Is the Political Economy Stable or Chaotic?

Recent events in the global economy have caused many writers to argue that the market is driven by animal spirits, by irrational exuberance or speculation. At the same time, the economic downturn has apparently caused many voters in the United States, and other countries, to change their opinion about the the proper role of government. Unfortunately, there does not exist a general equilibrium model of the political economy, combining a formal model of the existence, and convergence to a price equilibrium, as well as an equilibrium model of political choice. One impediment to such a theory is the so-called chaos theorem which suggests that existence of a political equilibrium is non-generic. This paper surveys results in the theory of dynamical systems, emphasizing the role of structural stability and chaos. We consider models of celestial mechanics where the notion of chaos first developed, and then examine applications in models of climate change and economics. There is discussion of the past influ ences of climate on human society, and particularly how agriculture developed during the “holocene,” the past ten thousand years of benign climate. The recent period of globalization is likened to the holocene, and the question is raised whether future climate change may bring economic and political chaos.Economic uncertainty, climate change, political disorder

Modelling Authoritarian Regimes

In the last few years, a body of ideas based on political economy theory has been built up by North and Weingast, Olson, Przeworski, and Acemoglu and Robinson. One theme that emerges from this literature concerns the transition to democracy: why would dominant elites give up oligarchic power? This paper addresses this question by considering a formal model of an authoritarian regime, and then examining three historical regimes: the Argentine Junta of 1976-1983; Francoist Spain ,1938-1975; the Soviet System ,1924-1991. We argue that these historical analyses suggest that party dictatorships are more institutionally durable than military or fascist ones.Democratic Transition, Authoritarian Regimes, Rational Choice Theory.

Formal Models of Elections and Political Bargaining

The key theoretical idea in this paper is that activist groups contribute resources to their favored parties in response to policy concessions from the parties. These resources are then used by a party to enhance the leader’s valence — the electoral perception of the quality of the party leader. The equilibrium result is that parties, in order to maximize vote share, will balance a centripetal electoral force against a centrifugal activist effect. Under proportional electoral rule, there need be no pressure for activist groups to coalesce, leading to multiple political parties. Under plurality rule, however, small parties face the possibility of extinction. An activist group linked to a small party in such a polity has little expectation of influencing government policy. The paper illustrates these ideas by considering recent elections in Turkey, Britain and the United States, as well as a number of European polities.Election, plurality rule, proportional representation, activist groups

Electoral Oscillations in Argentina..

The mean voter theorem suggests that all parties should rationally converge to the electoral center. Typically this leads to an outcome which is unattractive to the rich. This paper develops a general stochastic model of elections in which the electoral response is a¤ected by the valence (or quality) of the candidates. Contributions made by policy-motivated activists can influence valence, leading to the failure of the mean voter theorem. The model is then applied to the presidential elections in 1989 and 1995 in Argentina, to suggest why Carlos Menem, who won in 1989 with a populist platform, was able to win in 1995 with quite different policies that favored the upper middle class.

Classification of Voting Games on Manifolds

A voting game σ is classified by two integers v*(σ),w*(σ),(v*(σ) v*(σ) the emptiness of the σ-core is structurally stable

Classification Theorem for Smooth Social Choice

A classification theorem for voting rules on a smooth choice space W of dimension w is presented. It is shown that, for any non-collegial voting rule, σ, there exist integers v*(σ), w*(σ) (with v*(σ)<w*(σ)) such that (i) structurally stable σ-voting cycles may always be constructed when w ⪴ v*(σ) + 1 (ii) a structurally stable σ-core (or voting equilibrium) may be constructed when w ⪴ v*(σ) - 1 As a corollary, it is shown that a σ-voting cycle may always be constructed if W is finite and of cardinality at leas v*(σ) + 2. Finally, it is shown that for an anonymous q-rule, a structurally stable core exists in dimension (n-2)/(n-q), where n is the cardinality of the society

Bargaining Theory for Games with Transferable Value

This paper presents an existence proof of a bargaining equilibrium set B*, in the case of games with transferable value, by making use of the Knaster Kuratowski Mazurkiewicz (KKM) Theorem. As a corollary proof of existence of the usual bargaining set B1 is obtained. Whereas previous proofs of B1 existence have made use of fixed point arguments, use of the KKM theorem provides an insight into possible extensions of the existence proof to the nontransferable value case

The Geometry of Voting

For any non collegial voting game, σ, there exists a stability dimension v*(σ), which can be readily computed. If the policy space has dimension no greater than v*(σ) then no local σ-cycles may exist, and under reasonable conditions, a σ-core must exist. It is shown here, that there exists an open set of profiles, V, in the c1 topology on smooth profiles on a manifold W of dimension at least v*(σ)+1, such that for each profile in v, there exist local σ-cycles and no σ-core

Coalitions in West European Democracies

The duration and type of coalition governments in twelve European countries in the period 1945-1983 are considered. It is argued that the distribution of party size, on a one dimensional policy dimension, conditions the bargaining process between parties and thus the type of coalition that forms and the average duration of government. On this basis the twelve countries are divided into four groups