PART I—
INTRODUCTION

Chapter 1—
Political Economy and Policy Choice in the Third World

Social scientists frequently appear to find themselves in a dilemma: how to remain true to the demands of their professional disciplines and how, at the same time, to identify with the needs and aspirations of the governments and peoples of Africa. As great as this conflict seems on the surface, the apparent gap between these two commitments could be reduced through altered theoretical framework. By focusing on policy analysis, both disciplinary and areal orientations can be juxtaposed, helping social scientists who are concentrating on the Third World to raise "the right questions."^[1] Thomas R. Dye's remark that "policy analysis might be labeled the 'thinking man's response' to demands that social science become more 'relevant' to the problems of our society" is as applicable to non-Western as to Western countries.^[2]

[1] Margaret L. Bates, review of Gwendolen M. Carter (ed.), National Unity and Regionalism in Eight African States, in American Political Science Review 61, no. 3 (September 1967): 824. Also see Henry L. Bretton, "Political Science Field Research in Africa," Comparative Politics 2, no. 3 (April 1970): 442.

[2] Thomas R. Dye, Understanding Public Policy (Englewood Cliffs, N.J.: Prentice-Hall, 1971),, p. 6.

Clearly, one way in which social scientists could make a substantial contribution to African development is by helping decision-makers to develop policy objectives and to implement programs to attain them. Rather than assuming a neutral and value-free stance, these analysts might adopt, or at least be sensitive to, the values that could facilitate the probing of complicated issues and the proposing of alternative courses of action to persons in positions of power and responsibility. "What is needed," assert Warren F. Ilchman and Norman T. Uphoff, "are some ways of assessing the comparative efficiency of policy alternatives and some means of formulating priorities."^[3] We agree, and we view a political economy framework as an appropriate analytical tool to deal with the dynamics of social change that require the formulation and ranking of priorities and the developing and implementing of policy alternatives. In an examination of the decisional choices by public authorities in achieving political, social, and economic goals, political economy offers a useful means of inquiring into the interaction between social, political, and economic organization and process. Such an emphasis on decisional choices orients a political economy approach more toward problem-solving than toward management or maintenance.^[4]

Policy analysis combines two critical disciplines that are central to an understanding of the process of transformation

[3] Warren F. Ilchman and Norman T. Uphoff, The Political Economy of Change (Berkeley and Los Angeles: University of California Press, 1969), p. 11. Of course, as Robert A. Packenham points out such a policy-relevant approach tends to skirt around normative questions. "Political Development Research," in Michael Haas and Henry S. Kariel (eds.), Approaches to the Study of Political Science (Scranton: Chandler Publishing Co., 1970), pp. 179, 186–87. For the normative issues from a neo Marxist point of view, see the essays in Richard Harris, The Political Economy of Africa (New York: Wiley, 1975).

[4] See the excellent review by Robert T. Golembiewski, " 'Maintenance' and 'Task' as Central Challenges in Public Administration," Public Administration Review 34, no. 2 (March/April 1974): 168–69. Also see Gary L. Wamsley and Mayer N. Zald, The Political Economy of Public Organizations (Toronto: D. C. Heath, 1973), pp. 16–22. A brief but useful discussion of the scope of political economy is in Joel Joalladebu, "Restrained or Enlarged Scope for Political-Economy?" Journal of Economic Issues 9, no. 1 (March 1975).

occurring throughout Africa today—political science and economics. Their interdependence is shown by the priorities set by decision-makers as well as by the problems of application they have encountered. Thus, even while placing considerable emphasis on productive efficiency, planners find themselves unable to isolate the economic factors they seek to influence from political rules and doctrines or social beliefs and habits.^[5] Insensitivity to the norms, values, and practices of pastoral people may actually hamper the production of meat or undermine the establishment of viable ranching schemes; similarly, inattention to locally held social stratification patterns may make the diffusion of technological innovation extremely difficult.^[6] Economic values, then, can only be effectively considered in a broader context, one which places heavy stress on both the political variable and the social-psychological environment.

In emphasizing the elements of choice in relation to political and economic resources, the "new" political economy serves as a theoretical model for two main groups: the students of developmental processes seeking analytical insights into the efficiency of resource mobilization and allocation in the particular time-place circumstances prevailing in various states, and the decision-maker searching for means to rank priorities, develop alternative policy designs, and choose and implement a specific policy program. Political economy, therefore, performs both analytic and prescriptive functions.^[7] It makes possible a fuller insight into the vital interplay between political and social process and organization, and economic practices.

