

Chapter 1 Public Choice Theory

1.1 History of the development of public choice theory

1.2 Genesis of public choice theory

Chapter 2

2.1 Background of public choice theory

2.2 Logrolling and political rent seeking

Chapter 3

3.1 Using public choice theory to predict the behavior of voters and politicians

3.2 Using Public Choice Theory to Predict Bureaucracy Behavior

Conclusion

List of used literature

INTRODUCTION

Public choice theory is a branch of economic science that studies the patterns of choice of government activities in the field of economics and how this choice is made under the pressure of a democratic system.

This theory is based on the basic idea that a person in any area of ​​his activity seeks to maximize the result in his own interests. As an independent direction of economic science, it was formed in the 1950s and 60s. However, in a modern interpretation, it originates from the work of J. Buchanan "The Limits of Freedom" (1975). public choice voter politician

Public choice theory is sometimes referred to as the "new political economy" because it deals with the study of the political mechanism of macroeconomic decision-making. According to Buchanan, this theory is based on three main premises: methodological individualism, the concept of "economic man" and the analysis of politics as a process of exchange.

Representatives of the theory of public choice consider the political market by analogy with the commodity market, where the state is also a market in which voters and politicians exchange votes and election promises in order to gain access to the distribution of resources and places on the hierarchical ladder. At the same time, the activities of state representatives are often far from ideal.

According to this theory, the failures of the state include: a) the limited information necessary for decision-making (the presence of an active lobby and a powerful bureaucratic apparatus leads to a significant distortion of the available information); b) imperfection of the political process (manipulation of votes, bureaucracy, search for political rent); c) limited control over the bureaucracy (the larger the state apparatus, the more difficult it is to fight the bureaucracy); d) the inability of the state and persons representing it to foresee and effectively control the immediate and long-term consequences of government decisions.

Every person has faced in his life the need to make a choice. The future of a person depends on it, any wrong step can destroy a career, family life, the fate of other people. All the more important is the right choice in solving state issues.

The study of the mechanisms of public choice is extremely important for politicians in order to find support from the people, managers, in order to better understand how public demand is formed, entrepreneurs, since the external environment has a direct impact on any firm.

Based on this and taking into account the foregoing, we can conclude that the topic of public choice is very relevant.

Among the foreign scientists involved in the study of this problem, one can note J. Buchanan, Muller Denis, D. Tulloch and others. Among domestic scientists, Nureyev R. M. can be noted.

The main purpose of this work is to consider the theory of public choice. The goal set in the work determined the objectives of the study, namely:

1. Analyze the genesis and main provisions of the theory of public choice.

2. Consider the possibilities of practical application of the provisions of the theory of public choice.

CHAPTER 1. PUBLIC CHOICE THEORY

1.1 History of the development of public choice theory

One of the founders of public choice theory is the American economist James McGill Buchanan.

An important role in the formation of the theory of public choice was played by the works on the political philosophy of T. Hobbes, B. Spinoza, as well as the political science studies of J. Madison and A. de Tocqueville. As an independent direction of economic science, it was formed only in the 50-60s of the XX century.

The discussions of the 1930s and 1940s gave an immediate impetus to the theory of public choice. on problems of market socialism and welfare economics (A. Bergson, P. Samuelson).

A wide response in the 1960s was caused by K. Arrow's book "Social Choice and Individual Values" (1st ed. 1951, 2nd ed. 1963), which drew an analogy between the state and the individual. In contrast to this approach, J. Buchanan and G. Tulloch in the book "The Calculation of Consent" (1962) drew an analogy between the state and the market. The relationship of citizens with the state was considered in accordance with the principle of "quid pro quo" (quid pro quo).

Trade in the political market develops primarily in connection with externalities and public goods. In the 1960s, Buchanan published a number of papers on these issues. First of all, it should be noted the book “Fiscal Theory and Political Economy” (1960), the articles “Externalities” (1962, written jointly with W. Stubblebin), “The Economic Theory of Clubs” (1965) and the book “Public Finance in the Democratic Process” ( 1966). It was these ideas, further developed in Buchanan's "The Limits of Freedom" (1975), that contributed to the spread of public choice theory. After the publication of this work, the popularity of Buchanan's ideas among academic economists increased dramatically.

Buchanan and Richard Wagner, in Democracy in Shortfall (1977), argued for the constitutional requirement for a balanced budget. In The Power of Taxation (1980), written by Buchanan with Geoffrey Brennan, this theme is developed further. In particular, it justifies constitutional restrictions on the government's rights in the field of taxation. Thus, Buchanan approaches the idea of ​​a balanced state budget from two sides - from the side of expenditures and from the side of income.

In 1985, another work by Buchanan was published, written jointly with J. Brennan, "The Foundations of the Rules." It substantiates the importance of norms and rules in all spheres of society. The authors of the book compare the rules of the market and political orders. They deepen the understanding of the contractual (contractual) foundations of society, comparing the political "playing by the rules" with "playing without any rules" and analyzing their consequences. This book raises the question of the possibility of a constitutional revolution in a democratic society, which should lead to the formation of a constitutional economy - an economy that can stop the unrestrained growth of the state apparatus, put it under the control of civil society.

Given all of the above, we can conclude that public choice theory is one of the branches of economics that studies the various ways and methods by which people use government institutions for their own interests.

1. 2 Genesis of the theorypublic choice

Public choice theory is one of the most striking areas of economic imperialism, associated with the application of the methodology of neoclassical economic theory to study political processes and phenomena.

The theory of public choice is sometimes called the "new political economy", as it studies the political mechanism of formation of macroeconomic decisions. Criticizing the Keynesians, the representatives of this theory questioned the effectiveness of government intervention in the economy. Consistently using the principles of classical liberalism and the methods of microeconomic analysis, they actively invaded the area traditionally considered the field of activity of political scientists, lawyers, sociologists (such intervention was called "economic imperialism").

Criticizing state regulation, representatives of the theory of public choice made the object of analysis not the impact of monetary and financial measures on the economy, but the process of making government decisions.

Originating in the 1960s as a branch of economics dealing with taxation and government spending, public choice theory has greatly expanded its scope of analysis in the following decades and can now be considered as a discipline that rightly claims to be the economics of politics.

The ideas underlying the theory of public choice were first formulated at the end of the 19th century by representatives of the Italian school of public finance: M. Pantaleoni, U. Mazzola, A. De Viti de Marco and others.

This approach was further developed in the works of representatives of the Swedish school in economics- K. Wicksell and E. Lindahl, who paid primary attention to political processes that ensure the definition of state budgetary policy.

The developed approaches remained practically unknown to other researchers for a long time. At the same time, in the 1940-50s, ideas about the rational nature of the behavior of individuals in the political sphere began to actively penetrate into scientific discussions, thanks to the works of J. Schumpeter, C. Arrow, D. Black, E. Downes published during this period.

The combination of these two directions became the basis for the development of a set of ideas now known as public choice theory. Representatives of the so-called Virginia School of Economics played a key role in this. The recognized leader of this school is J. Buchanan, who was awarded the Nobel Prize in 1986.

Thanks to the numerous works of J. Buchanan, as well as other specialists in the field of public choice theory, such as J. Brennan, W. Niskanen, M. Olson, G. Tulloch, R. Tollison and others, since the early 1960s, there has been Significant progress has been made in developing both the basic ideas of public choice theory and child theories based on these ideas.

In conditions of limited resources, each of us is faced with the choice of one of the available alternatives. Methods for analyzing market behavior are universal. They can be successfully applied to any of the areas where a person must make a choice.

The basic premise of public choice theory is that people act in the political sphere in pursuit of their own self-interest. Rational politicians support, first of all, those programs that contribute to the growth of their prestige and increase the chances of winning the next election. Thus, public choice theory attempts to consistently implement the principles of individualism, extending them to all types of activity, including public service.

The second premise of public choice theory is the concept of the economic man. A person in a market economy identifies his ideas with the product. He seeks to make decisions that maximize the value of the utility function.

His behavior is rational. The rationality of the individual has a universal meaning in this theory. This means that everyone, from voters to the president, is guided in their activities primarily by the economic principle, i.e. compare marginal benefits and marginal costs: MB > MC, where MB is the marginal benefit; MC - marginal cost.

The third premise, the interpretation of politics as a process of exchange, goes back to the dissertation of the Swedish economist Knut Wicksell "Studies in the Theory of Finance" (1896). He saw the main difference between economic and political markets in terms of the manifestation of people's interests. This idea formed the basis of the work of the American economist J. Buchanan.

Proponents of the theory of public choice consider the political market by analogy with the commodity. The state is an arena of people's competition for influence on decision-making, for access to the distribution of resources, for a place in the hierarchical ladder. However, the state is a special kind of market. Its participants have unusual property rights: voters can choose representatives to the highest bodies of the state, deputies - to pass laws, officials - to monitor their implementation. Voters and politicians are treated as individuals exchanging votes and campaign promises.

A basic tenet of public choice theory is that people act in the same way in their private roles as they do in any public role. In analyzing people's personal choices, economists have long concluded that people act in the rational pursuit of personal gain. As consumers, they maximize utility; as entrepreneurs they maximize profits, and so on.

A decision made by or on behalf of a group is sometimes called a public choice. The study of a market economy has largely focused on the choices made by individuals, but in all economies many decisions regarding the allocation of resources are made by governments or other groups.

Economists are interested in the ways in which such collective decisions are made and the resource allocations to which they lead. Economists are particularly interested in the Pareto optimality of collective decisions and the degree to which such decisions reflect the personal preferences of individuals.

Impossibility theorem K.J. Arrow points out that there are serious difficulties in forming collective choices based on individual values.

