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Political Decentralization

Alan Peacock

“The Political Economy of the ‘Dispersive Revolution.’” Scottish Journal of Political Economy (UK), 23 (1976): 205–219.

Demands for greater political participation in government are often greeted with sneering words recalling Hunt's:

Were you to preach in most parts of the world, that political connexions are founded on voluntary consent or a mutual promise, the magistrate would soon imprison you, as seditious, for loosening the ties of obedience, if your friends did not shut you up as delirious, for advancing such absurdities.

More soberly, we can offer a review of how we might use economic analysis to examine the demand by the individual for more participation in industrial and political decision making.

The conventional ways of formulating the process of choice conjure up the image of human beings reacting like Pavlovian dogs to external stimuli. These are unsatisfactory ways and it is dangerous to base judgments about society's welfare on them. Liam Hudson (Human Beings: The Psychology of Human Experience, 1975), stays more to the point when he says that if we “see the individual as passive—either as the victim of events that lie outside himself, or as a mere knot of sensations ... we strip the individual of his special status as an agent: someone who makes sense of himself and the world around him, and then acts in the light of the sense he makes.” We will find a more useful paradigm of choice, as J. Buchanan argues, in the principle of gains-from-trade as exemplified by Austrian economist Eugen von Bohm-Bawerk's horse traders rather than in the housewife shopping for groceries in the supermarket who exemplifies the passive maximizer.

Increasingly, persons demand greater control over the political environment and the work situation. Such evidence supports this “break-out” theory of individual economic behavior which suggests that the individual has a strong incentive to seek information on alternative political and economic systems.

But in analysing the demand for political decentralization in countries with centralized government we must consider the actual distribution of political power. Predictions based on reality are likely to surpass those based on some principle of the legitimacy of the exercise of political power. The demand for decentralization may emanate not so much from individual citizens as from interest groups. Thus the Report of the Commission on the Constitution (UK) provides evidence that bargains designed to alter the function of government are not between private invididuals and groups whose representatives carry out their decisions. Such bargains actually arise between entrenched political parties, on the one hand, and a wide range of dissident groups of varying size and efficiency on the other. Such groups differ sharply about how the world looks to them and what it is feasible for government to do.

However, the growth of central government may eventually promote a reaction from individual citizens against the government's control over their daily lives. Citizens reacting to this growing impersonality and remoteness of government may also demand political decentralization. It will arise when individuals express their frustration over the government's inefficient goods and services. The degree of this frustration will depend on the disproportion between their tax obligations and the amount and form of service which they really want.

We can draw a stark contrast between the hierarchical order of the workplace and the democratic order to which at least some pay lip-service. But if alienation serves as a function of hierarchical organization, we cannot explain it away by property relations, because collective ownership of the means of production is not synonomous with democratization at the shop floor level. As Ota Sik argues (The 1973 Ernest Bader Common-Ownership Lecture), a centrally planned system perpetuates hierarchies in firms and creates another source of alienation—the gulf between the structure of production and the structure of needs. In any case, we cannot even be certain that workers would prefer nonhierarchical, i.e., self-managed firms.