[5] Economic planning "may be described as the conscious effort of a central organization to influence, direct, and, in some cases, even control changes in the principal economic variables . . . consumption, investment, saving" (and production). See Michael P. Todaro, Planning Development (Nairobi: Oxford University Press, 1971), p. 1.

[6] Donald Rothchild, "Realist Perspectives on African Modernization," Africa Today 20, no. 4 (Fall 1973): 41. Also see Harold D. Lasswell, "The Policy Sciences of Development," World Politics 17, no. 2 (January 1965): 288.

[7] Yehezkel Dror, "Some Diverse Approaches to Policy Analysis: A Partial Reply to Thomas Dye," Policy Studies Journal 1, no. 4 (Summer 1973): 258.

Consequently, political economy combines pure and applied social science research, and thus acquires a dual utility appealing to scholars and statesmen alike.

The social scientist or decision-maker utilizing the political economy approach must be wary of a number of possible pitfalls. Later we shall specifically examine the differences in the policy processes between developed and developing societies. Suffice it for now to point out some general problems in the way of easy application of this Western-based theoretical instrument to non-Western circumstances.

First, those utilizing a political economy framework must make a conscious effort to accept the existence and validity of different political cultures in which formal and informal decision rules are shaped. In this sense, it is unwise for them to minimize the variance in meanings which diverse societies give to such widely used terms as democracy, stability, freedom, equality, and efficiency. Different definitions as well as different norms, values, and practices in Third World societies will likely have a distinct impact on the decisional process (for example, the extent to which "command" as against "bargaining" procedures prevail). Men are obviously not malleable productive units but human beings with pronounced feelings, interests, habits, and values. As the latter impinge on policy making, planners may become circumscribed in their capacity to implement transformation: for example, the human costs of transformed productive processes might be too great. It is therefore essential that those adopting a political economy approach view the process of change as much as possible from within a particular situation. By emphasizing the ability of leaders to maximize the goals they set for themselves, the policy analyst can go far in avoiding preconceived preferences that may hinder a rigorous and systematic assessment of policy options under the conditions operating in a particular developing society.

Second, the policy analyst will enhance the effectiveness of his recommendations by avoiding deterministic thinking. All too often Western observers conceptualize change as leading in a sequential manner to a parliamentary type of democracy, while his Eastern counterpart (as distinct from the neo-Marxist theorist) superimposes a rigid form of class analysis and an inevitable

proletarian triumph on the African scene.^[8] But over and above these alien preconceptions is another, and possibly more insidious, type of determinism: namely, a self-defeating pessimism. The assumption (whether grounded on conspiracy doctrines or not) that existing international power relations foredoom an indefinite continuance of African underdevelopment does not automatically give rise to "realism." A case in point is the prediction of one scholar that few of the African countries "are capable of maintaining their current position in the international rank order; to score net gains seems to be well-nigh impossible for many."^[9] For African decision-makers to accept such a gloomy prognosis would be to give up the struggle for transformation before it starts. Why bother to restructure one's opportunities if the chances of altering the outcome are so restricted from the outset? By contrast, policy analysts probe given environments to find whatever opportunities, large or small, may be present. They experiment with a wide array of problem-solving initiatives, seeking thereby to enlarge choice through a more effective use of available resources. In this sense, "realism" is commitment to the potential instead of to the actual. Such futuristic orientations leave eventual outcomes undetermined and give policy formers an enhanced role in shaping their countries' relationship to their environments.

Third, the policy analyst must be cautious about reaching conclusions on alternative courses of action that rest on a narrow time perspective. Yehezkel Dror's comments on public policy-making in developing countries are pertinent: "Comparison with the past," contends Dror, "is inapplicable: the preindependence period is too different in most variables, and the independence period too short."^[10] He notes, for example, that

[8] On the economic determinism in classical Marxism (as distinct from neo-Marxism), see James M. Buchanan and Gordon Tullock, The Calculus of Consent (Ann Arbor: University of Michigan Press, 1971), p. 26. A statement of the more pragmatic neo-Marxist position appears in E. A. Brett, Colonialism and Underdevelopment in East Africa (New York: Nok Publishers, 1973), pp. 13–14.