Summarizing all the above, we can draw the following conclusions:

1) representatives of the theory of public choice made the object of analysis not the impact of monetary and financial measures on the economy, but the process of making government decisions;

2) in conditions of limited resources, each of us faces the choice of one of the available alternatives.

3) methods of market behavior analysis are universal and can be successfully applied to any of the areas where a person has to make a choice.

4) Public choice theorists assume that the actions and choices of people in public office are also driven by considerations of personal gain.

CHAPTER 2. MAIN PROVISIONS OF THE THEORY OF PUBLIC CHOICE

2.1 Background of public choice theory

Public Choice Theory- one of the modern neo-institutional economic theories, formed in the 50-60s. 20th century Its founder is the American scientist-economist J. Buchanan, who received the Nobel Prize in Economics in 1986 for research in the field of public choice theory.

Public choice theory is sometimes called the new political economy because it studies the political mechanism of macroeconomic decision making.

Criticizing the Keynesians, representatives public choice theories have questioned the effectiveness of government intervention in the economy. Consistently using the principles of classical liberalism and the methods of microeconomic analysis, they actively invaded the area traditionally considered the field of activity of political scientists, lawyers and sociologists. This intervention was called economic imperialism.

Proponents of the theory of public choice consider the political market by analogy with the commodity. The state is an arena of people's competition for influence on decision-making, for access to the distribution of resources, for a place on the hierarchical ladder. However, the state is a special kind of market. Its participants have unusual property rights: voters can choose representatives to the highest bodies of the state, deputies - to pass laws, officials - to monitor their implementation. Voters and politicians are treated as individuals exchanging votes and campaign promises.

The object of analysis of this theory is the public choice in conditions of both direct and representative democracy. Therefore, the main areas of its analysis are the electoral process, the activities of deputies, the economics of the bureaucracy and the policy of state regulation of the economy. By analogy with the perfectly competitive market, public choice theorists begin their analysis with direct democracy, moving on to representative democracy as the limiting factor.

Direct democracy is a political system in which every citizen has the right to personally express their point of view and vote on any specific issue.

Within the framework of direct democracy, there is a model of the so-called median voter, according to which decision-making is carried out in accordance with the interests of the centrist voter (a person who occupies a place in the middle of the scale of interests of a given society). At the same time, resolving issues in favor of the centrist voter has its pluses and minuses. On the one hand, it keeps the community from making unilateral decisions, from extremes, on the other hand, it does not always guarantee the adoption optimal solution, since even in conditions of direct democracy, when decisions are made by a majority of votes, it is possible to choose in favor of an economically inefficient result (for example, underproduction or overproduction of public goods). The fact is that such a voting mechanism does not allow taking into account the totality of the benefits of an individual.

The median voter model is also relevant for representative democracy, but here the selection procedure becomes more complicated. A presidential candidate, in order to achieve his goal, must appeal to the centrist voter at least twice: first within the party (for his nomination from the party), and then to the median voter among the entire population. At the same time, in order to win the sympathy of the majority, one has to make significant adjustments to one's original program, and often even abandon its fundamental principles.

Unlike private, public choice is carried out at certain intervals, limited by the circle of applicants, each of which offers its own package of programs. The latter means that the voter is deprived of the opportunity to elect several deputies: one - to solve employment problems, another - to fight inflation, the third - on problems foreign policy etc. He is forced to elect one deputy, whose position does not completely coincide with his preferences.

Representative democracy has a number of undeniable advantages. In particular, it successfully uses the benefits of the social division of labor. Elected deputies specialize in making decisions on certain issues. Legislative assemblies organize and direct the activities of the executive power, monitor the implementation of decisions made.

At the same time, in a representative democracy, it is possible to make decisions that do not correspond to the interests and aspirations of the majority of the population, which are very far from the model of the median voter. Prerequisites are being created for making decisions in the interests of a narrow group of people. Ways of influencing representatives of power in order to make a political decision beneficial to a limited group of voters are called lobbying.

Representatives of the theory of public choice have clearly shown that it is impossible to rely entirely on the results of voting, since they depend to a large extent on the specific rules of decision-making. The very democratic procedure of voting in legislative bodies also does not prevent the adoption of economically inefficient decisions. This means that there is no rational approach in the society (elected body), and the principle of transitivity of preferences is violated.

J. Condorcet called this situation the paradox of voting. The voting paradox is a contradiction arising from the fact that majority voting does not reveal the true preferences of society regarding economic goods. This problem was further developed in the works of the American economist K. Arrow.

Therefore, when developing regulations, the influence of market factors that hinder the adoption of fair and effective bills should be avoided. Democracy is not limited to the voting procedure, the guarantor of democratic decisions must be firm and stable constitutional principles and laws.

In conclusion, we can conclude that public choice theory is based on three main premises: methodological individualism, Adam Smith's concept of "economic man", and the analysis of politics as a process of exchange.

2.2 Logrolling and political rent seeking

In everyday legislative activities, deputies seek to increase their popularity by actively using the logrolling system - the practice of mutual support through "trading" of votes. Each deputy chooses the most important issues for his voters and seeks to obtain the necessary support from other deputies. The deputy “buys” support on his own issues, giving his vote in return for the defense of the projects of his colleagues.

Proponents of the theory of public choice do not consider any "trading" of votes as a negative phenomenon, since sometimes with its help it is possible to achieve a more efficient allocation of resources, that is, an allocation that increases the overall ratio of benefits and costs in accordance with the Pareto-optimality principle. However, the opposite effect cannot be ruled out. Going to meet local interests, with the help of logrolling, the government obtains the approval of a large state budget deficit, an increase in defense spending, etc. In this way, national interests are often sacrificed for regional benefits.

The most important area of ​​public choice theory is the economics of bureaucracy. According to this theory, the economy of bureaucracy is a system of organizations that satisfies at least two criteria: firstly, it does not produce economic benefits that have a value assessment, and, secondly, it extracts part of its income from sources not related to the sale of its results. activities. By virtue of its position, the bureaucracy is not directly connected with the interests of voters; it primarily serves the interests of various echelons of the legislative and executive branches of power. Officials not only implement the adopted laws, but also actively participate in their preparation. Therefore, they are often directly linked to special interest groups in parliament. Through bureaucrats, special interest groups "process" politicians, present information in a favorable light for them.

Realizing their own goals and the interests of special groups, bureaucrats strive to make decisions that would open up access for them to the independent use of various resources. They can earn little from saving public goods, but the adoption of expensive programs provides them with wide opportunities for personal enrichment, strengthening influence, strengthening ties with groups supporting them and, ultimately, for preparing ways to “retreat” to some “warm place”.

It is no coincidence that many corporate employees, after working in the state apparatus, return to their corporations with a noticeable increase. This practice is called "revolving door systems".

The strengthening of the bureaucracy increases the inefficiency of the organization. In a private firm, a simple measure of efficiency is profit growth. There is no such clear criterion in the state apparatus. The usual response to "failures" of past programs is to increase appropriations and staff growth. All this contributes to the swelling of the state apparatus - people engaged in the search for political rent.

Political rent seeking is the pursuit of economic rent through the political process. Government officials seek to obtain material benefits at the expense of both society as a whole and individual decisions. Bureaucrats, participating in the political process, seek to carry out such decisions in order to guarantee themselves the receipt of economic rent at the expense of society.

Politicians are interested in solutions that provide clear and immediate benefits and require hidden, hard to define costs. Such decisions contribute to the growth of the popularity of politicians, but, as a rule, they are not economically efficient.

Therefore, representatives of the theory of public choice consistently advocate the all-round restriction of the economic functions of the state. Even the production of public goods is not a reason, from their point of view, for government intervention in the economy, since different taxpayers benefit differently from government programs. According to them, the market-mediated transformation of public goods and services into economic goods is democratic.

Non-intervention of the state in the economy by representatives of the theory of public choice is justified by the presence of "failures" (fiasco) of the state.

The activity of the state, aimed at combating the "failures" of the market, itself turns out to be far from perfect. The "failures" of the state are added to the "failures" of the market. Therefore, it is necessary to strictly monitor the consequences of its activities and adjust it depending on the socio-economic and political situation.

Conclusion: economic methods should be applied in such a way that they do not replace the action of market forces. Using certain regulators, the government must strictly monitor the negative effects and take measures in advance to eliminate the negative consequences.

CHAPTER3. POSSIBILITIES OF PRACTICAL USE OF THE THEORY OF PUBLIC CHOICE

3.1 Useepublic choice theoryto predict ngardeningIvotersand politicians

Public choice theory makes extensive use of microeconomic analysis to explain the process of political decision making. Thus, the modern American representative of this trend, E. Downes, in his work "The Economic Theory of Democracy" explores the behavior of a rational voter and proposes the following formula:

E (U A t+1) - E (U B t+1), where:

t+1 - time period between past and present elections;

A - the ruling party; B-opposition; U - utility from government action for period t+1; E is the expected value.

Moreover, if the result is a positive number, the voter votes for party A, if negative - for the opposition, if zero - the voter abstains from voting, but, being a rational subject, evaluates the activities of the government that has been in power for the past period t for another formula:

Where: U it - the maximum possible utility, ideal (i-ideal), that could be obtained over the past period t;

U at - utility actually received (a-actual) for the past period t.

Speaking about elections or any other political actions of individuals, it is necessary to note the possibility of rational ignoring of these actions by individuals.

Consider the case of voting on some issue that is less important for a particular person than, for example, a business meeting scheduled for this time. Suppose that a person sees that his vote in the elections will not have much weight, because. in society, the vast majority holds a different point of view (this may be due to survey data public opinion in the media, or overtly expressed sentiments in society, or the experience of previous votes on this issue).

