Why Do Governments Lack “Political Will� An Explanation

This paper proposes “lack of political will†as the most important reason why a ruling political party is unable to commit itself to economically efficient choices or policies. The notion of political will is explicated using concepts from the transactioncosts perspective. The paper models the interactions between an interest group and the ruling party on the one hand and between general electorate and the ruling party on the other as quid pro quo relationships or transactions. In the first type of transaction, the ruling party offers the interest group of favourable policy (say, subsidised public sector output) in exchange for political support. In the second transaction, the ruling party offers the general electorate subsidised welfare amenities (say, basic health care) in exchange for political support. The analysis in the paper shows that the transaction-costs associated with the interest group-ruling party exchange will be lower than the transaction-costs in the case of the general electorate-ruling party exchange. Consequently, the ruling party will implement policies which are inefficient for the point of view of the economy but which work to the benefit of the interest group.