[9] Henry L. Bretton, Power and Politics in Africa (Chicago: Aldine Publishing, Co., 1973), p. 19. See also Johan Galtung, "A Structural Theory of Imperialism," Journal of Peace Research 8, no. 2 (1971): 88–91.

[10] Yehezkel Dror, Public Policymaking Reexamined (San Francisco: Chandler Publishing Co., 1968), p. 116.

if the change between past and present net output is insufficient to indicate a future trend, conclusions drawing upon short-term comparisions may be misleading, even fallacious.^[11] Dror's point is well taken. In light of the poverty and inequalities inherited from the past, it would be a mistake to evaluate Third World performances in terms of brief postcolonial time spans. Such assessments could lead either to excessive optimism when compared with developmental experience in colonial times or to excessive pessimism when compared with future aspirations. A broader time perspective seems essential in order to minimize the gap between the desirable and the realizable.

Fourth, the policy analyst focusing on Third World countries cannot usefully adopt a static theoretical orientation. The process of transformation involves dissatisfaction with the status quo as well as determination and capacity to alter the inherited order in a significant manner. Essential to this effort at revising social practices is a sense of urgency over the need for expanded options, not a limitation of vision to existing state functions and structures.^[12] In this sense, structural-functional analysis seems open to the criticism of not going far enough. Although it does enlarge our field for comparison by delineating which functions have corresponding structures in all societies, it affords us little insight into the dynamics of social change affecting all Third World countries (the broadening of the range and extent of organizational goals, international bargaining, exploitation and discrimination, pan-Africanism, regional integration, and so forth). Consequently, there would seem to be grounds for Richard Sklar's complaint that "in today's Africa, an undue emphasis on the existing state system is likely to promote a conservative outlook that cannot easily accom-

[11] Ibid., p. 60.

[12] Gabriel A. Almond, "Introduction: A Functional Approach to Comparative Politics," in Gabriel A. Almond and James S. Coleman (eds.), The Politics of the Developing Areas (Princeton: Princeton University Press, 1960), p. 5. Subsequently Almond himself conceded that "the 'new political science' critiques of system functionalism as ideologically conservative make a useful point." "Approaches to Developmental Causation," in Gabriel A. Almond, Scott C. Flanagan, and Robert J. Mundt (eds.), Crisis, Choice and Change (Boston: Little, Brown, 1973), p. 7.

modate the radical values of liberation, economic freedom, and continental unity."'^[13]

And fifth, policy analysts who inadvertently fail to emphasize, or at least recognize, concerns for human betterment court futility and neglect. The realistic problem-solver must aim toward worthwhile objectives if his recommendations are to have a useful thrust—the realism of idealism. To do otherwise, and merely catalog political and economic resources for efficient utilization, would be to engage in a mechanical exercise largely devoid of constructive purpose. Such efforts could, moreover, be used by life-negating decision-makers for goals that seem unworthy of systematic research. In brief, then, the policy sciences must never lose sight of such challenges as inequality, exploitation, and arbitrariness.^[14] As Zambia's President Kaunda puts the matter so well: "We cannot succeed in any field, whether it be political, industrial or religious, if we fail to recognize that man is of primary importance."^[15] It would be truly myopic to overlook the fact that the end goal for the policy sciences is man's self-fulfillment.

The Utility of a Comparative Policy Approach

Formulated most simply, policy analysis seeks to determine what rational courses of action are open to decision-makers in light of availing societal demands and constraints. "It decides major guidelines for action directed at the future, mainly by governmental organs. These guidelines (policies) formally aim at achieving what is in the public interest

[13] Richard Sklar, "Political Science and National Integration—A Radical Approach," Journal of Modern African Studies 5, no. 1 (May 1967): 4. See also Maure L. Goldschmidt, "Democratic Theory and Contemporary Political Science," Western Political Quarterly 19, no. 3 (September 1966): 11.

[14] Jonathan S. Barker, "Political Science and the Real World," Taamuli 1, no. 2 (March 1971): 6–7.

