This is a text seeking to refute one of the cornerstone beliefs of economics and political science: that economic markets are more efficient than the processes and institutions of democratic government. The author first considers the characteristic of efficient markets - informed, rational participants competing for well-defined and easily transferred property rights - and explains how they operate in democratic politics. He then analyzes how specific political institutions are organized to operate efficiently. "Markets" such as the the Congress in the United States, bureaucracies, and pressure groups, the author asserts contribute to efficient political outcomes. He also provides a theory of institutional design to explain how these political "markets" arise. Finally, Wittman addresses the methodological shortcomings of analyses of political market failure, and offers his own suggestions for a more effective research strategy.
Ultimately, the study concludes that nearly all of the arguments claiming that economic markets are efficient apply equally well to democratic political markets; and, conversely, that economic models of political failure are not more valid than the analogous arguments for economic market failure.
Acknowledgments 1: Introduction: The Market Metaphor 2: The Informed Voter 3: Electoral-Market Competition and the Control of Opportunistic Behavior 4: Transaction Costs and the Design of Government institutions 5: Homo Economicus versus Homo Psychologicus: Why Cognitive Psychology Does Not Explain Democratic Politics 6: Legislative Markets and Organization 7: Pressure Groups 8: Bureaucratic Markets: Why Government Bureaucracies Are Efficient and Not Too Large 9: The Market for Regulation 10: The Constitution as an Optimal Social Contract and the Role of Transaction Costs in Constitutional Design 11: Majority Rule and Preference Aggregation 12: The Distribution of Economic Wealth and Political Power 13: The Testing of Theory 14: Epilogue: The Burden of Proof References Author Index Subject index