In addition, the very essence and content of the question put to the vote is not vital for this person (the question has very little to do with the daily life of the individual, or does not have any at all). On the other hand, this person sees that canceling a business meeting may entail some costs (for example, he will not be able to conclude a contract and, therefore, will not receive a possible profit from this contract).

Having considered the current situation from a rational point of view, the “economic person” will not go to the polls, since his pressing problems are closer to him, and it is more profitable for him to go to a business meeting. In the case when the issue under discussion has nothing to do with the life of the voter, then it will be more profitable for him to even just relax at home than to go to the vote.

Let's consider one more example. Suppose that at the time of voting the person is in another city and is not able to take an absentee ballot. In this situation, he needs to go to his polling station, pay his own money for a ticket, take free days at work if the road is very long, etc. In this case, when considering the question “to vote or not to vote?”, i.e. when comparing their costs and benefits from this process, the individual is more likely to refuse to vote.

In all the examples given, individuals weigh their benefits and costs of visiting a polling station, and if the costs are higher, then the person will not vote. We are faced with a case of rational ignorance. Moreover, not only voting can be ignored, but also such a political action as the removal of an official from office due to a violation by this person of his rights or failure to fulfill his duties, if this procedure is very difficult. Many other actions can be rationally ignored as well.

Summarizing all of the above, we can say that there is a threshold effect - this is the minimum value of benefit that must be exceeded in order for the voter to participate in the political process. If it is below a certain value, then the voter tries to avoid fulfilling his civic duty, becoming a person for whom it is more rational to ignore the political process.

In addition to voting, there are other channels for expressing political will. People interested in a particular political solution can lobby. That is, by means of any factors, to influence the decisions of a person elected to power, to engage in propaganda of any political decisions.

Public choice theory considers the decision-making process as a kind of market transaction, or bargaining: "You provide me with votes in elections - I provide you with the implementation of specific government programs that satisfy your interests."

Lobbyists are looking for nothing more than political rent (carry out "chasing political rent"). Political rent is the receipt of economic rent through political institutions, or, in other words, through political progress.

Like any activity, lobbying has its opportunity cost. First, voters must have some information about the upcoming elections and determine the range of pressing issues that require government action. It is worth noting here that information has an opportunity cost expressed in terms of money, time, or their combination.

Second, voters must keep in touch with their elected representatives. Letters, telegrams, newspaper ads, the use of professional "lobbies" in the capital also cost money and time. Few voters feel such a great interest in a certain solution of any issue that they consider it adequate for the effort expended on at least one letter to the one for whom he voted.

However, certain groups of people with mutual and significant interests are in a slightly different situation. They can share the future costs of sharing information, presenting their views to elected representatives; they can hire full-time professional "lobbies". As a result, their influence on government agencies can be several times stronger than someone who acts alone.

The disproportionate strength of small well-organized groups sometimes works to the advantage of other associations that pursue their goals, considering them to be necessarily useful to all citizens. This is quite applicable to the circle of people who are obsessed with seeking rent, whose main goal is only to obtain the narrow interests of obtaining personal gain. Sometimes the interests of a certain circle of people are so important to them that they are ready to decide at a simple meeting on the nomination of their candidate for deputy and his further promotion.

Opportunities for a narrow circle of people in the promotion of "their man" are strong, because they are supported by both personal interests and the interests of the enterprise as a whole. But one should not think that in order to receive support in development or undertaking, each time interested persons nominate their own candidate. The decision to nominate is reasonable and deliberate. An example is the promotion in the Duma of the law on increasing duties on imported foreign cars. Such a decision could not have been put under consideration without "their own person" from the representatives of Russian automobile concerns. This example reflects one of the main prerequisites of the theory of public choice - the receipt of personal benefits, but not only by politicians, but also at the expense of politicians.

As noted above, the majority of voters do not vote often, and political issues do not take up much space between campaigns. On the contrary, members of the Duma, government, etc. daily meet and exchange opinions, as well as vote on hundreds of issues. This gives them the opportunity to “swap and trade” votes or logroll.

The point of trading votes is quite simple. Each power member chooses a few issues that he thinks are important to his constituents. In exchange for voting "Yes" on these agenda items, this politician undertakes to provide support to those who agree to this proposal.

The practice of logrolling ultimately leads to the adoption of certain programs. Such programs create rent-seeking opportunities for a very limited number of individuals by passing the costs of the programs onto the broad masses of taxpayers or consumers. This means that the practice of logrolling prioritizes local interests at the expense of national ones, as local issues impact voters the most.

Thus, a situation arises in which it makes sense for an elected representative of the legislature to "sell" his vote on important, national issues - the budget deficit, the appointment of the Supreme Court, the conclusion of foreign policy alliances and agreements - in order to enlist the support of other representatives on such narrow local issues as a specific military order or protectionist tariff that benefits his constituents.

One of the options for selling votes is a barrel of lard, a kind of "public trough". This is the name of laws consisting of a series of small local projects that are beneficial to the population of a region, but are implemented at the expense of the budget of all taxpayers.

Political entrepreneurs in the process of long-term work add "lard" to this "barrel" until they are sure that the necessary majority of votes has been gained. Then a whole package of proposals is put forward for consideration as a single law. This bill is passed, although no single part of it would have received a majority of the votes or passed the cost-benefit test.

Despite numerous examples of logrolling inefficiencies, public choice theorists tend to view these situations as rather neutral because they do not inherently advocate for either bad or bad policy decisions.

Most likely, the function of logrolling is to express the interests of a strongly interested minority, with the indifference or slight opposition of the majority. Indeed, in the practice of logrolling, along with the “barrel of lard” or the search for tax loopholes and benefits, issues such as the civil rights of national and racial minorities, freedom of conscience and religious practices, etc. are resolved.

Representatives elected to the legislature have their own interests, which do not necessarily and not always coincide with the interests of the constituents who support them. For a politician, his re-election for a new term is an event of the highest priority, whether a particular people's choice wants to defend the interests of his voters, fight for the implementation of certain projects, gain power and prestige, or simply not worry about finding a new job.

But in order to be re-elected for a new term, you have to spend a lot of money. Therefore, a politician must also become a political entrepreneur: he needs to look for sources of financing for the election campaign.

Considering the above, the following conclusions can be drawn:

1. Lobbyists looking for rents for certain narrow circles are one of the richest sources of financial support for candidates for elected office.

2. Although few members of Congress openly sell their votes, they always have time to state their position and collect donations in a narrow work schedule.

3. The party that has enough time to declare its position in the most complete way wins.

3.2 Useepublic choice theory to predict bureaucracy behavior

So far, our attention to public choice theory has focused on the choices made by voters and their elected representatives.

However, the actual practical activities of government at all levels are carried out by a multitude of government bodies: departments, agencies, institutions, which together are well known to us as a bureaucracy.

Public institutions have obvious similarities and differences with private firms. But, despite a number of certain similarities, they are far from being completely equivalent to private firms. In many aspects of their activities, they are able to take advantage of the hierarchical form of enterprise organization to an even lesser extent than private firms, and at the same time are more susceptible to the disadvantages inherent in this form of enterprise organization. The reasons for this phenomenon lie in three main points: control, competition and the self-interest of the bureaucracy.

In any hierarchical structure, the activities of subordinates are controlled at all levels to ensure the conscientious performance of their official duties.

Let's take a look at the state of the art as an example. In a public institution, the closest analogue to a board of directors is its elected legislature. After all, one of the main occupations of legislators is to observe the activities of state institutions and, together with representatives of the executive authorities, appoint their top management. However, without denying the imperfection of the instruments of control over the activities of the corporation, I will note that the control over the functioning of state institutions by the voters is organized even worse.

In addition to the differences between the way private and public enterprises connect with their owners and constituents, there are further differences in the way they connect with their consumers.

As an illustrative example, consider the difference in procedures for registration driving license and bank deposits. Both of these operations require two or three minutes at the clerk serving you, however, obtaining or re-registering a driver's license is sometimes incredibly delayed.

If you apply personally on this issue, you quickly become convinced that there are significantly fewer employees in charge of processing cases than we would like; that the queue here is several times longer than at the bank; that employees are less busy with their official duties than they should be, and so on. There is simply nothing like a 24-hour ATM in this business.

One of the most frequent references to the personal benefits of leaders of private public institutions is the expansion of their organizations. Wages, size of offices and offices, travel, business trips and travel, prestige, opportunities to move up the corporate ladder - all this increases for the management of the institution as it expands. Naturally, the directors of public institutions actively interact with the government and its administration, by any means seeking to increase the budgets and rights of their organization.

It is probably difficult to find a state institution whose leadership would agree with the idea that someone else in the structure of the state can perform their functions better. In practice, there are no cases when government agencies would return unused funds to the treasury - after all, you can always find something to spend money on: new furniture, a trip to a conference and similar nice things.

Another aspect of bureaucratic self-interest stems from the simple revolving door effect. This effect implies a cyclical rotation of the heads of private firms to their sister state organizations and vice versa. The speed at which the doors turn is accelerating very quickly, as executives in industry often earn 5 to 10 times more than their peers in the public sector. Thus, service in the public sector can only be seen as an investment in human capital, which can be returned only when its owner changes the state service for a job in a private firm.

The revolving door effect creates a clear sympathy among many government officials for the industries they oversee. Some economists argue that the public sector is inherently less efficient than the private sector. And the point is not that lazy and incompetent workers get into the public sector, while purposeful and capable ones gravitate towards the private sector. Rather, the market system creates incentives for efficiency gains that the public sector does not. More precisely, managers of private enterprises have a strong personal incentive to work effectively - an increase in income.

Regardless of whether a private firm operates in a competitive or monopoly environment, cost reduction through efficient management contributes to increased profits. The head of a state department or its manager, who achieves efficiency in his diocese, does not receive tangible personal benefits, that is, part of the profit.