[15] Colin Legum (ed.), Zambia: Independence and Beyond: The Speeches of Kenneth Kaunda (London: Thomas Nelson and Sons, 1966), p. 116. (Italics in text.)

by the best possible means."^[16] Through inquiry into real-world decision processes and outcomes, policy analysis tends to be realistic and pragmatic. It de-emphasizes the great "isms" (e.g., socialism versus capitalism) and stresses instead the fine gradations of choice that may be present in various systems.^[17] What is assumed to be common to all systems is scarcity of resources and a desire on the part of individuals to improve their, or their group's, share of the output generated by using the resources. Government is left with a threefold task: (1) extracting resource contributions (taxes, national service, military duty, etc.); (2) setting priorities on the allocation of public resources among various objectives in response to demands by as well as among distinct interest groups and social classes; and (3) establishing regulations on enterprise and activities.^[18] In principle, "rational" governmental policies are based on cost-benefit considerations. Where a community secures more direct and indirect advantages (over disadvantages) from pursuing a given line of activity, then the policy can be considered useful and possibly be put into effect. Whether it actually is undertaken depends on whether other competing activities are expected to produce even greater net advantages.^[19] In making such calculations, the policy-maker must take into account various non economic factors involving social values, norms, habits, and practices as well as the more traditional economic objectives associated with productionist ends. Political economy thus seeks to combine the subjective of politics and society with the objective goals of economic growth.^[20] This interdisciplinary

[16] Dror, Public Policymaking Reexamined, p. 12.

[17] Robert A. Dahl and Charles E. Lindblom, Politics, Economics, and Welfare (New York: Harper and Row, 1953), pp. 3–16.

[18] Larry L. Wade, The Elements of Public Policy (Columbus: Charles E. Merrill, 1972), pp. 10–15; and Larry L. Wade and Robert L. Curry Jr., A Logic of Public Policy (Belmont, California: Wadsworth, 1970), chaps. 1–3.

[19] We shall discuss in greater length the matter of benefit-cost situations in later chapters. For a discussion of the role of analysis in selecting from among alternatives (such as various projects that compete for community resources), see UNIDO, Guidelines for Project Evaluation (New York: United Nations, 1972), chaps. 1–3.

[20] James S. Coleman, "The Resurrection of Political Economy," in Norman T. Uphoff and Warren F. Ilchman (eds.), The Political Economyof Development (Berkeley and Los Angeles: University of California Press, 1972), pp. 32–34: and John W. Harbeson, "Modernization Theory and Modernization Policy: Toward the Creation of a Dialogue," a paper presented to the Third Session of the International Congress of Africanists, Addis Ababa, 9–19 December 1973, p. 19.

perspective enables the policy analyst to take a broad view of the process of change in transitional societies. The analyst employing a political economy approach is in a position to cope more effectively with such complicated and multidimensional issues as the preconditions for development, political exchange, external costs, transfers of resources, and the exogenous factor in development. The future is seen in terms of a process involving the expansion of resource availability and not merely the allocation of existing resources. Such a concern for growth and experimentation cannot afford the restrictions of static or deterministic assumptions about the political economy of development.

We feel that it is appropriate and useful to offer the reader a rational-choice model included as the appendix to this chapter. The model is heuristic, or nonempirical, in nature and therefore is limited to a set of logical propositions about the rational choice of public policies. Since this model contains the essence of many of the propositions on which the remainder of our volume is based, an understanding of it becomes essential to an appreciation of both our methodological approach and the substantive issues to which our main attention is directed.

If political economy can be useful to scholars and statesmen alike in determining the choices open to decision-makers, what scope exists for comparative analysis? To be sure, a situational approach emphasizes the capacity of the state or region to set priorities on the utilization of scarce resources. At the same time, an analyst need not look inward to the community affected by the decisional process. As Ilchman and Uphoff contend: "Policies of different regimes can be compared over time and among countries on the basis of the comparative efficiency of different combinations of resources."^[21] A comparative outlook can, to the extent that it enlarges the awareness of meaningful alternatives on the part of policy-makers, be

[21] Ilchman and Uphoff, Political Economy of Change, p. 32.

expected to complement the decisional process at the state or regional levels.

