4.7 Forces of Short-Run Stability

The ability to make credible commitments affords open access orders the ability to solve many ongoing political problems as they arise. Without the ability to make these credible bargains, individuals and groups would instead play their short-term maximization strategies and fail to resolve a range of problems.

4.7 Forces of Short-Run Stability

All open access orders face two problems of stability. The first concerns static stability – the institutions and incentives that create a self-enforcing open access order and that prevent the tendency to degrade into a natural state. The second concerns dynamics – how open access orders sustain themselves in the face of the numerous problems and crises that arise over time. This section treats the first topic while the next section treats the second subject.

Political officials in all states are tempted to use rent-creation to solidify their position and to alter the rules in ways that make it difficult for their opponents to compete. For open access to survive, officials must have incentives to resist these temptations. In this section, we show how competition in both the political and economic systems helps sustain the open access order. No one institution or set of incentives alone sustains an open access order; instead, the institutions and incentive systems supporting this social order are numerous and redundant (as Landau, 1969, and Mital, 2008, suggest for the U.S. Constitution).

4.7.1 Elections, Party Competition, and the Civil Society

Democracy in open access orders sustains competition among political parties for the exercise of power. Competition for power induces parties to offer competing visions for addressing the society’s principal problems. As with other forms of competition, innovators who devise more attractive ways of dealing with problems have advantages over those who do not. Because new problems, issues, and crises inevitably arise, Schumpeterian competition reigns: parties must constantly try new ideas in their attempts to capture or retain power. As Riker (1982a, Chs. 1 and 9) emphasizes, electoral losers have especially strong incentives to innovate in their efforts to regain power. Failing to do so risks remaining out of power with an absence of personal and political rewards. To capture power, today’s losers must devise new ways of combining interests, constituencies, and political support.

Franklin Roosevelt’s creation of the New Deal following the 1932 election and Tony Blair’s remaking of the British Labour Party in the mid and late 1990s illustrate this principle. Both leaders devised new programs for their parties in the face of successful opponents and lackluster success of their own parties. Roosevelt’s triumph came after the 1932 election following the Republicans’ long-term dominance of American elections since 1860 and especially since 1918. Addressing various problems associated with the Great Depression, Roosevelt’s New Deal programs became very popular not only among Democrats but also among Republicans who were affected by unemployment or feared being so.9 Their political success granted Democrats united political control of American national government for a dozen years, a block of time that they had not enjoyed since Jackson’s election in 1828. Blair’s success came in the wake of Margaret Thatcher’s successful conservative turn of Great Britain, which began with her becoming prime minister in 1979. Using the label “New Labour,” Blair moderated his party’s goals, symbolized by his removing the clause in the party’s constitution seeking the common ownership of the means of production. Labour renounced Keynesian-style management of the economy, nationalization of industry, and negotiated income policies, focusing instead on competitive markets and fiscal and monetary conservatism (Iverson, 2005, p. 253). Although Blair significantly increased health and education spending and raised the minimum wage, he maintained many of Thatcher’s economic policies and continued coordinating foreign policy with the United States.

Party competition forces parties to compromise and to moderate interest group and constituency demands. Rent-creation cannot be the primary product of party competition in open access orders. Consider first-past-the- post electoral systems. These systems are subject to Duverger’s law (Cox, 1997; Duverger, 1959; Riker, 1982b), so that they produce two major parties.10 Successful parties in these systems are therefore large, encompassing organizations that combine a wide range of disparate groups and interests. A party cannot hope to win general elections with extremist positions or policies that fail to command support from a range of different interests, constituencies, and voters. Because parties need to gain the support of many interests, they must temper the (rent-creating) demands of each, lest the associated extreme positions hinder the party’s electoral prospects.11

9Reflecting this aspect of the era, David Kennedy (1999) titled his Pulitzer-Prize-winning history as Freedom from Fear.

10Cox (1997) shows how this law generalizes in a natural way to other types of electoral systems.