The market system has a clear criterion for the effectiveness of the functioning of a private firm - profits and losses. An efficient firm is profitable, so it succeeds and develops. An inefficient enterprise is unprofitable and does not succeed, it degrades, fails and ceases to exist.

In the private sector, inefficiencies and material losses lead to the cessation of the production of certain types of goods and services. But the state is not inclined to abandon those activities in which it has failed. Typically, the government's response to failure is to double the appropriations and staff. This means that public sector inefficiencies can be reproduced on a larger scale. Critics point to the tendency of government departments to keep themselves busy looking for new problems that need to be addressed. Therefore, social problems, as described by the government, tend to escalate.

Many officials, guided by their sense of professionalism and pride, do what they believe is necessary for society. But public choice theorists warn that professionalism and pride will not always prevail among bureaucrats. Motives for personal gain are the wind that blows in a constant direction, under the influence of which the adoption of certain bureaucratic decisions always drifts.

Conclusion: in each case, the pursuit of personal gain by bureaucrats leads to the fact that their actions come into conflict with the public interest, but this does not mean that all officials never make decisions in the interests of all citizens.

CONCLUSION

Public choice theory is one of the branches of economics that studies the various ways and methods by which people use government agencies for their own interests. Public choice theory is based on three main premises: methodological individualism; the concept of "economic man" and the analysis of politics as a process of exchange.

Representatives of the theory of public choice made the object of analysis not the impact of monetary and financial measures on the economy, but the process of making government decisions;

In conditions of limited resources, each of us is faced with the choice of one of the available alternatives.

Market behavior analysis methods are universal and can be successfully applied to any of the areas where a person has to make a choice.

Public choice theorists suggest that the actions and choices of people in public office are also driven by considerations of personal gain.

A person in a market economy identifies his ideas with the product. He seeks to make decisions that maximize the value of the utility function. His behavior is rational.

Public choice theory does not offer universal formulas and means, although it sheds light on a number of problems that cannot be ignored. Depending on voting procedures, cost sharing and self-interest, external factors, non-production costs, and many other considerations, the economic decisions made by a democratic government can sometimes be better and sometimes worse than those made by private entrepreneurs.

Nevertheless, public choice theory gives grounds for caution about expanding the economic role of the state.

It can also be argued that the criticism of the public sector is overblown and too cynical, but at the same time convincing enough to shake the naive belief in a benevolent government that clearly and effectively responds to the needs of its fellow citizens.

Considering all of the above in this term paper, I want to note that there can be no clear answers to questions that arise in the process of considering the interaction of a voter, a politician and an official in the theory of public choice, as in most considerations of economic issues.

Thus, for each of the participants in the triad, their personal interests are at the forefront, leaving behind common sense behavior of the voter, politician, official in society. One hundred percent attendance at the elections, the fulfillment of one's direct duties and promises is the ideal, the achievement of which will put all the dots in the theory of public choice. Until then, we will live in a society of conflict interaction between voters, politicians and officials.

Currently, there are many points of view on the theory of public choice; there are discussions and discussions; new visions of this theory are presented.

BIBLIOGRAPHY

1. Bunkina M.K., Semenov A.M. Economic Policy [Text], INTEL-Synthesis Business School, 1999.

2. Buchanan J. The constitution of economic policy [Text] J. Buchanan // Questions of Economics. No. 6, 2004.

3. Buchanan J. Limits of freedom: between anarchy and Leviathan [Text] J. Buchanan - M., Taurus Alpha.1999.

4. Downs. E. Economic theory of democracy. [Text] - M., 2002. - 228 p.

5. Dolan E. J., Lindsay D. Microeconomics [Text]. - SPb., 2004. - 448 p.

6. History of economic doctrines / Ed. V. Avtonomova, O. Ananyina, N. Makasheva: Proc. allowance. [Text] - M.: INFRA-M, 2006. - 784 p.

7. History of economic doctrines. Textbook under general ed. A.G. Khudokormov. - M.: INFRA. - [Text] - M., 2008.

8. Kiseleva E.A., Safronchuk M.V. State, economy, society: aspects of interaction [Text] // Scientific reports, issue No. 105. - M .: Publishing Center for Scientific and Educational Programs, 2006. - 136 p.

9. Political science course [Text] M.: INFRA-M., 2002. -460 p.

10. McConnell K.R., Brew S.L. Economics: Principles, problems and politics. [Text] In 2 volumes: Per. from English. 11th ed. T.1 - M.: Respublika, 1995. - 400 p.

11. Nobel laureates in economics. James Buchanan. M.: Taurus Alpha, [Text] - M., 2007.

12. Nureev R.M. Institutionalism: yesterday, today and tomorrow [Text] // Questions of Economics. No. 6, 2005.

13. Nureev R.M. Microeconomics course [Text]: a textbook for universities. /MGYuA - 2nd ed., rev. - M.: Publishing house NORMA (Publishing group NORMA-INFRA M), 2006. - 527 p.

14. Nureev R.M. Theory of public choice [Text]: Teaching aid. Questions of Economics. No. 8, 2002.

15. Olson M. The logic of collective action [Text]. Moscow: Economic Initiative Fund, 2005.

16. Otmakhov P.A. The Virginia School in American Political Economy [Text] // Problems of American Studies. Issue. 8: Conservatism in the US: past and present. M.: Publishing house of Moscow State University, 2000. S. 325-340. 17. Political rent in a market and transitional economy. [Text] M.: IMEMO, 2005.

18. Rumyantseva E.E. New economic encyclopedia [Text] - M., 2005.

19. Economics of the public sector. [Text] /Part I. Concepts of public choice theory: Tutorial. // Zaostrovtsev A.P. - St. Petersburg, 2002. - 93 p.

20. Arrow K. Social choice and individual values ​​[Text]. - M., 1951.

21. Yakobson L.I. Economics of the public sector [Text]. Moscow: Nauka, 2005.

22. Yakobson L.I. Economics of the public sector [Text]: Fundamentals of the theory of public finance: a textbook for universities. - M.: Aspect Press, 2006.

23. 50 lectures on microeconomics [Text]. - St. Petersburg: School of Economics, 2000.

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Introduction

1. The theory of public choice in economic theory

1.1. Essence and main prerequisites for the emergence of public choice theory

1.2. Public Choice in a Direct Democracy

1.3. Public Choice in a Representative Democracy

2. Theories based on the concept of public choice

2.1. Political Business Cycle Theory

2.2 Theory of endogenous economic policy determination

2.3 Theory of political rent

2.4. Economic theory of political institutions

3. The theory of public choice. Leviathan Threat

Conclusion

Bibliography

Introduction

Public choice theory is a theory that studies the various ways and methods by which people use government institutions for their own benefit. The object of analysis of the theory under study is the public choice in conditions of both direct and representative democracy. Therefore, the main areas of its analysis are considered to be the electoral process, the activities of deputies, the theory of bureaucracy, regulatory politics and constitutional economics. By analogy with the market of perfect competition, she begins her analysis with direct democracy, then moving on to representative democracy as a limiting factor. The theory of public choice is sometimes called the new political economy, as it studies the political mechanism for the formation of macroeconomic decisions. Criticizing the Keynesians, the representatives of this theory questioned the effectiveness of government intervention in the economy. Consistently developing the principles of classical liberalism and using the methods of microeconomic analysis, they actively invaded the area traditionally considered the field of activity of political scientists, lawyers and sociologists. This intervention was called "economic imperialism". Criticizing state regulation, representatives of the theory of public choice made the object of analysis not the impact of monetary and financial measures on the economy, but the process of making government decisions.

Public choice theory is an important component of neo-institutional economic theory.

All of the above and determined the choice of the topic of the course work - the theory of public choice.

The purpose of the course work is to study the theoretical foundations of the theory of public choice.

In accordance with the goal in the course work, the following tasks are defined:

To study the essence and basic prerequisites for the emergence of public choice theory;

Consider the formation of public choice in conditions of direct and representative democracy;

Consider such phenomena as the economy of bureaucracy and the "failures" of the state (government).

The object of research in the work is the public choice.

The subject of the study is economic relations.

Issues of the theory of public choice were covered by such authors: E. Atkinson, J. Buchanan, J. Dupuy, G. Lindal, R. Musgrave, M. Olson,

1. The theory of public choice in economic theory

1.1 The essence and main prerequisites for the emergence of public choice theory

The theory of public choice, as an independent direction of economic science, was formed only in the 1950s and 1960s. XX century. The discussions of the 1930s and 1940s gave an immediate impetus to the theory of public choice. on problems of market socialism and welfare economics (A. Bergson, P. Samuelson). Wide resonance in the 60s. called the book by K. Arrow "Social Choice and Individual Values" (1951), which drew an analogy between the state and the individual. In contrast to this approach, J. Buchanan and G. Tulloch in the book "The Calculus of Consent" (1962) drew an analogy between the state and the market. The relationship of citizens with the state was considered in accordance with the principle of "quid pro quo" (quid pro quo). It was these ideas, which were further developed in the work of J. Buchanan "The Limits of Freedom" (1975), that formed the basis of the theory of public choice. An important role in its development was also played by D. Muller, U. Neskanen, M. Olson, R. Tollison and others.

The theory of public choice is sometimes called the "new political economy", as it studies the political mechanism of formation of macroeconomic decisions. Criticizing the Keynesians, the representatives of this theory questioned the effectiveness of government intervention in the economy. Consistently using the principles of classical liberalism and the methods of microeconomic analysis, they made the object of analysis not the impact of monetary and financial measures on the economy, but the process of making government decisions.