Without attempting to overplay the comparative dimension, it is important to note several ways in which it is useful in policy choice. First, a cross-national approach offers decision-makers insights into comparable priority-ranking and policy-implementing experiences elsewhere. Policy-makers need not repeat the errors of other localities or countries; instead, the experiences of one political system can act as an example or a warning for another. Despite distinguishing political cultures and environmental circumstances, a number of similar questions confront all states. In matters of recruitment, extractions, budgeting and allocations, regulations, and relations with foreign countries and enterprises, they have much to learn from each other. Moreover, common experiences at the regional level (for example, the Lake Tahoe basin of the western United States and the Lake Victoria area of East Africa) may offer extensive scope for transnational policy analysis. To the extent that comparative policy analysis offers new insights on such issues, it goes far in fulfilling its basic problem-solving mandate.

Second, institutions can be compared in terms of their ability to promote desired policies and outcomes. Such institutions, described as "stable, valued, recurring patterns of behavior,"^[22] can either make demands on the political system or convert these demands for resources and opportunities; in the latter case, governmental agencies such as the executive and legislative branches, the bureaucracy, and local administrations organize activities, determine priorities, and allocate costs and benefits.^[23] By linking structures to the policy process, the political economy approach revives a flagging concern on the part of social scientists with political structures. The renewed focus on institutions reveals much about the way policies are formulated and implemented. "Institutions," says Thomas R. Dye, "may be so structured as to facilitate certain policy outcomes and to obstruct other policy outcomes. They may

[22] Samuel P. Huntington, Political Order in Changing Societies (New Haven: Yale University Press, 1968), p. 12.

[23] Larry L. Wade and Robert L. Curry, Jr., A Logic of Public Policy, pp. 120–27.

give advantage to certain interests in society and withhold advantage from other interests. Certain individuals and groups may enjoy greater access to government power under one set of structural characteristics than under another set."^[24] Clearly, there is much room for comparative analysis here. Such structurally based foci as federalism, legislative-executive relations, party organization, interest group strategies, and bureaucratic-military encounters can be examined cross-nationally for their impact on policy formulation and implementation. This approach is likely to open up some little used, but potentially profitable, vistas into the economizing process.

Third, the outputs of different political systems may be a suitable field for comparative examination. Such outputs, according to David Easton, consist of "authoritative allocations of values or binding decisions and the actions implementing and related to them."^[25] Regime initiatives with respect to the environment, expressed in the form of rules, regulations, decisions, or actions, embody public policies on such issues as the mobilization and allocation of resources, tax burdens, redistribution of community income, and division of labor. Outputs such as these represent the "operational profile" of the political system ^[26] and, notwithstanding certain limitations arising from time-place circumstances discussed below, can be usefully compared for their impact on the environment.^[27] For example, a cross-national examination of the redistribution of resources from the relatively advantaged to the relatively disadvantaged parts of a polity could suggest much about the decisional efficiency of such actions. It is possible that policy-makers

[24] Dye, Understanding Public Policy (n. 2 above), p. 33.

[25] David Easton, A Framework for Political Analysis (Englewood Cliffs, N.J.: Prentice-Hall, 1965), p. 126. Also see his article, "An Approach to the Analysis of Political Systems," World Politics 9, no. 3 (April 1957): 383–400.

[26] Alexander J. Groth, Comparative Politics: A Distributive Approach (New York: Macmillan, 1971), p. 9.

[27] "The 'environment' is regarded as the totality of the subsystems, which, with the polity (itself now being regarded as a 'subsystem') makes up the social system." B. J. Dudley, Instability and Political Order: Politics and Crisis in Nigeria (Ibadan: Ibadan University Press, 1973), p. 11.

would be in a better position to put more radical reallocative or redistributive measures into effect if they had access to the kinds of information presented by comparative data analysis.

Fourth, comparisions of outcomes, as distinct from outputs, can be highly suggestive.^[28] Here the policy analyst is concentrating on the consequences of actions rather than the decisions themselves. With a provision in the central budget for a reallocation of resources from the advantaged to the disadvantaged sections of the country, what are the results (anticipated or unanticipated) of these measures? Some findings on the outcomes of regimes in developing countries have already come to light. For example, although the Zambian government remained faithful to its doctrine on corrective equity among the provinces of the country, it actually spent more during the course of the first-plan period in the two major line-of-rail regions, Copperbelt and Central Provinces, than in the remaining six provinces combined; thus 287.8 million Zambian kwacha was allocated to the two more industrial provinces and ZK440.4 million in fact disbursed (53 percent more than planned), while ZK260.9 million was allotted to the other six provinces and 207.4 million actually expended (21 percent less than planned).^[29] Government expenditure patterns thus pointed to a noticeable gap between promise and performance with respect to redistributional objectives. Moreover, Ira Sharkansky shows that the lower-income population of the least developed countries and of the least developed of the (United States) states were both taxed disproportionately; although taxes based on retail sales and excises were easiest to collect, they were regressive in their effects, as they fell most heavily upon the poor. Such a focus on outcomes, which minimizes the importance of

