Member-only story
Democracy can be understood as a kind of market where the supply of governance is meant to meet the demand of voter preferences. However, representative democracy has a critical inefficiency: the supply of decision-makers is inherently limited, while the demand – reflecting the diverse ideologies, values, and interests of the population – is vast and varied. This structural mismatch creates inefficiencies and undermines the very premise of democratic governance.
In this context, the solution is not just political but economic. To bring supply closer to demand, we must reduce the scale of decision-making to smaller, localized communities. Smaller democracies make it easier for governance to reflect the preferences of the governed, reducing inefficiencies and fostering more stable and satisfying outcomes.
The Economic Flaws of Representative Democracy
Representative democracy is constrained by its supply side. The number of elected representatives is finite, and their capacity to enact policy is further limited by bureaucracy, institutional inertia, and political compromise. Meanwhile, the demand side – voters’ preferences – exists on a virtually infinite spectrum, encompassing ideologies, cultural values, economic priorities, and personal interests.
This mismatch creates a series of inefficiencies. Voter preferences are diluted as they are aggregated into party platforms or legislative compromises. Representatives, tasked with catering to millions, often default to serving majority blocs or powerful interest groups, leaving many voices unheard. As a result, democracy becomes unresponsive and alienating for those it claims to represent.
This imbalance grows worse as the size of the polity increases. In a large, centralized democracy, the diversity of demands becomes unmanageable, and the supply of governance becomes increasingly disconnected from the population it serves. The result is inefficiency, polarization, and a breakdown of trust in democratic institutions.
The Role of Smaller Communities in Resolving Imbalances
The path to resolving this imbalance lies in reducing the size of the decision-making market. Smaller communities, by their nature, make it…
