Abstract
I provide a rational solution to the lasting paradox that citizens be more concerned with “general interest” than most economic agents. I show who that, in the face of fundamental political uncertainty, the social contract, as conceptualized by Jean-Jacques Rousseau two centuries ago, provides to self-interested voters an effective mechanism of self-insurance that limits amount of involuntary transfers.
My positive theory of voter behavior and general interest has but a formal resemblance with the normative theory of welfare judgments and social justice. Even when the efficiency aspects of redistribution are not considered, there is no way in which the final distribution of incomes could be equal if the initial distribution of incomes were unequal!
The role of political parties in this model is to manipulate the distribution of political chances in order to maximize their probability of winning elections. I show for instance that “social instability” and progressive redistribution characterize the equilibrium outcome of a two-class democracy in which the lower class forms a majority.
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I received useful comments on earlier drafts by R. Brenner, M. Poitevin, Y. Shilony, A. Yokoyama, and participants at the European Public Choice Society Conferences at Bergen and Linz, the Microeconomics Seminar at the University of Montréal, and the Bar-Ilan Conference on “Markets and Politicians”. All remaining errors are mine.
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Levy-Garboua, L. General interest and redistribution with self-interested voters: Social contract revisited. Public Choice 69, 175–196 (1991). https://doi.org/10.1007/BF00123846
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DOI: https://doi.org/10.1007/BF00123846