For the first time, the ideas underlying the theory of public choice were formulated at the end of the 19th century by representatives of the Italian school of public finance: M. Pantaleoni, U. Mazzola, A. De Viti de Marco and others. These researchers were pioneers in the use of marginal analysis and theory prices to study budget process, as well as for modeling supply and demand in the market of public goods. This approach was further developed in the works of representatives of the Swedish school in economics - K. Wicksell and E. Lindahl, who paid primary attention to political processes that ensure the definition of state budgetary policy.

The developed approaches remained virtually unknown to researchers for a long time. At the same time, in the 1940-50s, ideas about the rational nature of the behavior of individuals in the political sphere began to actively penetrate into scientific discussions, thanks to the works of J. Schumpeter, C. Arrow, D. Black, E. Downes published during this period. The combination of these two directions became the basis for the development of a set of ideas now known as public choice theory. Representatives of the so-called Virginia School of Economics played a key role in this. The recognized leader of this school is J. Buchanan, who was awarded the Nobel Prize in 1986.

In his Nobel lecture, J. Buchanan formulated three main premises on which the theory of public choice is based: methodological individualism, the concept of "economic man" and the analysis of politics as an exchange process.

In conditions of limited resources, each of us is faced with the choice of one of the available alternatives. Methods for analyzing the market behavior of an individual are universal. They can be successfully applied to any of the areas where a person must make a choice.

The basic premise of public choice theory is that people act in the political realm in pursuit of their own interests, and that there is no insurmountable line between business and politics. This theory consistently debunks the myth of the state, which has no other goals than caring for the public interest.

Public choice theory is a theory that studies the various ways and methods by which people use government institutions for their own benefit.

"Rational politicians" support, first of all, those programs that contribute to the growth of their prestige and increase the chances of winning the next election. Thus, public choice theory attempts to consistently implement the principles of individualism, extending them to all types of activity, including public service.

The second premise of public choice theory is the concept of "economic man" (homo economicus). A person in a market economy identifies his preferences with the product. He seeks to make decisions that maximize the value of his utility function. This behavior is rational.

The rationality of the individual has a universal meaning in this theory. This means that everyone - from voters to the president - is guided in their activities primarily by the economic principle: they compare marginal benefits and marginal costs (and, above all, benefits and costs associated with decision-making), striving to fulfill the condition:

where MB - marginal benefit,

MS - marginal cost - marginal costs.

The interpretation of politics as a process of exchange goes back to the dissertation of the Swedish economist Knut Wicksell " New principle fair taxation "(1896). He saw the main difference between the economic and political markets in terms of the manifestation of people's interests. This idea formed the basis of Buchanan's work. "Politics, he writes, is a complex system of exchange between individuals in which the latter collectively strive to achieve their private goals, since they cannot realize them through ordinary market exchange. There are no other interests, except for individual ones. In the market, people exchange apples for oranges, and in politics, they agree to pay taxes in exchange for benefits that everyone needs.

Proponents of the theory of public choice consider the political market by analogy with the commodity. The state is an arena of people's competition for influence on decision-making, for access to the distribution of resources, for places on the hierarchical ladder. However, the state is a special kind of market. Its participants have unusual property rights: voters can choose representatives to the highest bodies of the state, deputies can pass laws, officials can monitor their implementation. Voters and politicians are treated as individuals exchanging votes and campaign promises. The main areas of analysis of the theory that interests us are the electoral process itself, the activities of deputies, the theory of bureaucracy, and the policy of state regulation.

The most important area of ​​public choice theory is the economics of bureaucracy.

The logical conclusion of the theory of public choice is, therefore, the formulation of the question of the "failures" of the state (government). These failures are cases when the state (government) is not able to ensure the efficient distribution and use of public resources.

Thus, a basic tenet of public choice theory is that people act in the same way in their private roles as they do in any public role. In analyzing people's personal choices, economists have long concluded that people act in the rational pursuit of personal gain. As consumers, they maximize utility; as entrepreneurs they maximize profits, and so on. And public choice theorists suggest that the actions and choices of people in public office are also driven by considerations of personal gain.

1.2 Public choice in a direct democracy

Direct democracy is a political system in which every citizen has the right to personally express their point of view and vote on any specific issue.

Direct democracy is preserved in modern society. It is typical for meetings of collectives of enterprises and institutions, the work of clubs and creative unions, party meetings and congresses. On a national scale, this is manifested in the election of deputies of parliament or the president, the holding of referendums. At the same time, primary attention is paid to the rules: the outcome depends on the principle of voting (unanimity, qualified or simple majority, etc.). Therefore, representatives of the theory of public choice are interested in the foundation of the foundations - the constitutional choice, i.e. rules for choosing a regulation. The constitution is the key category of J. Buchanan's concept. The term "constitution" refers to "a set of pre-agreed rules by which subsequent actions are carried out." It is on them that the development of democracy depends. Buchanan and his supporters sincerely believe that constitutional regulations can make the democratic system more efficient and effective.

The interpretation of the origin of the state and law as the result of a free contract of free individuals originates from the theory of the "social contract" (social contract) popular in modern times. This concept was originally an illusion of a special kind - modernity, overturned into the past. It was born in the era of religious wars, when the feudal regulation, consecrated by traditions, gradually began to give way to the conscious regulation of civil society. It was a time of heightened understanding of justice; honesty and business seemed incompatible to many. The development of contract ethics, a culture of compliance with contracts, has become imperative. There is a radical rethinking of the rights and freedoms granted to each individual "from birth". One of the founders of the contract (contractual) theory of society was the English philosopher and economist John Locke (1632-1704), whom Buchanan often refers to as his ideological predecessor. It is in his works that we find the rationale for the concept of private property as a necessary prerequisite for civil society and the contractual interpretation of the powers of state power.

The contract theory views freedom as a "state of nature" based on the rights to life, liberty, and property. It is these three rights that form the constitutional basis of civil society. Each of these rights creates the prerequisites for the other, passes into the other, creates itself as the other. The right to life is realized in activities subordinated to happiness and profit. The right to freedom denies political slavery, despotism. The right to property acts as a prerequisite and guarantee of these rights. Free activity is based on independent judgment, individual choice and conscious goal setting. Freedom of conscience, speech, press, assembly acts as the most important prerequisite for independent activity, choice of professions, freedom of movement.

Of course, the concept of "natural rights" and "social contract" did not reflect the real process of politogenesis, but the program requirements of the "third estate" in its struggle against the absolutist state. This concept is an abstraction, an ideal image of a market economy, where all people are simple commodity producers operating in conditions of perfect competition. Buchanan's appeal to the contract theory of society allows him to show the positive possibilities of just such an ideal market mechanism operating in the sphere of political relations.

Back in the 1954 article "Individual Voting Choice and the Market," Buchanan identified two levels of public choice: 1) initial, constitutional choice (which takes place even before a constitution is adopted) and 2) post-constitutional. At the initial stage, the rights of individuals are determined, the rules for the relationship between them are established. At the post-constitutional stage, a strategy for the behavior of individuals is formed within the framework of established rules.

J. Buchanan draws a clear analogy with the game: first, the rules of the game are determined, and then, within the framework of these rules, the game itself is carried out. The constitution, from the point of view of James Buchanan, is such a set of rules for conducting a political game. The current policy is the result of a game within the framework of constitutional rules. Therefore, the effectiveness and efficiency of policy depends to a large extent on how deep and comprehensive the original constitution was drafted; after all, according to Buchanan, the constitution is, first of all, the fundamental law not of the state, but of civil society.

However, here the problem of "evil infinity" arises: in order to adopt a constitution, it is necessary to develop pre-constitutional rules according to which it is adopted, and so on. To get out of this "hopeless methodological dilemma", Buchanan and Tulloch propose a seemingly self-evident rule of unanimity in a democratic society for the adoption of the original constitution. Of course, this does not solve the problem, since the substantive question is replaced by a procedural one. However, there is such an example in history - the United States in 1787 showed a classic (and in many ways unique) example of a conscious choice of the rules of the political game. In the absence of universal suffrage, the US Constitution was adopted at a constitutional convention.

The legal system acts as a kind of social capital. The characterization of the law as a capital good received a comprehensive justification in Buchanan's work "The Limits of Freedom". "The system of laws, whether they are formalized in practice or not," wrote Buchanan, "is a social capital, the return on which increases over time." Even in direct democracy, the principle of a simple majority is usually used. However, the introduction of this principle may lead to the infringement of the rights of the minority and thus to the distortion of democracy.

Let us consider as an example the distribution of votes of voters in accordance with their ideological preferences. Let's note on the horizontal axis the positions of voters from the extreme left to the extreme right (Fig. 1). In the middle of the axis, we denote the position of the median voter by a dot M . If the positions of voters are evenly distributed between the extremes in society, we will get a normal distribution with a peak above the point M . The total area under the curve represents 100% of the voters. Let us assume that the voters give their votes to those who are closer to them in terms of their ideological views.

Suppose there are only two candidates. If one of the candidates chooses a middle position (for example, at the point M ), then he will receive at least 50% of the votes. If the candidate takes the position BUT , then he will receive less than 50% of the votes. If one candidate occupies a position at the point BUT , and the other at the point M , then the candidate at the point BUT will receive the votes of voters located to the left of the line a (a - middle position between BUT and M ), that is, a minority of votes. Candidate holding a position M , will be able to get the votes of voters located to the right of line a, that is, the majority. The best strategy for the candidate will be the one that is as close as possible to the position of the median voter, since it will provide him with the majority of votes in the elections. A similar situation will develop if one of the candidates is to the right of the other (takes a position at the point AT ). And in this case, the victory will go to the one who better reflects the position of the centrist voter. The problem, however, lies in the precise definition (identification) of the interests and aspirations of the median voter.

