The Role of the Democratic and Republican Parties as Organizers of Shadow Interest Groups

Abstract

Political parties are one of the most poorly understood components of American political life. Neither political scientists nor economists have explained adequately what political parties are and what they do. Generally speaking, political scientists underestimate the significance of political parties, while economists mischaracterize the role that they play. This article advances a new theory to explain the relationship between political parties and interest groups. Among the as yet unanswered questions that I resolve are: (1) why many politicians both Republicans and Democrats develop a reputation for despite the parties' inability to employ any meaningful sanctions against politicians who deviate from the party line; (2) why candidates for public office run in contested primaries when running as an independent generally would be a less costly mechanism for getting on the ballot; (3) why the two major U.S. political parties continue to attract resources from contributors and to inspire loyalty among various groups despite an apparent decline in party strength as shown by split-ticket voting, contested primaries, and a growing lack of ideological cohesion within party platforms. I argue that at times the costs of organizing into interest groups will outweigh the benefits for certain groups of individuals. Political parties enable these unorganized interest groups to find expression in the political process at relatively low cost. My model of the two major political parties depicts such parties as political brokerage firms. The objective of these intermediaries is to increase their value to the politicians and potential politicians who serve as their clients. The parties do this by serving as arbitrageurs who signal politicians of citizens' preferences and thereby inform politicians about how to obtain political support. This matching process lowers the transaction costs to