POLITICAL INSTITUTIONS
All polities are characterized by institutional rules pertaining to the role of citizens in influencing the selection of government leaders. Let any polity consist of N citizens. Let S be the subset of N that participates in the selection of the political leadership. We call this subset the selectorate. Then N – S is the set of
4 Although democracies do not fight wars with one another, they often become engaged in militarized disputes (Oneal and Russett 1997). See Senese (1997) for an alternative viewpoint. 5 Earlier work demonstrates the endogenous relationship of institu- tions to foreign policy interests (Bueno de Mesquita and Siverson 1995; McGillivray 1997; Schultz 1996).
disenfranchised citizens with no say in the choice of leadership. All members of S have the right to partic- ipate in choosing the government. A subset of the selectorate forms a winning coalition, which we denote as W. Members of the winning coalition are those people whose support is required to keep the incum- bent in office. If the incumbent cannot find W members of the selectorate to support her, then she is removed from office.6 Since we assume that leaders are keen to stay in power, they are eager to satisfy members of the winning coalition.
Typical categories of regimes can be related to the institutional variables on which we focus. In a democ- racy with universal suffrage, for instance, S is approxi- mately equal to N, and W is large, typically being a majority of S. In monarchies and military juntas, W and S are typically small relative to N. In some authoritar- ian states, S is quite large, and in others it is very small, while W is always small in such systems. In a communist state, for instance, S has typically been a figure between just the members of the Communist Party (i.e., 57 million people in China) and all citizens, since univer- sal suffrage (in largely meaningless elections) is com- monplace for such systems. Authoritarian regimes are often characterized by rigged elections in which S is large, but this has little effect on actual governance other than to raise the risks for members of W if they defect from the incumbent, as we explain below.
Incumbent leaders (as individuals or as a governing coalition) select and implement public policies, which inevitably have a public goods component and a private goods component. Leaders have only limited resources to allocate to different policy goals and to help keep them in office. They can put everything into public policy that benefits everyone in the polity, everything into private goods that are consumed only by members of the winning coalition, or any mix in between. If they spend resources on, for instance, providing defense for the citizenry, then they cannot use those same re- sources to provide special privileges to the members of the winning coalition. If they buy the necessities of national defense only from cronies in the winning coalition, then the reduced competition to provide defense results in an inefficient provision of that public good while cronies skim money off the top for their personal gain. Thus, scarcity necessarily requires lead- ers to make choices over just how much to focus their limited time and other resources on providing gener- ally beneficial public policies and how much to focus on just satisfying the wants of their core supporters.
The main concerns here are to identify how re- sources are allocated during an international dispute, given variations in institutional arrangements; to iden-
6 The theory we develop does not require that we assume minimal winning coalitions (Riker 1962). Indeed, the results generalize straightforwardly to any defined magnitude for W. Yet, it makes most sense to begin from a minimal winning context because that appears to be incentive compatible with the objective of leaders to maximize their gains. A central question of interest to us here is how W is selected, including the selection of W such that it deviates from minimal winning. The comparative static analysis we undertake focuses in part on that question.
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An Institutional Explanation of the Democratic Peace December 1999
tify whatever dependencies exist between regime type and war participation and outcomes; and to evaluate the prospects that leaders are retained in office as a function of institutional arrangements. These issues influence whether leaders concentrate resources on the pursuit of national goals or on benefits to key constit- uents. In showing that this is true, we explain the empirical regularities that constitute the democratic peace.
Before turning to the formal representation, we pause to describe the basic structure of our model and outline the intuition that leads to the democratic peace result. We start by assuming that two nations, A and B, are engaged in a dispute. National leaders must decide whether to start a war in the hope of achieving their objectives or rely instead on a negotiated settlement. If war occurs, then leaders must decide how much effort to make to achieve military victory. By this we mean what proportion of available resources a leader is prepared to allocate to the war effort rather than to other purposes. Obviously, leaders-who dedicate large quantities of resources to the war are more likely to win, but at the cost of not having those resources available to reward their supporters. The citizens re- ceive payoffs based on the outcome of the crisis-be it a war or a negotiated settlement-and the rewards that accrue from resources not consumed in the war effort. Given these payoffs, the winning coalition decides whether to retain or replace the current leader.
