Review of Austrian Economics - The Ludwig von Mises Institute

Higgs: Analysis of the Growth of Government 19
to abstract from an essential aspect of the process whereby government
grew in the United States.
Proposition 11
Putative "public demand/' especially as expressed by voting, drives
the political-governmental system. Elected officials (and hence the
bureaucracy subordinate to them) may be viewed as perfect agents
of the electorate.
Adherence to this proposition characterizes the bulk of all analysis
dealing with the growth of government in the West, regardless
of analytical tradition or ideological leaning. (Specific citations seem
unnecessary. See virtually any issue of Public Choice as well as the
widely cited articles by Meltzer and Richard [1978; 1981; 1983],
Peltzman [1980; 1984; 1985], Becker [1983; 1985], and Borcherding
[1977; 1985]. The most recent and most extreme contribution along
these lines is Wittman [1989].) This approach displays a professional
deformity related to the economist's basic tool of analysis, the theory
of markets with its component theories of demand and supply. Applying
their familiar tools to the analysis of politics, economists immediately
look for analogues. What is the "good" being traded? Who is
the "supplier" and who the "demander"? What is the "price'? The
answers seem obvious. Public policy is the good; the elected legislators
are the suppliers; the voters are the demanders; votes are the
currency in terms of which political business is being transacted.
Thus voters "buy" the desired policies by spending their votes; the
legislators "sell" policies in exchange for the votes electing them to
office. (See Benson and Engen [1988] for an especially straightforward
application of such analogues.) Economists view consumer
demand in ordinary markets as ultimately decisive for the allocation
of resources; hence consumer "sovereignty," a political metaphor
imported into economics. Applying their familiar apparatus of
thought to politics, economists tend to think that ultimately the
political system gives the voters what they want. Therefore, if government
grows, it does so because that is what the people want
(Musgrave 1985, p. 306; Stiglitz 1989, p. 69). Demand creates its own
supply. Voting is ultimately all that matters for determining the
growth of government. As Dennis Mueller (1987, p. 142) has observed,
"In the public choice literature the state often appears as simply a
voting rule that transforms individual preferences into political outcomes."
It is easy—and probably healthy—to mock this view of the political
process. Joseph Schumpeter (1954, p. 429) called it "the perfect
example of a nursery tale." There are, after all, many significant