An Economic Theory of Democracy

The first chapter begins with the observation that governments are critical in determining the shape of the global economy, but economic theory has not caught up with this fact. The purpose of the book is stated: to provide a theory of rational economic policy for a democratic government, so as to harmonize the workings of public and private actors. Economic theory, Downs states, presumes rationality, the use of reason to direct means toward a given end. In particular, economics seeks to define the ends being sought and the optimal methods of achievement. It is generally assumed that firms seek to “maximize profits and consumers [to] maximize utility” (5). Rational actors need not be rational in every respect, only in that they apply resources toward a goal to the best of their knowledge and ability. When confronted with several choices, the rational person is able to rank preferences and consistently select the best option. Economic theory cannot posit any specific end as rational, only the means of achieving it. Downs lays out the scope of his treatise: his theory will focus on economic and political goals, although human beings can apply other motives to their economic and political behavior. It does not attempt to describe the fullness of reality, but it can still highlight the primary motivations for voting behavior.