The twentieth century has witnessed a fundamental and systemic change in politicoeconomic systems. Turn of the century mature, market-based economies with government spending to national income ratios of onetwelfth to one-sixth have been transformed into mixed economies that place greater and greater emphasis on collective decision making. Nowhere is this phenomenon more obvious than in the case of the richest of the industrialized economies where government expenditures now frequently comprise 40 percent and more of current gross national product.

It is not surprising that a change of this magnitude has attracted enormous attention in the literature. Predictably, much of the focus of this research has been on modeling and explaining government growth. Since such growth implies a dramatic shift from private to public allocation, additional concerns have arisen: (1) Is increased government size simply a natural consequence of modern industrial society, or does it indicate instead that rent-seeking groups have become increasingly powerful and more capable of manipulating government expenditures toward their own ends? (2) Does increased government expenditure represent investment in capital and social infrastructure, or does it hamper economic development, leading to slower GNP growth rates?