The Dynamics of Constitutional Incentives
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Reviewed by Geoffrey Brennan

The Strategic Constitution
by Robert Cooter
Princeton University Press,2000,US$45.00, 392pp,ISBN 069 1058644

Americans have a distinctive form of patriotism. It is distinctive of course in its mode of expression. ItÕs hard to imagine an Australian fixing you with an earnest eye and declaring, with perhaps a slight shake in the voice and/or a thump of the table, ÔGoddammit! I love this country!Õ, whereas Americans seem to do this all the time. Equally, in my experience, itÕs hard for the Australian visitor to the US to watch the local scout troupe Ôparading the coloursÕ or leading the Ôprayers for AmericaÕ without being overcome by a desperate desire to giggle. Recent Olympic displays aside, our expressions of patriotism are mostly pretty subtle.

American patriotism is different from ours not only in its mode of expression but also in its content. For us Australians, identity is first and foremost a geographic phenomenon. In that respect, we are like the English. English identity is, as Dorothea McKellar rightly discerns in her now mythic poem, a matter of Ôcoppiced lanesÕ, thatched cottages, larks ascending and the like. Our analogue may be sunburnt, by contrast, but it is still essentially a matter of landscape.

For Americans, identity is importantly institutional/ constitutional. There is still a lively sense in the US of being a nation self-invented, the outcome of a unique political experiment, something brought to life as an exercise in intellectual imagination and therefore to be valued as a kind of accomplishmentÑmuch as one might value a work of art. As James Madison puts it at the beginning of the famous Federalist Papers:

. . . it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force.

Consciousness of this special roleÑof being a people ÔreservedÕ for a specific intellectual/political endeavourÑ is a critical part of American self-understanding, from the highest levels of academic enquiry to the level of the ordinary citizen. This consciousness is both the cause and the effect of the concentration in the US education system on ÔcivicsÕÑa concentration that is almost totally lacking in Australia. As we Australians celebrate our founding political/Constitutional moment, the most striking feature of our ÔcelebrationsÕ seems to be our ignorance about what it is exactly that weÕre celebrating.

Small-c versus capital-C constitutionalism

The Madisonian idea of the US polity as an object of Ôreflection and choiceÕ is in some tension with the AmericansÕ veneration of their political institutions. It is a tricky business to treat the same thingsÑthe Constitutional documents, sayÑas constructions of rational deliberation and as icons. Icons call for respect and honour; rational deliberation requires one to put all that emotional baggage on one side and examine the relevant arguments on their merits.

With regard to the Constitution, there is a divide between those for whom the major exercise is one of ÔinterpretationÕ (as perhaps with sacred texts) and those whose primary concern is ÔanalysisÕ, possibly with an eye to reform. The latter is an ongoing exercise of constitutional ÔreflectionÕ (with an eye to ÔchoiceÕ) representing a continuation of MadisonÕs Ôdistinctive American projectÕ. To some extent at least, this continuing debate over the Ôrules of the gameÕ is recognised popularly as a legitimate, even essential, aspect of the American political enterprise.

Bob CooterÕs new book, The Strategic Constitution, continues the debate. Cooter is an economist by training, though he has been in the Law School at UC Berkeley for most of his academic career. He is, in the judgement of many observers (myself included), among the most intelligent and sensible practitioners of the Ôlaw and economicsÕ tradition. His earlier book with Tom UlenÑ Law and EconomicsÑremains the best introduction to that subject available.

CooterÕs choice of title for his new book is presumably meant to signal quite explicitly that his exercise is one of constitutional analysis, rather than Constitutional interpretationÑan exercise in small-c rather than capital-C constitutionalism. This is an important distinction to make, not least to an audience of lawyers for whom Constitutional interpretation is a more natural and familiar exercise.

In ordinary parlance, ÔstrategicÕ might be seen to connote some kind of manipulation, or to gesture at a military orientation. In the Cooter context, ÔstrategicÕ conveys a concern with the kinds of complex interactions that are characteristic of social phenomena and that are the explicit subject matter of social analysis using the techniques of so-called Ôgame theoryÕ.