[28] On the distinction between outputs and outcomes, see Austin Ranney, "The Study of Policy Content: A Framework for Choice," in Austin Ranney (ed.), Political Science and Public Policy (Chicago: Markham, 1968), pp. 8–9; and Ira Sharkansky, "Governmental Expenditures and Public Services in the American States," American Political Science Review 61, no. 4 (December 1967): 1074–75.

[29] Donald Rothchild, "Rural-Urban Inequities and Resource Allocation in Zambia," Journal of Commonwealth Political Studies 10, no. 3 (November 1972): 238–39. Also see his "Ethnic Inequalities in Kenya," Journal of Modern African Studies 7, no. 4 (December 1969): 689–711.

doctrine in favor of actual performance criteria, is important for its ability to distinguish achievement from aspiration.^[30]

And finally, a comparative approach adds perspective to an anlysis of the policy process in a particular political system. Richard Rose's comments on the manner in which cross national research enhances the meaningfulness of conclusions is insightful here. Rose states:

The significance of social and economic conditions for public policy can be tested comparatively by positive and null hypotheses. Contrasting countries with very large and very low gross national products per capita are likely to produce predictable and positive results. These findings can be modified in important ways, however, if one studies the aggregate gross national product of a country in relation to government choice about collective goods. It is often overlooked that the total gross national product of the Republic of China, India or France is far greater than that of Norway or the Netherlands; the relationship is reversed only when one analyzes wealth on a per capita basis.^[31]

Policy Constraints:
Ideas, Information, and Structure

In principle, then, policy analysis could be of great use to students and statesmen concentrating on Third World problems. Yet in practice this has not generally been the case. The limited application may be due to the existing literature's focus on experiences in developed capitalistic countries (particularly the United States). To dwell on such culturally oriented objectives as private enterprise or parliamentary democracy, as do many

[30] Ira Sharkansky, "Structural Correlates of Least Developed Economies: Parallels in Government Forms, Politics and Public Policies among the Least Developed Countries and the Least Developed (U.S.) States," a paper presented to the International Political Science Association, Montreal, 19–25 August, 1973, pp. 6–8. For a study of the impact of ideology upon public spending patterns, with considerable relevance for policy outcomes in developing countries, see Wade, Elements of Public Policy, pp. 32–36; and Alexander Groth and Larry Wade, "International Educational Comparisons," in Dusan Sidjanski (ed.), Political Decision making Processes (Amsterdam: Elsevier Press, 1973), pp. 122–48.

[31] Richard Rose, "Comparing Public Policy: An Overview," European Journal of Political Research 1, no. 1 (April 1973): 71.

Western writers, is to limit the relevance of research conclusions as far as many African or Asian observers are concerned. Similarly, Western caution and pragmatism seems out of touch with the radical trends that inevitably mark Third World conditions. Manfred Halpern contends that a modernizing state involves "a persistent capacity for coping with a permanent revolution."^[32] Unless the public policy literature can become attuned to this ongoing transformation, it risks the stigma of irrelevancy in Third World countries (and First and Second World lands as well).

The limited applicability of current policy science analyses to the developing countries becomes evident from an examination of the methods and tools of research at the disposal of the policy analyst. Not only are African-oriented analysts frequently bound by assumptions implicitly underlying much current policy research, but they are also constrained by inadequate and often unreliable data as well as an inability to relate existing data to comparable situations. In many African lands, statistics are notoriously undependable;^[33] where such information is available, it is not always clear what measurements are to be applied to the data if meaningful conclusions are to be reached. For example, key indices such as the gross domestic product and the gross national product are subject to different interpretations in essentially modern and traditional economic contexts; therefore, any effort to draw comparisons between them is likely to be misleading, even erroneous.^[34]

These general constraints upon utilizing the burgeoning literature on policy in Third World circumstances are aug-

[32] Manfred Halpern, "Toward Further Modernization of the Study of New Nations," World Politics 17, no. 1 (October 1964): 177. See also the critique by Donal Cruise O'Brien, "Modernization, Order and the Erosion of a Democratic Ideal," Journal of Development Studies 8, no. 4 (July 1972): 351–78.