What happens if a third candidate enters the fray? Consider an example where one candidate occupies a position AT , and the other two - the position M . Then the first one will receive the votes that are under the distribution curve to the right of the line b , and each of the other two - half of the votes lying to the left of this line. Therefore, the first candidate will win the majority of votes. If one of the two candidates accepted the position BUT , then the candidate holding the position M , would receive a very small percentage of the vote, equal to the area under the distribution curve between the lines a and b . Therefore, the candidate M there is an incentive to leave the segment AB , thereby putting one of the other two candidates in a difficult position. The promotion process may take some time, but it has its limits. While the distribution peak is at the point M , any candidate can improve his chances by moving towards M .

Under the conditions of a tough confrontation between two different parties, the distribution of votes can acquire a bimodal form (see Fig. 4). In reality, a bimodal distribution can have both a symmetric (as in Fig. 2) and an asymmetric shape (which is much more common).

Finally, in a society where there is no clear polarization of interests, a polymodal distribution of votes may also occur. If there are three parties in such a society, then the distribution of votes may take (ideally) the form shown in Fig. 3. The figure shows the even distribution of votes between the parties. However, this is a special case. An asymmetric shift to the right or left is also possible here.

The presented models of political competition allow us to get a general idea of ​​the directions contemporary research in this region.

1.3 Public choice in a representative democracy

In a representative democracy, public choice researchers believe, the voting process becomes more complicated. Unlike private, public choice is carried out at certain intervals, limited by the circle of applicants, each of which offers its own package of programs. The latter means that the voter is deprived of the opportunity to elect several deputies: one for solving employment problems, another for fighting inflation, a third for foreign policy issues, and so on. He is forced to elect one deputy, whose position does not completely coincide with his preferences. In business, this would mean buying a product "with a load", so the voter is forced to choose the least of many evils.

The voting procedure is also getting more complicated. Suffrage may be conditioned by a property qualification (as in ancient rome) or residence qualification (as in some Baltic countries). A relative or absolute majority may be required to elect a candidate.

Voters should have certain information about upcoming elections. Information has an opportunity cost. It takes time or money to get it, and more often both. By no means all voters can afford the significant expenses associated with obtaining the necessary information about the upcoming elections. Most seek to minimize their costs. And this, according to economists, is quite rational.

The main factor shaping the opinions of a significant number of voters is often the mass media and, above all, television. Note that this is not only a convenient, but also a relatively cheap method of obtaining the necessary information. However, some voters do not use this chance either, relying on their own opinion or the opinion of acquaintances and relatives. Finally, many voters simply do not vote. This indicates that they do not see the benefit of participating in the political process. This phenomenon is called rational ignorance in public choice theory. There is a kind of threshold effect - this is the minimum value of benefit that must be exceeded in order for the voter to participate in the political process. If it is below a certain value, the voter tries to avoid fulfilling his civic duty, becoming a person for whom rational ignorance is typical.

Representative democracy has, according to public choice researchers, a number of undeniable advantages. In particular, it successfully uses the benefits of the social division of labor. Elected deputies specialize in making decisions on certain issues. Legislative assemblies organize and direct the activities of the executive power, monitor the implementation of decisions made.

At the same time, in a representative democracy, it is possible to make decisions that do not correspond to the interests and aspirations of the majority of the population, which are very far from the model of the median voter. Prerequisites are being created for making decisions in the interests of a narrow group of people.

"It would be unrealistic to assume," writes Buchanan, "that elected officials in positions of responsibility in the executive or legislative branches of power do not have individual preferences about the size of the public sector, sources of funds for it, and, most importantly, about specific items of public expenditure. "An individual who is really indifferent to all these issues would hardly be attracted to politics as a profession and as a side occupation. Probably politicians are those people who really have personal preferences on such issues and who are attracted to politics precisely because, as they believe that in the course of the political process they will be able to have some influence on the results of collective action.If this basic, albeit elementary, point is understood, it is easy to see that the final budget figures will not fully reflect the preferences of voters, even those who are members of the coalition , which brought victory to its candidate or artii".

In a representative democracy, the quality and speed of decisions depend on the necessary information and incentives that contribute to its transformation into practical solutions. Information is characterized by opportunity costs. It takes time and money to get it. An ordinary voter is not indifferent to the solution of this or that issue, but the influence on his deputy is associated with costs - he will have to write letters, send telegrams or make phone calls. And if he does not heed the requests, write angry articles in newspapers, attract the attention of radio or television with the most different ways up to the organization of demonstrations and protest rallies.

A rational voter must balance the marginal benefits of such influence with the marginal costs (costs). As a rule, the marginal costs significantly exceed the marginal benefits, so the voter's desire to constantly influence the deputy is minimal.

Other motives are those voters whose interests are concentrated on certain issues, such as producers of specific goods and services (sugar or wine products, coal or oil). Changing the conditions of production (regulating prices, building new enterprises, the volume of government purchases, changing the conditions of imports or exports) is a matter of life or death for them. Therefore, such special interest groups tend to maintain constant contact with the authorities. For this they use letters, telegrams, mass media, organize demonstrations and rallies, create special offices and agencies in order to put pressure on legislators and officials (even to bribery). All these methods of influencing representatives of the authorities in order to make a political decision beneficial for a limited group of voters are called lobbying.

Groups with mutual and significant interests can more than recoup their costs if the bill they advocate passes. The fact is that the benefits from the adoption of the law will be realized within the group, and the costs will be distributed to the whole society as a whole. The concentrated interest of the few defeats the dispersed interests of the majority. Therefore, the relative influence of special interest groups is much greater than their share of the vote. Decisions favorable to them would not be made in a direct democracy, when each voter directly and directly expresses his will.

Followers of the theory of public choice have clearly shown that one cannot completely and completely rely on the results of voting, since they depend to a large extent on the specific rules of decision-making. The very democratic procedure of voting in legislative bodies also does not prevent the adoption of economically inefficient decisions.

Quite often, the voting procedure does not allow for an agreed conclusion. The paradox of voting not only makes it possible to explain why decisions are often made that do not correspond to the interests of the majority, but also clearly shows why the result of voting can be manipulated. Therefore, when developing regulations, one should avoid the influence of market factors that hinder the adoption of fair and effective bills. Democracy is not limited only to the voting procedure, the guarantor of democratic decisions must be firm and stable constitutional principles and laws. "The choice is this: either a free parliament or a free people. In order to preserve personal freedom," writes F. A. Hayek, "it is necessary to limit all power - even the power of a democratic parliament - to long-term principles approved by the people."

Supporters of the theory of public choice (for example, J. Buchanan and G. Tulloch) do not consider any "vote trading" to be a negative phenomenon. Sometimes logrolling can achieve a more efficient allocation of resources, that is, an allocation that increases the overall ratio of benefits and costs in accordance with the Pareto optimality principle.

Let's consider this on a specific example (see Fig. 4). Postpone the expected utility of making a political decision for an individual X on the x-axis, and the expected utility of the individual Y - on the y-axis. The consumer opportunity curve will look like YmEBCDXm . If the initial position of individuals is characterized by a point BUT , then the sector ABCD is the area of ​​Pareto-optimal solutions. This means that moving from the point BUT , for example, in AT we improve the situation of the individual Y , without degrading the utility of the individual X . Passing from a point BUT in D , we improve the expected utility X without diminishing the utility Y . Finally, when moving to a point FROM both win. However, if compensatory payments are possible, then the area of ​​possible political solutions increases markedly. For example, when moving from BUT in E individual payoff Y so large that he can give part of his winnings to the victim X , thereby buying his consent to such a redistribution. Thus, with the help of logrolling (using compensation payments), it is possible to improve the welfare of society as a whole, even if someone incurs direct losses in doing so.

Rice. 4. Pareto-optimal redistribution of resources and compensation payments

However, the opposite effect cannot be ruled out. Going to meet local interests, with the help of logrolling they achieve the approval of a large state budget deficit, an increase in defense appropriations, etc. Thus, national interests are often sacrificed for regional benefits.

The classic form of logrolling is the "barrel of lard" - a law involving a set of small local projects. In order to get approval, a whole package of various proposals, often loosely connected with the main law, is added to the national law, in the adoption of which various groups of deputies are interested. To ensure its passage, more and more new proposals (“lard”) are added to it until there is confidence that the law will receive the approval of a majority of deputies. This practice is fraught with dangers for democracy, since fundamentally important decisions (limitation of civil rights, freedom of conscience, press, assembly, etc.) can be "bought" by the provision of private tax breaks and the satisfaction of limited local interests.

2. Theories based on the concept of public choice

2.1 Political business cycle theory

The theory of the political business cycle, which is the work of William Nordhaus, Edward Taft, Douglas Hibbs and Paul Mosley,

suggests that some economic indicators fluctuate in sync with the election. Although there is not enough empirical evidence that such a link always exists, it is believed that pre-election stimulus to the economy, which forms the basis of the political business cycle, can be a strategy that is adopted or not, but there is no theory saying why the strategy is sometimes adopted and sometimes not.

Political business cycle theory is based on a number of assumptions:

Governments strive to win elections, for which they try to maximize votes;

Voters have preferences about economic outcomes, which is reflected in their voting behavior;

Governments can manipulate the economy to improve their chances of being re-elected.

2.2 The theory of endogenous policy making

To date, the greatest progress in studying the patterns of functioning of a complex of economic and political markets has been achieved within the framework of one of the branches of the theory of public choice - the theory of endogenous determination of economic policy, which is based on the EVM.2 methodological approach. Its key idea is to recognize that the use of economic regulation tools depends on the variables that affect the decisions of the subjects of the political market that maximize their target functions. It is assumed that the goal of a government pursuing a policy to change the main characteristics of the economic environment - the distribution of property rights and the vector of prices - is to maximize political support from ordinary voters and influential pressure groups. These latter, in turn, when choosing objects of support for the government or opposition forces, are guided by the motive of maximizing their own economic well-being and provide support to those who pursue or announce the most beneficial political course for them. As a result, the measures of state economic policy, which, within the framework of the mainstream of economic theory, are understood as "external" in relation to the economic sphere, are interpreted here as endogenous, set by the conditions for the functioning of the entire economic and political system.