A polity’s institutional arrangements shape the se- lection criteria that supporters use to determine whether to retain the incumbent. Hence, political institutions determine which outcomes allow a leader to keep her job and which do not. As we shall see, these differences shape the policies that leaders choose.
Citizens in general enjoy the benefits of public policies, whether or not they belong to the winning coalition. The advantage that members of W have is that they also enjoy ashare of whatever private goods are allocated by the leadership. On average, each member of W receives a share of private goods equal to RIW, where R is the available pool of resources and W is the size of the winning coalition.
As the winning coalition increases, holding the bud- get constant, each member’s share of private goods decreases. This makes public policy benefits loom larger in the overall utility assessment of members of the winning coalition in more democratic polities as compared to autocracies. One consequence is that democratic leaders, being just as eager to retain office as their authoritarian counterparts, must be especially concerned about policy failure. Toreduce the risk of policy failure and subsequent ..deposition, they make a larger effort to succeed in disputes. This means that they are willing to spend more resources on war effort and only engage in fights they anticipate winning. In contrast, leaders with small winning coalitions reserve more resources for distribution to their supporters in the form of private goods. As long as they can provide substantial private goods, they are at less risk of being deposed than are their democratic counterparts, who
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perforce cannot give a large amount of such benefits to each member of their winning coalition.
Democratic leaders are more likely to try hard to win their wars than are autocrats. If they do not expect to win, then they try to avoid fighting; This implies that they pick and choose their conflicts carefully, which has several consequences. Democrats are more likely to win wars than autocrats for two reasons. First, if they need to, democrats try hard, spending resources on the war to advance their public policy goals (Reiter and Stam 1998b). Second, fearing public policy failure, democrats try to avoid contests they do not think they can win. Since two democrats in a dispute both try hard, both can anticipate that, if they go to war, each will spend lots of resources in a risky situation in which neither is disproportionately advantaged by greater effort. Therefore, democrats are generally inclined to negotiate with one another rather than fight (Lake 1992; Stam 1996, 176-8). By contrast, autocrats typi- cally reserve their resources for domestic uses, as their political survival depends on satisfying key constituents through the distribution of private goods. Autocrats do not have a great need to produce successful public policies. Consequently, they try less hard than demo- crats in war, and they sometimes fight wars in which their chances are poor because defeat does not so greatly affect their prospects of political survival at home. Democrats, by their superior level of effort, often defeat autocratic foes and achieve successful policy outcomes. This helps enhance their reselection.
THE GAME
We assume that two nations, A and B, are engaged in a dispute. Our model examines the fundamental deci- sions that national leaders make under this contin- gency. In the game, leaders choose to fight or to negotiate a settlement. If the choice is to fight, then leaders decide how many of their available resources they are prepared to commit to the war effort. In reality, of course, either side in a dispute can resort to war. We, however, consider the restricted game in which the leader in nation A chooses between the use of force and a negotiated settlement. If she decides to attack, then she also picks an effort level, by which we
mean she allocates some proportion, gA, of her avail- able resources, RA, to the conduct of the war. Once attacked, the leader in nation B also picks an effort level, gB. If nation A decides not to attack, then the dispute is settled peacefully through negotiations.
The war’s outcome is a function of the relative effort by each side. That is, who wins depends in part on how leaders choose to allocate their limited resources. When the dispute is settled, either through negotiation or war, the domestic audiences in A and B then decide whether to retain or to depose the incumbent (Fearon 1994; Smith 1998). To make this decision, they evaluate their payoffs under each contingency and decide whether they are better off remaining in the incum- bent’s winning coalition or defecting to a prospective new leader.
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