[33] On the accuracy and completeness of censuses in developing countries, see I. I. Ekanem, The 1963 Nigerian Census: A Critical Appraisal (Benin: Ethiope Publishing Corp., 1972), p. 28.

[34] The gross national product differs from the gross domestic product in that it takes indirect taxes and subsidies as well as factor payments to and from other states into account. See the difference between the two illustrated in Republic of Kenya, Economic Surveys 1973 (Nairobi: Central Bureau of Statistics, 1973), pp. 8–11.

mented by the difficulty of having recourse to the input-output-feedback model so basic to this approach. On the input side, the sources of demands on the regime are somewhat distinct between the more developed and the less developed countries. Whereas interest group and political party pressures for public and private goods are extensive in pluralistic Western societies, such sectors tend to be less organized and effective in the African states.^[35] Demands for change are readily apparent, to be sure, but these are as likely to emanate from bureaucratic or governmental agencies, locally based expatriate groups, multinational corporate interests, foreign donor agencies, or external powers as from the more conventional political and economic sources of the West. Moreover, interest groups frequently exhibit a greater influence over administrators than over policy makers, and this has a larger impact on the implementation than the formulation of public policy.^[36]

With respect to the processing of demands, further differences emerge between the situations of the more developed and the less developed states. In many of the Third World countries, governmental structures which determine priorities on public issues are notable for their brittleness and ineffectiveness, rather than for the overbearing tendencies so often attributed to them. The reasons are not hard to find. Governmental organs lack the capacity in many instances to cope effectively with the range and intensity of demands confronting them. "The most general trend that developed in the [political] sphere in these societies," states S.N. Eisenstadt, "was marked discrepancy between the demands of different groups—parties, cliques, bureaucracy, army, regional groups—and the responses and ability of the central rulers to deal with these demands."^[37]

[35] Thomas B. Smith, "The Study of Policymaking in The Developing Nations," Policy Studies Journal 1, no. 4 (Summer 1973): 245. See also Ferrel Heady, Public Administration: A Comparative Perspective (Englewood Cliffs, N.J.: Prentice-Hall, 1966), p. 65.

[36] In India, where interest group claims tend to exert greater influence, it is apparent to, observers that these sectors are more effective in bringing pressure to bear on administrators than on policymakers. See Myron Weiner, The Politics of Scarcity (Chicago: University of Chicago Press, 1962), p. 217.

[37] S. N. Eisenstadt, "Breakdowns of Modernization," Economic Development and Cultural Change 12, no. 4 (July 1964): 350. Also see his"Bureaucracy and Political Development," in Joseph LaPalombara (ed.), Bureaucracy and Political Development (Princeton: Princeton University Press, 1963), pp. 96–106.

Failure to manage these demands leads directly to instability, lack of continuity, and what Eisenstadt depicts as "breakdowns" of modernization.

The fragility of a number of structures under Third World conditions has already been indicated. Suffice it here to note the weakness of a single key institution involved in the formulation of public policy: the policy-planning structures variously associated with the national organs of the new African states. Despite the wide acceptance of a need for centralized economic action, such institutions are often unable to integrate and manage demands. Commenting on the lack of central institutional authority in developing countries for enforcing compliance with development plans, one author observes that policymakers in these states will more likely than not "constitute merely another political group competing for attention and influence in the policymaking process."^[38]

The ineffectiveness of these planning agencies to design and implement comprehensive programs for development, especially by comparison with such developed polities as the Soviet Union, stems largely from their difficulties over staff recruitment, reliable information, and relations with administrators and politicians. These organizations must compete with the ministries, parastatal bodies, and multinational corporations for trained persons, and given the prevailing salary structure, they often find themselves in a poor position to attract the most able personnel. Policy-making organizations are also constrained by

