“It is not from the benevolence of the butcher, the brewer, or the baker that we can expect our dinner, but from their regard to their own interest,” wrote Adam Smith in The Wealth of Nations (1776). Smith conveyed an assumption that individuals interacting in the marketplace are driven by the pursuit of rational self-interest. It does not mean that individuals are not concerned about others or cannot act generously, but their central motive a concern about the costs and benefits for themselves.

Self-interest assumption is used in economics to analyze human interactions not only in private markets, but then also in other areas, including politics. In 1957, economist Anthony Downs introduced the theory of rational choice to explain individuals’ participation in politics. Another economist, James M. Buchanan, was the architect of public-choice theory since Calculus of Consent (1962), a book he coauthored with Gordon Tullock.

Economic theory on politics challenges the belief that politics runs merely based on ideology or ideas. Instead, it argues that self-interest explains the inner workings of a political system akin to the market mechanism. The theory uses equal assumption about human behavior in private and public setting and replaces romantic and illusionary beliefs about politics with more realistic ones. Individuals act within their own self-interest, and hence voters, politicians and public officials use self-interest to influence and make collective choices. Buchanan labeled the approach “politics without romance”.

Divorcing romanticism and engaging the rationalism of self-interest could review the efficacy of collective choices in a democratic country like Indonesia. The democracy creates freer political system but more complex collective decision making.

The complexity started with direct elections for members of parliament and the head of governments at local and central levels. Ideally, elections are measures of public interest. In reality, elections are competitions between the contesting self-interests of voters and politicians.

Reconciling diverse self-interest is a tall order. There is no way to reunite voters who, for instance, want religionism with those who prefer secularism, or those who want more highways with those who prefer more public funds spent on health care. These competing and conflicting interests cannot be consolidated into any feasible single measure of public interest.

The optimal situation that democracy can accomplish is a dynamic equilibrium.

In the marketplace, an individual can buy a cup of coffee without being forced to buy a piece of cake. In elections individual voters cannot choose a single public policy. Instead, they vote on a basket of policies that covers issues of education, health care, defense, security, infrastructure, trade and others. Voters may have interests on some issues but do not care about the others and cannot pick and choose.

Meanwhile, political parties and politicians are pursuing interests of their own. They are simply vote-maximizers to grasp power and positions. They promote a package of vision and mission for collective choices that they think would enable them to get elected, and not necessarily because they think they are right. Electability surveys are vital indicators to continue or modify political campaign strategies, which confirm that political romanticism has been fading away.

Once the elected representatives and government come into office, competition among the contesting self-interests continues. Well-organized small groups with sharply focused interests have substantial influence in collective decision making. The groups represent people or businesses who have joined together to lobby the legislative and executive offices for a narrow set of interests or issues. Interest groups could occupy a degree of political power beyond the numerical size of their membership, enabling them to capture regulatory agencies or political influence.

Engaging self-interest assumption in analyzing politics may suggest that democracy tends to be disruptive. Such an implication is not absolutely correct. Still, economic theory on politics offer an insight that democracy cannot rely on an “invisible hand” and choices in democracy are not automatically the best ones. Hence, the political process of collective choices should be a rule-based mechanism.

Today, Indonesia’s political system has been furnished with all the required rules for the process of collective choices. The rule of thumb is prioritizing mufakat (consensual decision-making) above majority voting. It could avoid the problem of minorities being exploited, or minorities exploiting majorities, although building consensus takes a lot of time and effort.

Collective decision-making is also made intricate by a fragmented legislature with more than two parties and none of them occupies an absolute majority. While coalitions are established, certain parties could change their positions when the political winds swing.

To improve the effectiveness of a political process, a guiding principle of legitimate collective choices needs to be reshaped. Because of diverse and conflicting interests, there is no perfect guidance to construct guaranteed rules that can always make everyone better off.

At best, collective choices should make everyone better off and no one worse off to improve everyone’s welfare. At second best, collective choices could accommodate the interest of one group for its better-off but must minimize another group’s worse-off. These choices are redistributive, which takes resources or liberty from one group and subsidize or protect another.

Collective choices without benevolence or based on self-interest should be understood as the outcomes of political mechanism whereby diverse interests in society are transparently arbitrated. It is a rational consideration on social costs and benefits of all available alternatives.

Trade-offs will always be created as the best choices, which provides that the largest benefits outweigh opportunity costs and anticipate the future consequences. A perfectly rational collective choice, even after comprehensively scrutinizing costs and benefits, is scarcely made. Instead of black and white, there will always be shades of gray in the process. The optimal situation that democracy can accomplish is a dynamic equilibrium, held stable by bargaining concessions for the opposing self-interests.

The judicial system of civil and constitutional courts is the “visible hand” of democracy. The courts are mandated to intervene, judge and make corrections on possible flaws in collective choices that may create inequality or breach the Constitution.

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The writer is managing partner at Trade-off Indonesia, an economic and business advisory firm.

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