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Efficiency and Democratic Political Organisation; The Case for the Referendum

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  • Frey, Bruno S.

Abstract

Familiar theories of market failure have diagnosed shortcomings in the economy, but theories of government failure argue that the state is incapable of correcting them. More than that, many criticisms of government implicitly or explicitly see failure as due to fundamental shortcomings of democracy. This paper argues that democratic forms of governments are not necessarily inefficient relative to other types of decisionmaking, for example, authoritarian government, and that if individuals are as rational in their actions and expectations as voters as they are meant to be in the market, then failures attributed to democracy lessen or disappear altogether. The paper demonstrates how more democracy, i.e. the use of the initiative and referendum, may actually improve the efficiency of government by giving the mass of citizens the information and opportunity to frustrate efforts of the classe politique to form a coalition against the voters. Empirical examples are drawn from the experience of Switzerland.

Suggested Citation

  • Frey, Bruno S., 1992. "Efficiency and Democratic Political Organisation; The Case for the Referendum," Journal of Public Policy, Cambridge University Press, vol. 12(3), pages 209-222, July.
  • Handle: RePEc:cup:jnlpup:v:12:y:1992:i:03:p:209-222_00
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    Cited by:

    1. Aguiar-Conraria, Luís & Magalhães, Pedro C., 2010. "How quorum rules distort referendum outcomes: Evidence from a pivotal voter model," European Journal of Political Economy, Elsevier, vol. 26(4), pages 541-557, December.
    2. Marcus Matthias Keupp, 2021. "Defense Economics," Springer Books, Springer, number 978-3-030-73815-0, December.
    3. Simon Hug, 2009. "Some thoughts about referendums, representative democracy, and separation of powers," Constitutional Political Economy, Springer, vol. 20(3), pages 251-266, September.
    4. Antoaneta Dimitrova & Bernard Steunenberg, 2017. "Pitfalls on the Road to Frey’s Democracy of the Future," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 34(2), pages 213-222, November.
    5. Marcus Matthias Keupp, 2021. "Opportunities for Reform," Springer Books, in: Defense Economics, chapter 0, pages 115-134, Springer.
    6. Wagschal, Uwe & Obinger, Herbert, 1999. "Der Einfluß der Direktdemokratie auf die Sozialpolitik," Working papers of the ZeS 01/1999, University of Bremen, Centre for Social Policy Research (ZeS).
    7. Schaltegger, Christoph A & Kuttel, Dominique, 2002. "Exit, Voice, and Mimicking Behavior: Evidence from Swiss Cantons," Public Choice, Springer, vol. 113(1-2), pages 1-23, October.

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