Among the indisputable advantages of the theory of endogenous determination of economic policy is its ability to take into account various aspects of the process of public decision-making. In this theory, two approaches to the study of the mechanisms of economic regulation have been formed) On the one hand, a number of works emphasize the role of political competition between candidates for elected positions (this approach can be called "competitive"). On the other hand, these activities can be seen as a means of maximizing the support of the political forces that are already in power and can really determine, and not just announce the political course ("monopolistic approach").

Each of these approaches has "comparative advantages" in different areas of public policy analysis. Thus, the "competitive approach" allows us to explore strategic problems: how likely is it to maintain the existing political course; what are the main features of a set of measures that meet the conditions of equilibrium in political markets: in whose interests will economic regulation be carried out. The "monopolistic approach", on the other hand, can be successfully used to address the tactical problems associated with the routine activities of the government to determine the specific distribution of property rights and elements of the price vector.

2.3 Political rent theory

The theory of political rent focuses on the fact that the purpose of the participation of economic entities in political activity may be to obtain specific advantages that provide them with rental (i.e., exceeding the competitive level) income on the factors of production at their disposal. These incomes are called “political rent”, and the activity aimed at obtaining them is called “search for political rent”. It is assumed that business entities invest part of their resources in economic activities (“profit creation activities”), and part in activities in the political market (“political rent seeking activities”). At the same time, the criterion for the efficiency of resource allocation requires that the marginal efficiency of their use in both areas be the same.

The most illustrative case of activity aimed at finding political rent is the struggle of economic entities for obtaining monopoly rights, limiting competition in the market, or legislatively fixing a price level favorable for producers.

Let in the conditions of free competition the price of goods is set at the level of average and marginal costs: Pc = MS = AC. The monopolization of this branch of the economy leads to an increase in prices to the level P and a drop in production volumes with QM. According to the traditional point of view, the amount of net economic losses of society corresponds to the area of ​​the MCM figure (the so-called “dead weight of monopoly”), while the amount of resources corresponding to the area of ​​the RMCMRM rectangle represents a net transfer from consumers to producers. G. Tulloch was the first to draw attention to the fact that these resources are also being lost for productive use. Each producer with a chance of obtaining monopoly rights from the state will have an incentive to allocate such an amount of funds for lobbying that the marginal costs are equal to the marginal expected revenues associated with an increase in the probability of establishing a monopoly. It follows that the total cost of establishing a monopoly will exactly correspond to the area of ​​the RIMRS rectangle. This phenomenon is called the dispersion of political rent.

The term "searching for political rent" was proposed by E. Kruger in the mid-1970s, while the basic provisions of the corresponding theory were developed by G. Tulloch back in the 1960s.

The losses of society due to the search for political rent. The desire of economic entities to obtain monopoly rights entails not only the emergence of a "dead weight" of the monopoly (KMQ, but also an unproductive fall in resource spending in the amount of RMCMRS (curve D is a graph of market demand for the good in question).

The situation becomes even more complicated if soon the measures of the state economic policy, which create political rent for some economic entities, cause the emergence of negative political rent for others. For example, the introduction of an import tariff on coal increases the income of national coal producers, but reduces the income of its consumers. Under these conditions, coal consuming companies can engage in "rent-avoidance" activities, for example, by lobbying for the removal of duties on coal (or against their increase). A tug-of-war situation arises when pressure groups with opposing interests collide in the political sphere. By itself, competition between them cannot be seen as an antidote to the inefficient use of resources. Of key importance is the fact that this competition also requires lobbying costs. G. Tulloch gives the following example: if subject A spends 50 dollars. to lobby for a transfer in the amount of $100. from subject B, and B spends 50 dollars. to lobby against the relevant transfer, then, regardless of the outcome of the confrontation, one of the subjects will receive a net gain of $50, while the total loss to society will be $100.

If organized pressure groups of the same “weight category” act as supporters and opponents of this or that measure of state economic regulation, competition in the political market can indeed lead to minimization of undesirable changes in the economic structure and reduction of the “dead weight” of economic policy. However, the amount of resources deployed by both parties in the interest of lobbying can be very large, especially if the stakes of the parties (ie, the economic gain if the desired course of economic policy is adopted and the economic losses if the alternative course is approved) are significant enough. In this case, a situation of a “black hole of state regulation” may arise, when the lion's share of economic resources will be used in pursuit of political rent, while the formal indicator that is the object of the struggle (for example, the import tariff rate) will remain practically unchanged.

Lobbying by economic actors for economic policies that are beneficial to them and their struggle to gain access to specific privileges constitutes the first level of seeking political rent. The second level is associated with the competition of political decision-makers for positions that open up opportunities for determining economic policy or implementing it. This leads to “additional unproductive costs. Thus, if the distribution of foreign trade licenses brings high incomes to officials holding relevant public positions, for example in the form of bribes or increased salaries, then a significant number of people will seek to obtain the education necessary for holding a relevant position and try to make the necessary connections in government bodies. Since not all of these people will get the jobs they want, the investments of the "losers" will represent a net loss from the point of view of society. rent) encourages companies to spend resources on entering or exiting relevant industries.

Thus, the theory of political rent sheds light on the motives of pressure groups and political decision-makers, which is of key importance for the theory of endogenous determination of economic policy. In addition, the scale of activity to seek political rent is considered as an important criterion for assessing the effectiveness of various institutions for making state decisions in the field of economic policy.

2.4 Economic theory of political institutions

This research discipline is in the zone of contact between the theory of public choice and neo-institutional economic theory. In the center of her attention are the problems of the institutional organization of the state decision-making process.

The combination of methodological approaches inherent in neo-institutionalism and public choice theory allows us to consider the problems of transaction costs that arise in the process of decision-making by public authorities, the features of agency relations between voters and politicians, politicians and officials, officials of different levels, etc., and also questions of non-transitivity of collective preferences for procedural manipulation in decision-making bodies. At the same time, the postulate of the rational behavior of the subjects participating in the political process is clearly carried out, and the political institutions themselves are understood as specific rules and procedures for making decisions that direct this behavior in a certain direction. Thanks to this, it becomes possible to consider the result of the political decision-making process in terms of a structurally determined equilibrium, i.e. balance due to the use of existing institutional mechanisms.

In recent decades, they have become widespread! studies devoted to the analysis of the structure of government bodies (parliaments and parliamentary committees, government agencies), alternative procedures for approving economic regulation measures in state bodies, as well as the stability of political institutions in the face of competition between political forces for spheres of influence. The study of the structure of authorities and the division of powers between them is of key importance for determining the features of the functioning of political markets. In particular, it has been shown that the typical American phenomenon of logrolling is a product of the US legislative review mechanism, in which the legislative initiatives of parliamentarians are directly submitted to the consideration of a representative body. On the contrary, it is generally accepted in European parliaments that preliminary examination of draft laws in the government, which significantly narrows the possibilities for logrolling. Thus, alternative procedures for considering bills impose various restrictions on the process of finding political rent associated with lobbying and approving bills of an economic nature,

Of similar importance is the comparison of specific aspects of the activities of different categories of political decision-makers who formulate economic policy within the framework of political and technical (administrative) decision-making ways ". Direct consideration of specific issues of current economic policy in parliament or government rarely takes place. Delegation of relevant powers is more often practiced different kinds of administrative bodies.There are important differences between these ways of making decisions.

First, the consideration of proposals in parliament or government (the political path) concerns important cases where all interest groups and ordinary voters are well aware of their nature. On the contrary, the technical way is resorted to when the political importance of the case and the degree of awareness of voters about it are insignificant. Secondly, the decision-making horizons are different - the technical path takes into account mainly the interests of the subjects applying for support, while the political path already involves the interests of a national scale. Thirdly, the criteria for making technical decisions are clearly defined in the regulatory bodies of the relevant authorities.

In the context of the competition of the subjects of the political market for power and access to economic privileges, it would be logical to assume that the procedures for making political decisions will be subject to frequent changes. In practice, however, this does not happen.

The prevailing explanation of this phenomenon emphasizes the role of political institutions as a stock of capital that ensures a stable flow of political decisions, and hence a certain set of points of structurally determined equilibrium in various areas. Under these conditions, investments aimed at changing this stock are inevitably associated with uncertainty about a new set of structurally determined equilibrium points. This uncertainty undermines incentives for institutional changes and determines the stability of equilibrium political institutions that arise as a result of contractual interaction of political market entities.

Accounting for the action of political institutions allows us to draw important conclusions about the factors that determine the possibilities of using the potential of economic growth in various countries. For this, a conceptual scheme can be used that describes different types the limits of economic opportunity. The production possibilities frontier defines the maximum level of production of economic goods given by the existing technology, subject to the traditional neoclassical assumption of zero level transaction costs in the economic system. The transaction possibilities frontier determines the limits of the output of economic goods in the presence of the minimum possible level of transaction costs, i.e. their level, which is observed when the state pursues an optimal policy for the protection of property rights and when economic entities use such a structure of contracts, which is focused on minimizing transaction costs. Obviously, even if these assumptions are met, the level of transaction costs in the economy will always be positive (in contrast to the "neoclassical" case, transaction costs in real life can never be reduced to zero). As a result, the transaction possibilities frontier will always be tighter than the production possibilities frontier. Finally, the limit of social opportunities determines the maximum volume of production of goods achievable in the conditions of the functioning of a real set of political institutions. Since these institutions can reflect the peculiarities of the historical evolution of social and cultural factors, as well as meet the goals of the struggle of the subjects of the political market for the creation and appropriation of political rent, the level of transaction costs in real life is always higher than under the conditions of an "ideal" set of institutions. Therefore, the social possibility frontier will correspond to a lower level of output than the transactional frontier. In other words, it is the political institutions that are the "bottleneck", limiting the options for the productive use of economic resources; therefore, it is the boundary of social opportunities that determines the real horizons for using the potential of the economic system.