11A related logic holds in proportional representation (PR) systems even though parties can be more narrowly focused on particular issues in these political systems, such as

The efficacy of party competition, however, depends on open access to organizations and the civil society. Organizations allow citizens whose interests are harmed to coordinate, act, and advance their interests, and elections are a low-cost means of affecting outcomes short of direct confrontations with governments (Fearon, 2006). Organizations also monitor the incumbents and respond when their interests are affected. They have incentives to collaborate with opposition parties when their interests are harmed by incumbents. As the literature emphasizes, successful democracy and the civil society go hand in hand (Lipset, 1963; Gellner, 1994; O’Donnell and Schmitter, 1986; Tocqueville, 1969[1835]; Putnam, 1993; Widner, 2001).

Interparty competition fosters intraparty moderation and cooperation in another way. Van Buren explained in the 1830s that without competition individuals and organizations that compose a party have only weak incentives to make the compromises necessary to maintain the party as an effective organization and electoral competitor (Hofstadter, 1969, Ch. 6, especially pp. 226–52). As organized political parties emerged in the first American party system in the early 1790s, each party sought to destroy the other. Americans in this era had no concept of the loyal opposition: one had never existed in any political system. When the opposition Federalist Party disappeared in the Era of Good Feeling (1816–24), the dominant Jeffersonian Party fell into several factions that failed to work well together. Demise of the opposition did not result in triumph.

Van Buren realized that the disparate factions within a party have incentives to compromise and accommodate one another only when winning required it. Hofstadter explains:

Here it became evident that the party had lost ground not because of the presence of a strong rival party but because of its absence: without external pressure toward solidarity, internal disintegration was unchecked. The lesson was clear: the divisive and agitating effects of personal factions were far more serious and far more to be condemned, than the open principled conflict of two great parties (Hofstadter, 1969, p. 229, emphasis added).

With the rise of the second-party system (roughly 1832 to 1860) following the Era of Good Feeling, beliefs came into line with experience: by the mid-1830s, a new system of stable two-party competition emerged, and Americans’ beliefs transformed from those reflecting the attempt of each

green parties. Because parties in PR systems typically do not win with a majority of seats, forming a government involves a coalition of parties. Compromise and moderation arise when forming a government. Being an attractive coalition partner typically requires that parties moderate their demands, lest they be unattractive coalition partners.

party to vanquish the other to the idea of a two-party system with a loyal opposition party.

The transformation in beliefs was central to sustaining party competition in open access orders. We now accept competition among parties as commonplace, but the idea of party competition, especially the idea of loyal opposition parties, had to be invented and sustained. Van Buren recognized a central piece of the incentives for sustaining these beliefs: competition from the opposition was necessary for the winner’s success. Here too, we see that sustaining party competition results in limits on politics: the winners do not seek to destroy the opposition, nor is the goal of the opposition to take power and destroy the incumbents.

The pluralists revealed another aspect of this same logic of competitive politics. These scholars understood politics as a balance of power among interest groups (Truman, 1952). Dahl’s classic pluralist text, Who Governs (1962), demonstrated that open access order democracies face many public issues and that no group can extract too much for fear of mobilizing a great many groups against it. Dahl observed that the set of groups and constituencies active or attentive differ across the many public issues. Groups that dominate one issue (say, developers concerned about local urban development) tend not to be major players in other issues (say education, welfare, agriculture, or defense).

This observation has an implication not understood in this literature. A problem with pluralist analysis and studies of interest groups more generally is that it takes the pattern of constituency and group activity as exogenous. Instead, the interests active on any issue are endogenous. If a group attempts to extract too much, then other groups who are normally not active on an issue are likely to begin paying attention and become active, with the potential to alter dramatically the political forces on this issue and hence the outcome. Taking an endogenous pluralist approach to group influence suggests that groups in open access orders have incentives to moderate their demands most of the time. Failing to do so risks mobilizing outsiders to become active in ways detrimental to the original group’s interests. The endogenous approach suggests that a few open access order markets might be cartelized or protected, such as agriculture, and certain markets regulated to produce rents, such as airlines in mid-century United States. However, these markets are the exception, not the general rule.

The force of both the interand intraparty competition and the pluralist arguments is that rent-seekers in open access orders have strong incentives to look down the game tree, to temper their policy demands lest they tip groups currently inactive on their issue toward becoming active and upsetting