CooterÕs object is to introduce to lawyers a style of systematic analysis of constitutional provisions that has been developed over the last 40 years or so by economists and more recently political scientists. Cooter also aims to use that analysis to make some general recommendations as to the directions in which American political practice should develop.

Although this style of analysis is only recent, it connects quite explicitly to the Federalist Papers tradition. One of the seminal books in this new style is The Calculus of Consent by James Buchanan and Gordon Tullock, written in 1962. As Buchanan says of that book, it seemed to him in writing it to be little more than a translation of the Madisonian logic into more formal terms. Those more formal terms reflect the Ôrational actorÕ methods of modern economics. The strategy of Ôreflection and choiceÕ over the rules of the political/social/economic game suggests that, at least in principle, those methods might be reasonably suited to the task.

Ends and means

Given that the techniques of analysis are drawn from economicsÑat least originallyÑit is perhaps natural that the conduct of politics is looked at via economic analogies. So, citizens are thought of as consumers of policy platforms, and rival political parties as potential suppliers. The central criterion of good political process is that policy outcomes should be best in the eyes of the citizenry; and the chief danger of politics is that governments will use the power of the state to secure their own independent ends.

Accordingly, attention is directed towards those mechanisms that seem most likely to constrain governments to operate in the interests of citizens. And the most promising mechanism in this connection is periodic election of the government that is to exercise the assigned powers of the state by the citizens themselves. The critical feature of ÔdemocracyÕ on this reading is the presence of electoral competition, with universal suffrage. But it remains an issue to be settled by analysis whether and under what circumstances Ôelectoral competitionÕ will work well and whether there are other mechanisms that might work better in particular cases.

In this sense, ÔdemocracyÕ is to be seen not so much as a set of ethically derived political principles, but rather as an institutional device for securing the end of Ôcitizen satisfactionÕ. Democracy is to be shown to be best by reasoned argument (which might in principle generate some other conclusion) rather than as a matter of basic moral commitment. And recommendations for constitutional improvement or reform are to be derived on the basis of what measures are likely to make electoral competition work ÔwellÕ in the sense of generating policy arrangements that will serve the ends of the citizens themselves.

Other traditions in political institutional analysis may have slightly different emphases. Some may have different normative goalsÑsay, to secure a more ÔvirtuousÕ citizenry, according to some independently derived understanding of virtue; or to ensure stability of the constitutional order, say by maximising perceived legitimacy; or to secure specific policy objectives (ecological sustainability, say) whatever the views of the citizenry happen to be. Some may identify the possible dangers of politics in different terms. Or they may see the focus on electoral competition as being limiting and involving a very partial and/or truncated view of ÔpoliticsÕ. One of the great virtues of the method of explicit theorising that CooterÕs work (and other work like it) exemplifies, is that it is relatively easy to identify such differences. Being clear as to the exact nature of disagreements is a major intellectual accomplishment. A great deal of what passes for debate on these issues proceeds on the basis of mutual misunderstanding, and is more to be characterised as Ôtalking at cross purposesÕ than as genuine argument. Methods that can expose true ÔdisagreementsÕ in this sense are to be encouraged.

Is parliament representative?

The fact that CooterÕs constitutional focus is more familiar to Americans than to Australians (and a fortiori to the English) does not mean that the analysis is irrelevant to Australian concerns. On the contrary, the ambition of this style of analysis is to derive perfectly general propositions, which are of perfectly general application. Consider, for example, the issue of Ôproportional representationÕ. This issue is of considerable contemporary relevance in both the UK and Australia, though the way in which the issue presents itself is quite different in the two cases.