Based on this scheme, it is possible to identify the main directions in which the reform of political institutions can influence the expansion of the country's economic opportunities. First, the creation of more effective political institutions ensures a reduction in the level of “politically driven” transaction costs, i.e. brings the frontier of social possibilities closer to the frontier of transactional possibilities. Secondly, in the conditions of the functioning of effective political institutions, opportunities open up for the creation of qualitatively new mechanisms for concluding contracts and protecting property rights for a given economic system, which brings the frontier of transactional possibilities closer to the frontier of production possibilities.

3. Studying the theory of public choice. Leviathan Threat

One area of ​​research in public choice theory is the economics of bureaucracy. The legislative bodies create the executive, and they, in turn, create an extensive apparatus for performing various functions of the state that affect the interests of voters. The voters who voted for the deputies are directly subordinated to the bureaucrats (see Fig. 5).

Rice. 5. The role of the bureaucracy

According to Buchanan, the bureaucratic system is inefficient for at least three reasons. The "evil of the bureaucracy", firstly, lies in the fact that it makes choices not in terms of people's economic values, but according to other criteria. Second, bureaucracy creates a dependent relationship between those in power and subordinates (Buchanan calls this "unjustified class distinctions"). Third, the struggle for access to valuable goods is a wasteful use of society's resources. "Such features as favoritism, discrimination (both in favor of and against individuals), arbitrary classification of citizens according to one criterion or another, are almost inevitably inherent in any system that makes people dependent on bureaucrats ...".

The bureaucracy develops as a hierarchical structure within the state. It is needed as a stable organization for the implementation of long-term programs, an organization capable of adapting to external changes. The political process is a unity of discontinuity and continuity. The periodic renewal of the legislature is combined with the relative stability of the main echelons of executive power. The bureaucracy helps maintain continuity in leadership and controls opportunistic behavior.

The economy of bureaucracy, according to public choice theory, is a system of organizations that satisfies at least two criteria: firstly, it does not produce economic goods that have a value assessment, and secondly, it derives part of its income from sources not related to sales. the results of their activities. By virtue of its position, the bureaucracy is not directly connected with the interests of voters; it primarily serves the interests of various echelons of legislative and executive power. Officials not only implement the already adopted laws, but also actively participate in their preparation. Therefore, they are often directly linked to special interest groups in parliament. Through bureaucrats, special interest groups "process" politicians, present information in a favorable light for them.

The bureaucracy, as a rule, fears not the discontent of the society as a whole, but targeted criticism from special interest groups, which the media can easily use for this. Conversely, in case of failure, they can be helped out of the predicament again by the same special interest groups with which they are closely associated.

Realizing their own goals and the interests of special groups, bureaucrats strive to make such decisions that would open up for them access to the independent use of a variety of resources. They can earn little by saving public goods, while the adoption of expensive programs provides them with ample opportunities for personal enrichment, increasing influence, strengthening ties with groups that support them, and, ultimately, for preparing ways to “retreat” to some warm place. It is no coincidence that many corporate employees, after working in the state apparatus, return to their corporations with a noticeable increase. This practice has come to be known as "revolving door systems".

With the growth of bureaucracy, the negative aspects of management also develop. Bureaucracy is characterized by a desire to speed things up by administrative methods, absolutization of form to the detriment of content, sacrificing strategy to tactics, subordinating the goal of the organization to the tasks of its preservation. The larger the bureaucracy becomes, the lower the quality of the decisions made, the slower their implementation. Different departments often pursue conflicting goals; their workers often duplicate each other's work. Outdated programs are not canceled, more and more new circulars are published, the document flow is increasing. All this requires huge funds to solve simple issues.

The strengthening of the bureaucracy increases the inefficiency of the organization. In a private firm, a simple measure of efficiency is profit growth. There is no such clear criterion in the state apparatus. The usual response to the failure of past programs is to increase allocations and increase staff. All this contributes to the swelling of the state apparatus - people engaged in the search for political rent.

A major achievement in the theory of public choice was the development of the theory of political rent, begun in 1974 by Anna Kruger. Political rent seeking is the pursuit of economic rent through the political process.

“If elected,” Buchanan rightly notes, “a politician is free to determine his position on spending and taxation. He is controlled by voters, because he must consider the prospects for re-election, ensure long-term party and public support. But even a politician who is very sensitive to these restrictions, there remains a wide freedom of political choice.A politician will choose that solution from a set of acceptable alternatives, the execution of which maximizes his own utility, and not the utility of his voters.This choice is one of the main motivations of politicians.In a broad sense of the word - this is their "political income", and it should be considered as part of the total remuneration for the performance of official duties.

Government officials seek to obtain material benefits at the expense of both society as a whole and individuals seeking certain decisions. Bureaucrats, participating in the political process, seek to carry out such decisions in order to guarantee themselves the receipt of economic rent at the expense of society. Politicians are interested in solutions that provide clear and immediate benefits and require hidden, hard to define costs. Such decisions contribute to the growth of the popularity of politicians, but, as a rule, they are not economically efficient.

Fig.6 Political and economic cycle

The hierarchical structure of the state apparatus is built on the same principles as the structure of large corporations. However, public institutions are often unable to take advantage of the organizational structure of private firms. The reasons are weak control over their functioning, insufficient competition, and greater independence of the bureaucracy. Therefore, representatives of the theory of public choice consistently advocate the all-round restriction of the economic functions of the state. Even the production of public goods is not a reason, from their point of view, for government intervention in the economy, since different taxpayers benefit differently from government programs. In their opinion, it is democratic to transform public goods and services into economic goods produced by the market.

They consider privatization to be a condition for an effective fight against bureaucracy, its content is the development of "soft infrastructure", and the ultimate goal is the creation of a constitutional economy. The concept of "soft infrastructure" introduced by U. Niskanen means an increase in economic human rights (strengthening property rights, honesty and responsibility in the performance of contracts, tolerance for dissent, guarantees of minority rights, etc.) and limiting the spheres of state activity.

The activity of the government between elections is subject to certain patterns. With a certain degree of conventionality, it can be described as a political-economic (political business) cycle. After the election, a number of measures are taken to change the goals or scope of the previous government. These measures are especially radical if a party comes to power that was previously in opposition. Attempts are being made to reduce the state budget deficit, curtail unpopular programs, and restructure the work of the state apparatus. Newly come to power people are trying to fulfill at least part of the election promises. However, activity then declines until the fall in popularity of the new government reaches a critical level. With the approach of the next elections, the activity of the government increases. If we plot time on the abscissa and government activity on the ordinate, then the described cycle in general will look something like in Figure 6.

Line segment T1T3 reflects the decline in the popularity of the government, cut T2T3 - increasing activity related to the preparation of the upcoming elections. It is worth noting that the peak of new activity should not be too far from the upcoming re-elections, otherwise the voters will have time to forget about the period of active government activity. In this case, it is desirable that the level of activity at the point T3 was not lower than the activity of the previous government at the point T1 . The general political and economic cycle may include a number of smaller sub-cycles that generally fit into the indicated pattern.

Conclusion

The merit of the theory of public choice is the formulation of the question of the failures of the state (government). Failures (fiasco) of the state are cases when the state is not able to ensure the effective distribution and use of public resources.

Typically, the failures of the state include:

1. Limited information necessary for decision-making.

Just as there can be asymmetric information in the marketplace, government decisions can often be made without reliable statistics to make better decisions. Moreover, the presence of powerful groups with special interests, an active lobby, a powerful bureaucracy lead to a significant distortion of even the available information.

2. Imperfection of the political process. Let us recall only the main points: rational ignorance, lobbying, manipulation of votes due to the imperfection of the regulations, logrolling, search for political rent, the political-economic cycle, etc.

3. Limited control over the bureaucracy. The rapid growth of the state apparatus creates more and more new problems in this area.

4. The inability of the state to fully foresee and control the immediate and long-term consequences of its decisions. The fact is that economic agents often react in a way that the government did not expect. Their actions greatly change the meaning and direction of actions taken by the government (or laws approved by the legislature). Measures taken by the state, merging into the overall structure, often lead to consequences that are different from the original goals. Therefore, the final results of the actions of the state depend not only, but often and not so much on itself.

The activity of the state, aimed at correcting the failures of the market, itself turns out to be far from perfect. The fiasco of the government is added to the fiasco of the market. Therefore, it is necessary to strictly monitor the consequences of its activities and adjust it depending on the socio-economic and political situation. Economic methods must be applied in such a way that they do not replace the operation of market forces. When applying certain regulators, the government must strictly monitor the negative effects and take measures in advance to eliminate the negative consequences.

To correct the existing situation, according to supporters of the public choice theory, it is possible with the help of a constitutional revolution. In her understanding, there are several approaches. F. von Hayek insists on limiting parliamentary sovereignty.

The model of the constitution proposed by Friedrich von Hayek proceeds from the need for a radical transformation of existing democratic institutions.

Therefore, F. Hayek believes that in a truly democratic society three representative bodies are necessary:

"one to deal exclusively with the constitution (it will meet at large intervals, only when changes in the constitution are required);

the other is for the constant improvement of the code of justice;

the third is for the current government, that is, for the disposal of public resources.

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