In a wide variety of political systems, and in almost every corner of the world, those who determine how and where public monies are spent do not necessarily hold the office that formally grants them this authority.
Actual power over public spending often sits quite apart from formal authority. This is particularly true in systems with a dominant party, i.e. a ruling party, which is insulated to some extent from electoral competition. In such systems, informal power within the dominant party counts for more than formal power. Informal networks of politicians and bureaucrats, or factions, often call the shots. These factions are made up of politicians and administrators who share common interests and compete for resources within political parties and coalitions. These “factions of interest” should be distinguished from lobbies organised around particular policy agendas. Unlike lobbies, factions pursue above all their own power, more than specific policies.
Intra-party factions have received too little attention from students of political economy.1 They deserve greater scrutiny, as they seem to play central roles in determining public spending.
Powerful, intra-party factions are a common phenomenon. In Italy, for example, patron-client networks called correnti affected the allocation of local public spending for many years from positions of power within the Christian Democrat coalition. Similarly, informal networks of patrons and clients called camarillas played central roles in determining public expenditures in PRI-dominated Mexico. In Japan, the power to direct public expenditure has also long resided in powerful party factions, hobatsu, within the ruling Liberal Democratic Party. Factional control over public spending, and especially patronage, has also been a hallmark of the (in)famous political “machines” of America’s urban North and 20th-century South.
A large descriptive and empirical literature, mostly in Political Science and Sociology, indicates that these intra-party factions importantly influence the levels and distribution of public expenditure.2 This literature describes how factions compete with each other to provide targeted public spending to their own, often quite localised, constituencies. As more spending goes towards pork, presumably less is available for true public goods and the public welfare suffers.
While intra-party factions have received considerable attention from empirical political scientists and sociologists, the topic has largely been ignored in political economy. In a recent working paper with Jose Carlos Rodriguez-Pueblita of the Mexican Treasury, (“Factions and Political Competition”) we have taken a first stab at modeling intra-party competition and comparing the predictions of such a model with data on public expenditure. Informed by the largely qualitative literature on factions, we have developed a simple model of the internal workings of a dominant party. The model produces a set of distinctive predictions that link patterns of public expenditure to the internal organisational structures of political parties; and these predictions often find counterparts in data on public expenditures in Mexico during the 1990s.
Our work takes the presence of parties and (potentially) powerful factions as given. In reality, it isn’t clear what conditions promote the proliferation intra-party factions or their power to influence public spending. But we suspect that an important role is played by the degree of central control over local government expenditure. When control over local government expenditure is highly centralised, there is both greater latitude and greater incentive for factions to lobby for their constituents. For a given-sized federal budget, this jockeying for influence and spending within the party will inevitably reduce the amount of true public goods that are provided by government, and public expenditure will be directed increasingly toward pork.
Understanding what gives rise to factional competition and factional power may have important consequences for a variety of institutional reforms. If, indeed, centralisation of control over local public expenditure is a key to the power of intra-party factions, then better electoral laws will not be sufficient for better governance.
Consider, for example, the influence of reforms aimed at strengthening political parties or ruling coalitions and thus improving the conditions for governability. That is, consider reforms, like those undertaken in Italy during the early 1990s (see Tito Boeri’s and Guido Tabelini’s VoxEU column for an especially cogent discussion of these reforms.) While such reforms likely benefited Italy by stabilising ruling coalitions and giving them greater opportunity to actually make decisions, we are not confident that increasing government stability alone will improve governance. The PRI in Mexico and the LDP in Japan are examples of systems with extremely strong parties that were (are) riven by factional competition and, partly as a consequence, hobbled by mediocre governance.
If factions can develop and gain power no matter whether parties are large or small, strong or weak, then reforms aimed at governability are just one step along the path toward better governance. Strengthening parties and making majorities long-lasting would likely be good for public policy, except that strong large parties need not be unitary parties. In Italy, party factions appear to have survived the political upheaval of the reform and counter-reforms of the electoral law, though it is too early to tell for sure. So as long as there is strong central control over local revenues, we expect factions to continue and the system to generate excessive redistribution.
Belloni, Frank P., and Beller, Dennis C., eds. (1978). Faction Politics: Political Parties and Factionalism in Comparative Perspective. Santa Barbara, Clio Press.
Cox, Gary W., and Frances Rosenbluth (1993). “The Electoral Fortunes of Legislative Factions in Japan.” The American Political Science Review, Vol. 87, No. 3. (Sep., 1993), pp. 577-589
Grindle, Merilee S. (1977) Bureaucrats, Politicians, and Peasants in Mexico: A Case Study in Public Policy. Berkeley: University of California Press.
Kato, Junko and Carol Mershon (2006) “Internal party organization in the Italian Christian democrats and Japanese liberal democrats: factional competition for office, clienteles, and corrupt exchange.” In Comparing Political Corruption and Clientelism, J. Kawata, ed., Ashgate Publishing Company, Burlington VT.
Key, V. O. (1949). Southern Politics in State and Nation. New York: Alfred A. Knopf.
Sartori, Giovanni. Parties and Party Systems: A Framework for Analysis. Cambridge University Press, New York, 1976.
Zuckerman, Alan (1979). The Politics of Faction: Christian Democratic Rule in Italy. New Haven, CT: Yale University Press.
1 While political scientists have provided general theories of party factions (see, e.g., Belloni and Beller, 1976 and Kato and Mershon, 2006), our recent work (discussed below) offers the first formal model of model of political competition that incorporates party factions and their power.
2 Modern research on factional politics may have begun with V.O. Key’s classic study of the American South (Key, 1949). Early references on factions in Italy include Sartori (1976) and Zuckerman (1979). A classic on factions in Mexico is Grindle (1977). On the influence of factions in Japan see, especially, Cox and Rosenbluth (1993).