Small-Group, Multi-Level Democracy: Implications of Austrian Public Choice for Governance Structure

Abstract

Abstract. This paper examines the process of mass democracy as the fundamental cause of transfer seeking and the centralization of governance, using Austrian-school theory and methodology such as decentralized knowledge, disaggregated phenomena, and the structure of capital goods. The alternative of decentralized, small-group gov-ernance reduces the demand for campaign financing and makes more effective use of decentralized knowledge. In addition, when public revenues originate in the local districts and are passed on to higher levels of governance, it provides incentives for revenue sources which do not have an excess burden on production. The governance struc-ture of cellular, bottom-up, multi-level voting, with public revenue flowing up from the lower to the upper levels, provides a contrast for a comparative systems analysis that can yield insight into the transfer seeking endemic in mass democracy.