The collective allocation of commodities in a democratic society

Abstract

What determines the extent to which a democracy will provide goods and services to its citizens? Differences in taste can be invoked to explain why communities, like individual citizens, consume different menus. And variations in wealth as well as taste may help to explain why one community may elect to spend only half as much as another in the same state on the education of its children. But will the process of majority rule yield an efficient division of resources between private and public goods? When market fail, will government do better? The democratic process portrayed in this paper resembles in certain respects the town meeting procedure used by many New England communities to determine simultaneously the level of educational expenditure and the consequent tax rate. But the paper simplifies many aspects of the democratic process in order to show that the principle of majority rule may encounter difficulties in even the most elementary circumstances. The ballot-box allocation considered in this paper involves equal shares for all in a collectively distributed good financed by a proportional tax. 1 It will be assumed for the most part, that all citizens have