There has been quite a lot of discussion in the UK about proportional representation as a mechanism for making the UK system Ômore representativeÕ of votersÕ apparent wishes. It is after all a significant feature of the UK system that a substantial proportion of voters cast their first votes for the Liberal Democrat party, but that this party receives a relatively small number of seats because it does not muster a plurality in very many electorates. Because the composition of parliament in Westminster fails to reflect the pattern of votes nationally, people are inclined to identify the system as unfair and unrepres-entativeÑ and not least those people who actually voted for the Liberal Democrats.

On the face of things, those people have a point. But having a parliamentary composition that reflects voter preferences is not an end in itself. What, at least under the Cooter scheme, is the important thing is to have a parliament that produces policy outcomes that best represent voter preferences. It is an importantÑand perhaps counter-intuitiveÑresult in the tradition that Cooter represents that this object is not necessarily furthered by having a Ômore repres-entativeÕ parliamentary assembly and indeed may well be undermined by greater Ôassembly representativenessÕ.

Senate activism in Australia

In Australia, the issue of proportional representation (PR) plays itself out mainly in the context of the relative powers of the Senate in our bicameral system. If one believed that the Senate was a more ÔrepresentativeÕ assembly than the House of Representatives, because it more accurately reflected the voting patterns of the Australian electorate, one would be inclined to think that the Senate should have more power rather than less in the policymaking arena, and that the recent turn to direct Senate influence on policy was a Ôgood thingÕ.

The issue of ÔrepresentativenessÕ in the Australian case, however, is complicated by the relative strength of voters in small as against large States. This violation of the Ôone-person-one-voteÕ principle is often seen to render the Senate less democratic than the House and is the (presumed) grounds for Paul KeatingÕs famous description of the Senate as Ôunrepresentative swillÕ.

There are two quite independent aspects of the issue here. Even if all States had exactly the same voter populations, it is likely (indeed almost certain) that the party composition of the Senate would differ from that of the House. The Democrats would win virtually no seats in the Lower House. They receive their quota of seats in the Senate because though they have a majority in virtually no single-member electorate, they have a significant level of support in virtually all electorates.

In fact, in the Australian case, the composition of the Senate does not seem to be much affected by the fact that all States have equal numbers of Senators. The most significant influence on Senate/House differences is the difference between the single-member electorate system used for the House as against the (modified) PR system used for the Senate.

In my view, probably the most interesting feature of Australian politics over the last decade has been the emergence of a Ôpolicy-activeÕ SenateÑthat is, of direct bargaining between majorities in the Senate and in the House over the details of policy.1 Part of what is at stake in this issue is the relative normative claims of PR and single-member systems of aggregating votes.

This is not the only issue in the debate over Senate activism, obviously. One might support an active Senate on broad Ôchecks and balancesÕ grounds even if one did not endorse PR as an aggregation mechanism in general. And, of course, in the Australian case, policy positions are chosen by the major parties mainly with an eye to election in the Lower House. If PR were in action in the Lower House, the policy positions chosen by each of the parties would predictably be different from those chosen under current arrangements. Nevertheless, the properties of PR and the case for it as a general mode of organising parliamentary composition is an interesting and relevant issue in the Senate activism debate.

ÔMedianÕ democracy

How does CooterÕs analytic apparatus help us in engaging the merits of PR? One of CooterÕs central distinctions is between two kinds of competitive electoral processesÑone kind dubbed Ômedian democracyÕ and the other Ôbargain democracyÕ. The characteristic feature of median democracy is that outcomes are drawn from the centre of the distribution of those that citizens prefer. The point of departure for median democracy is the recognition that citizen-voters want different outcomes, and the different policies that go with those outcomes.

Although this conception of politics is often framed in terms of an interest-based account of voter motivations, there is no necessary connection between median democracy conceptions and interest-based voting. Differences in the interests of different groups are not the only source of political disagreementsÑand may not be the most intensely felt.

