| The economic approach to public policy employs a narrow definition of policy, representing a fundamental misunderstanding of the scope of policy. Policymaking, as a structured politics, tends to constrain political conflict; the economic model enhances that tendency by offering, in market exchange, an apparent alternative to politics. The economic model, however, when examined in light of problems of information, actually defines a broader vision of policy.;The misunderstanding of the scope of policy originates in the artificial separation of politics and economics in the economic model of policy as governmental response to market failure. This separation implies a denial of politics, inhibiting both good policy and good citizenship, and neglecting important political concepts in policy analysis.;The links between politics and economics are uncovered under the rubrics of organization and information. In the economic model, all organization is problematic in light of the efficiency of markets; organization derives from market failure. Economic approaches to organization bring together politics and economics on terms other than government versus market. The economic analyses of public goods and collective action relate market failure to group theory; transaction cost economics link externalities to the theory of the firm.;Information represents a more fundamental tie. Politics is created, in the economic model, by the problem of information. Transaction cost economics demonstrates that imperfect information underlies market failure, organizations, groups--all departures from the market ideal. Organizations economize on information.;Organizations, groups and firms, then, must be explained politically, in relation to their external context. Organizations marshall subsidies from the disorganized. Economic analysis, however, cannot distinguish a market failure due to information disparity from an efficiency improvement due to organization. This distinction, and the resulting allocation of resources, demands a political rather than a marketplace decision.;These conclusions compare readily with traditional political themes like representation, mobilization of bias, nondecision, distributive politics and symbolic politics, which help explain organization as political power; such concepts are most closely paralleled in economics by the treatment of disparities of information. |
