Strangers in Politics - The Market for Good Politicians in Medieval Italy and its Lessons for Modern Democracy

Abstract

Limited political competition ultimately leads to inefficient policy setting. Still contemporary democratic institutions cannot be nefit from the healing forces of market competition because candidates have to be residents and wages are politically determined. In late medieval Italy, however, the prospering city-states mostly employed foreign executive politicians, the podestas. Their history illustrates the forces of an open market in politics. Applying the method of analytic narrative, these insights are captured by economic theory of political competition, reputation building and career concerns. The paper concludes that the combination of both, electoral and market competition, substantially improves policy setting.