Public Choice Theory

Public choice theory is an economic theory of politics. This is an application of economics to politics. The public choice approach to Public Administration came into existence in 1960s, almost coinciding with the New Public Administration. This theory has been chiefly propounded by Vincent Ostrom and William Niskanen.

This questions the very basis of bureaucracy run govt. PCT challenges the traditional belief of ‘public spiritedness’ of bureaucrats and politicians. PCT predicts and explains political behaviour on the assumption that political actors are ‘utility maximisers’, seeking to promote their self interest in contrast to theories which view politics as an act of public interest. 

A bureaucrat, according to William Niskanen, is budget maximiser.  The bureaucrat’s budget maximiser behaviour results in over supply of goods and inefficiency. Bureaucracy thus to be pruned by down-sizing govt. and passing many functions of govt. to private sector.

Related article: New Public Management

Choice implies competition. PCT introduces competition in PA to make it more efficient and responsive. PCT deals with the possibility of institutional pluralism in provision on public goods and services. Plurality of govt. and public services is supported on the ground of consumer’s preference. This approach advocates replacement of traditional doctrine of ‘bureaucratic administration’ by the concept of ‘democratic administration’.

Rigid hierarchy structure and accountability to a single centre of power reduce the capability of larger administrative system to respond to diverse preferences of citizens and cope up with diverse environment conditions.  PCT suggests an alternatively paradigm and involves multiple decision centers to provide different goods and services.

The central theme in PCT is how to limit govt. and to check the natural tendency of over govt. Public interest and welfare state are rejected by the public choice thinkers. It is however not state versus market debate. The real issue is how to make the state more democratic and citizen friendly and not to put it in background altogether and bring the ‘market’ in state’s place.

By breaking the monopoly of state as the provider and by introducing choice and participation, the public choice school seeks to redefine power equations between the govt. and citizens.

Impact of Public Choice Theory: Under the impact of views of PCT, in the last decade of 20th century private sector has expanded, state sector has shrunk in direct administration. Moreover there has been widespread adoption of management practices of business firms in public sector.  The whole New Public Management approach is heavily influenced by Public Choice Theory and can indeed be said to have roots in PCT.

Criticism of Public Choice Theory: Public interest and welfare state are rejected by public choice writers but these ideas have not evaporated from the society.

Herbert Simon argues that the major motivational premise of PCT, individual self interest is false. Human beings make most of their decision, not in terms of individual self interest but in terms of the perceived interest of groups, families, organisations, ethnic groups and national states with which they identify and to whom they are loyal.

Critics of PCT often view it as advocate of New Right ideology and it is seen as advocating market, minimal govt. and drastically cut bureaucracy. It may develop elite bias as market is out of the reach of the poor.

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Some appreciation please!