Why Do We Need Representatives? A Proposal for Direct Instead of Indirect Democracy

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midterm elections are over and the citizens of the U.S. can lean
back, relax and watch helplessly what their representatives on Capitol
Hill will do with the powers delegated to them. In economic terms,
the principals chose their agents and are now totally at the respective
agent's mercy (for an introduction see Pratt & Zeckhauser [1991]).
For those who believe in liberalism the question arises, why a representative
democracy is necessary. I mean why can the relevant political issues
not only be discussed but also decided not on behalf of the people
but by the people? Looking back in history could answer this question:

ancient democracies like Athens or Rome the assembly of the people
(consilium plebis or comitia tributa populi) was
the body to debate political issues and to decide. Even in our days
we have a few societies, where a general assembly decides, e.g.
Landsgemeinde in the Swiss cantons of Appenzell and Glarus

as per 11/1/02). The right to speak and vote in this assembly in
ancient times was restricted to full citizenship, which only polites
in Greece or the cives in Rome had. As time went by it became
simply impossible for the electorate to assemble physically, simply
a matter of size. Gathering 10,000 or more people was impossible
to handle. So the general assembly of the people remained but officers
were elected to deal with every-day business, later a senate or
a similar body was elected; the rights of the people were guaranteed
by the elected tribuni plebis which could veto each bill
of the roman senate. Let aside the centuries of monarchies and dictatorships
and focus on the Founding Fathers. They were well aware of the impossibility
of gathering all the citizens of the U.S. and invented our current
system of President, House, Supreme Court and all the other things
carefully constructed within the systems of Checks and Balances,
thereby hoping that no single man could become too powerful. The
principle of the division of power, invented by Montesquieu, should
guarantee this.

in our days, things changed and nobody seems to notice: Technology
gives us the chance to reinstall the general assembly of the citizens.
Not in person, but Internet technology enables us to take away decisive
rights from the representatives of the people and let the people
themselves decide. Let me illustrate this in a simple model:

Internet access of a significant part of the citizens (at least
a higher proportion than actually participating in elections), we
could easily establish a system, which enables electronic elections
as well as a referendum on any issue. The technical and organizational
problems have been solved and safe algorithms exist (see Prosser
& Müller-Török [2002]
). The prerequisites
necessary are

  1. A central
    registry of voters, which could easily be established
  2. A common
    existing service like electronic signature and a Trust Centers
  3. Access
    to the Internet either via workplace or private Personal Computer

is obvious that we cannot expect the hard working citizens of the
U.S., especially those engaged in private business, to sit on their
computer each day and decide on bills which contain hundred of pages.
But we could easily establish

  • A mandatory
    referendum on the federal budget or any issue exceeding a specified
    amount of public spending
  • A mandatory
    referendum on issues of real importance, e.g. whether the President
    should be allowed to take military action against another state
  • The right
    of a certain number of people (I would propose 10%) to veto
    each bill and call for a nation-wide referendum on it. 10% of
    the voters sounds much, but is quite easy to achieve in the
    Internet, if you compare it e.g. with the masses of people surfing
    the web daily.

am well aware of the fact that such a change in the constitution
needs discussion and some time before coming into effect. But as
an Austrian Economist I am convinced that this is the right way
of bringing the power back to the people and restraining representatives.
Or, in economic terms, increase the probability of detecting the
agent's cheating on the principal and making him do what the principal
really wants. I mean, we do not give our money to banks and tell
them "Do whatever you want with my money, I will do nothing
for 4 years and tell you then whether you may manage it for another
4 years." So why should we do this with politicians?

J.W. und Zeckhauser, R.J. (Hrsg.): Principals
and Agents: The Structure of Business
; Harvard Business
School Press, Boston, 1991

A., Müller-Török, R.: E-Democracy: Machbarkeit
und Auswirkungen; Wirtschaftsinformatik
6/2002, Vieweg-Verlag, Braunschweig 2002.

13, 2002

Robert Mueller-Toeroek [send
him mail
] teaches at the University of Economics and Business
Administration in Vienna, Austria.

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