Bryan Caplan, "'Market Fundamentalism' Versus the Religion of Democracy "

Many of the significant upheavals in the history of the modern society have arisen from attempts by marginal groups to win voting rights. Americans in particular are so fond of the “one person, one vote” style of democracy, that exporting it is a cornerstone of foreign policy. Letting the public have a voice in the shape of government—whether through the election of representatives or through direct referenda—is seen as a countervailing force to the influence of industry and other special-interest groups driven by greed. This belief in the supremacy of the democratic form of government is bolstered by the long-standing assumption that rational decision-making motivated by self-interest will, in the end, produce the best decisions for society as a whole.

Bryan Caplan, an economist who teaches at George Mason University, challenges these and other assumptions that have traditionally supported our faith in democracy. While “most social scientists assume that voters’ errors balance out,” leading to the best outcomes on average, Caplan insists in The Myth of the Rational Voter: Why Democracies Choose Bad Policies that this is “just wishful thinking” by democratic fundamentalists. He challenges the prevailing belief in the “wisdom of crowds” by claiming that the public is led by biased assumptions in supporting policies that are detrimental to popular wellbeing. “In theory,” he writes, “democracy is a bulwark against socially harmful policies. In practice, however, democracies frequently adopt and maintain policies that are damaging. How can this paradox be explained?” The problem, in Caplan’s view, is that while “most people resist even the most basic lessons of economics,” they nevertheless cling firmly to strong, emotionally motivated opinions on economic policy. The public as a whole “suffers from anti-market bias” that leads to emotionally satisfying but otherwise irrational and detrimental outcomes.

If, as Caplan suggests, “the majority can be wrong” and “democracy is not sacred,” what should the consequences be for both domestic and foreign policy? Can voters be educated to make better economic policy decisions, or should a council of studied economists be empowered “to declare legislation to be uneconomical and strike it down in the same way the Supreme Court strikes down restrictions on free speech as unconstitutional?” If both Republicans and Democrats—and bipartisan coalitions—all generate economically unsound policies, how much emphasis should the United States and other democracies continue to place on the will of the majority? And if the public is prone to irrational decision making when it comes to national policy, is it time to reconsider the prospects of self-governance in other areas of human endeavor as well?

Caplan, Bryan. The Myth of the Rational Voter. Princeton: Princeton University Press, 2007.

Digital image drawn from Bryan Caplan's George Mason University Faculty Profile.
Quotations come from Caplan’s own site; an excerpt from “The Myth of the Rational Voter: Why Democracies Choose Bad Policies” that appears on the CATO Institute site; “Special-Interest Secret,” a Wall Street Journal editorial by Caplan; an interview with Caplan on Australian radio, transcribed online; and “Dumbocracy in America.”

Links to Explore:

EconTalk: a podcast interview with Bryan Caplan on The Myth of the Rational Voter.

Another EconTalk interview on labour economics.

The Myth of Bryan Caplan's Seriousness: a critique of Caplan's work from The American Prospect.

Questions for Connecting:

• Caplan singles out William Greider as a prime example of a democratic fundamentalist. For rhetorical reasons, Caplan provides but one quote from Greider to substantiate his claim; Greider himself would doubtless use different terms to characterize his position. Indeed, in “Work Rules,” he sets out to explore “the promise and the difficulties” involved in “self-ownership.” That Caplan and Greider have different views of economics is clear, but what leads them to have such different views? Are they working with different facts? Different assumptions? Different beliefs? Different modes of argumentation? Rather than choose sides, write an essay that explores the source of the disagreement between Caplan and Greider. What would it take to resolve this disagreement?

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