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Public Choice, Economics of Institutions and the Italian School of Public Finance

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Abstract

A vast, multi-disciplinary, literature has investigated the reasons why, in democracies, policies may actually pursue vested narrow goals, to the benefit of restricted groups but at the expense of the community. This analysis constitutes the foundation of influential contributions in the growing field of economics of institutions. This study highlights how the concepts of narrow interest groups and ruling elites can be found in the largely forgotten strand of research conducted by leading scholars of the so-called Italian School of Public Finance (ISPF), which emerged over the end of the nineteenth century and the first half of the twentieth. The chapter also indicates how the fundamental insights on the political decision-making provided by the economics of institutions and the ISPF are able to shed a light on central problems concerning the definition and implementation of cultural policies.

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Notes

  1. 1.

    This widespread assumption underlying most theoretical analysis of Public Choice (for a review, see Mueller 2003), has been partially curtailed by the new approach to political economy (see, among others: Besley 2007; Wittman and Weingast 2008). This approach, following the earlier contributions by the ‘Chicago School’ which somewhat reconciled public choice with Paretian welfare economics, supports a more ‘positive’ view of the political sector than that presented by the scholars associated to the ‘Virginia School’. In particular, institutions and fully rational agents would guarantee some degree of public control over policymaking and a fairly competitive electoral system resulting in an outcome that, in principle, would ‘tend’ towards efficiency.

  2. 2.

    According to a traditional classification in political science, the evidence in favour of the influence of economic elites would support the theory of economic-elite domination, while the evidence in favour of the influence of organized interest groups would provide support for the theory of biased pluralism.

  3. 3.

    For references on the political economic literature of cultural heritage see: Rizzo and Throsby (2006), Peacock and Rizzo (2008), Holler and Mazza (2013).

  4. 4.

    Mazza (2011) and Holler and Mazza (2013) provide some comments on the limits of such institutions to effectively overcome the discussed problems.

  5. 5.

    Surveys on the contributions of the ISPF are also Backhaus and Wagner (2005), Fausto (2003, 2010), Fausto and De Bonis (2003), Fossati (2010).

  6. 6.

    See also Buchanan and Tullock (1962).

  7. 7.

    See footnote 1 for a disclaimer on that hypothesis.

  8. 8.

    For an analytical treatment of the issues presented in Acemoglu and Robinson (2012), see Acemoglu (2010).

  9. 9.

    Leaving aside Olson (1982), which is just briefly mentioned, no prominent scholars among the founders of Public Choice is cited, in spite of the closeness of the topics and insights. Equally surprising is that Acemoglu and Robinson (2012) does not refer to important investigations on the topic of political and economic elites (in the US) carried in political science, such as Mills (1956) and Winters (2011).

  10. 10.

    For De Viti de Marco, as with Pantaleoni and later Fusiani, the government is a cooperative agent of the public, although its mandate can be implemented in different ways, maximising the number of votes or rather the aggregate intensity of preferences (Giardina 2008).

  11. 11.

    Pareto’s analysis is however more complicated than it generally appears in textbooks. Pareto in fact distinguishes two separate concepts: ophelimity, concerning pure economic satisfaction, and utility, referring to broader satisfaction than the economic one. For a discussion of these concepts and of the maximum of ophelimity/utility of or for the collectivity, see Giardina (2008), and Forte and Silvestri (2013).

  12. 12.

    See Pareto (1896–7) par. 1046 and 1047. See also De Viti de Marco (1890) for a similar point.

  13. 13.

    For an empirical verification of Mosca’s theory in the Italian politics, see Fedeli et al. (2014).

  14. 14.

    Is it well known that the median voter outcome, obtained under specific circumstances in direct or representative democracy systems, does not necessarily maximize social welfare.

  15. 15.

    It is, however, correct to mention that particular cultural events, especially art exhibitions or art displays in public spaces, did occasionally generate a public outcry, in different countries. However, the reason was almost inevitably an alleged offense to public decency or to religious creeds. Therefore, the protest did not directly imply a judgement about the artistic value of the sponsored event but rather the open violation of shared norms or beliefs.

  16. 16.

    Holler and Mazza (2013) also highlight the question concerning the choice of the decision rule in any committee in these bodies, and how such a choice affects the outcome of the decision process.

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Authors and Affiliations

  1. University of Catania, Catania, Italy

    Emilio Giardina & Isidoro Mazza

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  1. Emilio Giardina
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  2. Isidoro Mazza
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Correspondence to Isidoro Mazza .

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Editors and Affiliations

  1. Department of Economics and Business, University of Catania, Catania, Italy

    Ilde Rizzo

  2. Bournemouth University, Bournemouth, Dorset, United Kingdom

    Ruth Towse

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Giardina, E., Mazza, I. (2016). Public Choice, Economics of Institutions and the Italian School of Public Finance. In: Rizzo, I., Towse, R. (eds) The Artful Economist. Springer, Cham. https://doi.org/10.1007/978-3-319-40637-4_4

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