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The Expansion of the Public Economy: A Comparative Analysis*

Published online by Cambridge University Press:  01 August 2014

David R. Cameron
David R. Cameron*
Affiliation:
Yale University
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Abstract

In spite of the traditional legitimacy accorded the market mechanism of the private sector in advanced capitalist nations, governments in those nations have become more influential as providers of social services and income supplements, producers of goods, managers of the economy, and investors of capital. And in order to finance these various activities the revenues of public authorities have increased dramatically–to a point where they are now equivalent to one-third to one-half of a nation's economic product.

This growth in governmental activity in advanced capitalist society is examined by considering the causes, and some of the consequences, of the expansion of the public economy–defined, following Schumpeter's discussion of the “tax state,” in terms of the extractive role of government. The primary concern of this article is to discover why some nations have experienced a far greater rate of increase in recent years and, as a result, have a much larger public economy than other nations. Five types of explanation are elaborated to account for the growth of the scope of governmental activity: (1) the level and rate of growth in the economic product; (2) the degree to which the fiscal structure of a nation relies on indirect, or “invisible,” taxes; (3) politics–in particular the partisan composition of government and the frequency of electoral competition; (4) the institutional structure of government; and (5) the degree of exposure of the economy to the international marketplace. The article evaluates the five explanations with data for 18 nations, and concludes by discussing some implications of the analysis.

Type
Research Article
Information
American Political Science Review , Volume 72 , Issue 4 , December 1978 , pp. 1243 - 1261
Copyright
Copyright © American Political Science Association 1978

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Footnotes

*

For comments and suggestions on various aspects of the research reported here, I wish to thank Edward Tufte, Philippe Schmitter, Douglas Hibbs, Stefanie Cameron, Theodore Eismeier, Richard Hofferbert, Robert Keohane, Henrik Madsen, John Stephens, and Aaron Wildavsky. A preliminary version of portions of this article was presented at the annual meeting of the American Political Science Association, Chicago, September 1976.

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