The Invisible Hand in Politics - Josep M. Colomer

I have participated in a transatlantic conference on ‘The Design of Democratic Institutions’, organized by the Political Science and Political Economy (PSPE) Group of the London School of Economics. In the paper (which is linked below), I use the 'invisible hand' term in the metaphorical sense in which it has also been used in economics and other fields. In this case, the metaphor suggests that while political actors choosing political institutions intend gains for themselves in terms of having access to power, they tend to favor the diffusion of power among multiple potential actors. The point is that the diffusion of power can be both a criterion for good governance and a prudent choice by power-seeking actors. Good governance can be estimated for the inclusiveness of citizens in the participation processes and the fit between policy-making decisions and citizens’ preferences. From this perspective, institutions favoring the diffusion of power, such as universal suffrage, multiple governments and institutions dealing with different issues, and multiple political parties with opportunities to access or share power, can be considered relatively good to the extent that they create wider opportunities for people's participation and influence in decision-making than those favoring the concentration of power into a single government, group or political party. At the same time, it can be assumed that the choice of political institutions is usually driven by politicians' and would-be rulers' ambition, the search for power, and calculations, estimates or expectations about the likely consequences of different institutional formulas to favor choosers’ self-interest. But a socially efficient institutional design can result from circumstances in which no actor has sufficient influence to impose its own project and diverse ambitions counterweight each other. Major institutional choices are then made in favor of formulas able to produce the diffusion of power and to satisfy broad groups of people. The fact is that, in the current world, the number of small countries increases; the number of democracies also increases; institutional choices tend to favor the division of powers rather than concentration into a single body or party; and electoral rules are increasingly chosen to permit multiple parties to participate in and share government. YOU CAN CLICK ON THE FIGURES TO ENLARGE THEIR SIZE 1. The number of countries increases This is facilitated by open trade and communications, which make the economic advantages of large-scale states less relevant, while the costs of exclusion in their political decision making become more visible. 2. The number of democracies increases There exist a positive correlation between the spread of democracy and the increase in the number of independent countries, which implies a decrease in their size. The number of democracies in countries with less than ten million inhabitants is twice the number of largedemocracies. The rates of success in democratization are even higher for small communities within large federations. Decentralization and federalism, which give small nations and regions means of self-government, consolidate democracy. 3. Divided and multiparty governments proliferate Democratic regimes tend to endure when they adopt institutional formulas favoring divided and multiparty governments rather than a concentration of power in a single political party. Out of sixty-four democratic regimes in countries with more than one million inhabitants, only one sixth are parliamentary regimes with majority electoral rules, while one third are parliamentary regimes with proportional representation, and one half are presidential or semi-presidential regimes. 4. Proportional representation expands More specific institutional choices involve the rules for assembly elections. In a global perspective they have evolved from indirect elections to direct elections by majority rule and from these to mixed systems and proportional representation rules, thus steadily enlarging the potential basis for participating and power-sharing groups. More and more countries tend to adopt electoral systems with multi-seat districts and proportional representation rules. As actors' self-interested behavior leads to broadly efficient and satisfactory institutional choices, it seems that a kind of 'invisible hand' in the field can be identified. Paper:‘The Invisible Hand in Institutional Design’CLICK The program and most papers presented in the conference can be accessed here:CLICK