But the median conception does presuppose the dual facts that only one policy package can eventually emerge as the political outcome and that the policy packages that are regarded as ideal by different voters are different. The median conception specifies what is effectively an optimal compromise between these competing ideals. That optimal compromise will lie in the ÔmiddleÕ of the notional distribution of individual votersÕ ideal points, in the sense that the aggregate distance of the ÔmedianÕ outcome from the ideals is minimised. In fact, there are a number of ÔmiddleÕ points of which the mathematical median is only one. What in particular distinguishes the median from other centrist points is that there are circumstances under which electoral competition can reliably produce that median (or some point very close to it) as an equilibrium outcome in competitive elections.

The object of Ômedian democracyÕ is then to so frame electoral competition that those circumstances apply. Those circumstances include, in particular, that electoral competition be effectively between two rival options (parties/candidates/policy packages) and that both parties/candidates locate very close to one another (because both locate close to the median). Median democracy is therefore associated with a two-party system, with a winner-take-all, or perhaps winner-take-most, result. Since two-party systems are supported by single-member electoral districts, median democracy is naturally associated with single-member electoral arrangements.

Proportional representation is inimical to median democracy because it involves multiple parties, and there are multiple ÔwinnersÕ, all of whom play some role in determining policy outcomes. In proportional representation systems, policy outcomes are determined by bargains struck between majority coalitions of parties and these majority bargains are more likely to include extremist influences. It is an obvious fact that proportional representation is hospitable to giving parliamentary presence to small parties, often representing special interests or issues. It is no less obvious that such parties can often exercise voting power way in excess of their representation.

In a chamber consisting of three parties, two of which have 49% of the seats and one of which has 2%, all parties exercise identical policy influence. No party forms a majority on its own and each needs only one other partyÕs support to constitute a majority. Effective policymaking influence for the smallest party is the same as for the other two, notwithstanding that they each have more than twenty times the amount of popular support. If we accept that these small minority parties are likely to be extremist in some ordinary sense, the effect on the likely direction and shape of policy outcomes in terms of broad electoral consensus is clear.

ÔBargainÕ democracy

The other category of democracy that Cooter recognises is so-called Ôbargain democracyÕ, in which representatives of citizens strike deals among each other and generate Ôoptimal compromisesÕ by explicit bargaining.

A necessary condition for such bargaining to be non-exploitative of minorities, however, is that an effective rule of unanimity or something close to it applies. Except in special cases, bargains struck among decisive majority coalitions are likely to be at the expense of the minorities who are not part of the deal. The particular combination of proportional representation and majority rule within assemblies, however common that combination may be in practice and however much it seems to commend itself to many political scientists (of whom Arendt Lipjhart is perhaps the most notable), would not satisfy the criteria for Ôbargain democracyÕ that Cooter lays down.

An element of bargain democracy does appear in the Australian system in the form of the relationship between the two Houses: effectively, both houses must agree before legislation is enacted. This combination of majority rule within houses and quasi-unanimity across houses could be argued to permit some of the best features of bargain and median democracy to prevail. And the Australian system of single-member electoral districts in the Lower House and quasi-proportional representation in the Senate might be argued to deliver many of the putative benefits of each electoral arrangement. Put another way, it may secure a standing and voice for significant minorities without creating excessive scope for extremism.

Conclusion

To suggest that we Australians live, constitutionally speaking, in the best of all possible worlds may be a trifle extravagantÑand certainly requires a great deal more in terms of detailed argument. But it is, for us quietly self-effacing Australians, an attractive thought. Perhaps someone ought to pursue it some time.

In doing so, Bob CooterÕs book would be a useful resource. Its coverage of the relevant pieces of analysis is excellent. It is written in a deliciously breezy and accessible style, with lots of amusing asides and relevant jokes lurking in the footnotes. This kind of ÔconstitutionalÕ analysis is not common in AustraliaÑ certainly not as common as it is in the US. But that may be our loss. I am inclined to think it is.

Endnotes

1 See G. Brennan, ÔThe ÒUnrepresentative SwillÓ ÒFeel Their OatsÓÕ, Policy 14: 4 (Summer 1998-99), 3-10.

Geoffrey Brennan is Professor,Social and Political Theory Program,Research School of Social Sciences,The Australian National University.

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