[38] Robert H. Jackson, "Planning, Politics and Administration," in Goran Hyden, Robert Jackson, and John Okumu (eds.), Development Administration: The Kenyan Experience (Nairobi: Oxford University Press, 1970), p. 175. See also Aaron Wildavsky, "If Planning Is Everything, Maybe It's Nothing," Policy Sciences 4, no. 2 (June 1973): 146. For discussions of basic planning elements, see W. Arthur Lewis, Development Planning: The Essentials of Economic Policy (New York and Paris: OECD, 1966), and Albert Waterston, Development Planning: Lessons of Experience (Baltimore: Johns Hopkins, 1967). For a focus on Africa, see UNESCO, Social Implications of Industrialization in Africa South of the Sahara (New York: United Nations, 1964).

the information at their disposal. Such information as is available to these planners, derived largely from spokesmen for interest group, subregional, partisan, and bureaucratic sources, is often sketchy and unreliable. Consequently, developmental programs based on this insufficient or misleading knowledge can be the cause of frustration and, even worse, of poor choices on developmental issues. Moreover, the relations between policymakers and bureaucrats or politicians are not necessarily harmonious. The coordination function expected of central-planning instrumentalities may prove difficult to effect in real-world conditions. Professional administrators have not always responded positively in practice to the leads of policy-planning units; on the other hand, bureaucrats and political officials have been known to resist attempts by these agencies to expand their control.^[39] The upshot is considerable institutional incapacity on the part of policy-planning organizations at just the point where their ability to offer coordinated direction to the economy seems most essential.

In addition to the structural difficulties besetting policymaking organizations in developing lands are the constraints upon choice which circumscribe their capacity for effective action. Certainly a wide array of factors impinge on that maneuverability: the ability to mobilize sufficient human and material resources, to secure reliable information, to manage interest group demands, to cope with the "exogenous variable," and so forth. Something akin to a paradox of choice is apparent. Radical inclinations and solutions seemingly abound; in practice, however, administrators, and perhaps to a lesser extent policy-makers, frequently opt for incremental adjustments. Rather than starting anew to set values and objectives when dealing with social problems (the root method), those disposed toward incrementalism tend "continually [to build] out from the current situation, step-by-step and by small degrees" (the

[39] Dror, Public Policymaking Reexamined (n. 10 above), p. 113; and Jackson, "Planning, Politics and Administration," p. 188. Also see James S. Coleman, "The Development Syndrome: Differentiation-Equality-Capacity," in Leonard Binder et al., Crises and Sequences in Political Development (Princeton: Princeton University Press, 1971), p. 99.

branch method).^[40] " As Colin Leys points out, many of those involved in policy analysis complain over spending only 10 percent of their time on comprehensive planning, the remaining 90 percent being left to the more mundane tasks of management and control.^[41]

How can one explain this seeming paradox of choice? No doubt the nature of the struggle against colonialism and neo-colonialism, the dimension of the problems of poverty, illiteracy, and disease, the bitterness over lingering evidences of racism and exploitation, the glaring inequalities between subregions, races, and ethnic peoples, and the general disillusionment over the rate of change all help to account for the gap between aspiration and reality. Policy-makers and administrators, intent on achieving a high level of performance as rapidly as possible, often pursue short-term options; this course of action may involve, for example, an accommodation with the international capitalistic system, not out of any preference for such connections but because of concern over the costs of severing such relationships.^[42] It is largely the hostility of the inherited world environment that leaves policy analysts in the less developed countries (LDCs) with limited room for movement. To be sure, they can make some basic value decisions over international alignments, trading partners, and nationalization programs, but having once established these fundamental preferences, the environment impinges and thereby curtails subsequent choices on public policies.

To a degree at least, such a combination of environmental strain and inability to cope effectively is in contrast with the experience of the rich industrialized polities of the West. Not

[40] Charles E. Lindblom, "The Science of 'Muddling Through,' " in Dennis L. Thompson (ed.), Politics, Policy and Natural Resources (New York: Free Press, 1972), p. 102. Also see his book, The Intelligence of Democracy (New York: Free Press, 1965), p. 178.

[41] Colin Leys, "The Analysis of Planning," in Colin Leys (ed.), Politics and Change in Developing Countries (Cambridge: Cambridge University Press, 1969), p. 253.

[42] These alternatives are explored more fully in Donald Rothchild's, Racial Bargaining in Independent Kenya: A Study of Minorities and Decolonization (London: Oxford University Press, for the Institute of Race Relations, 1973), chap. 13.

only are Western decision-makers induced by their values and assumptions to adopt reformist policy-making styles, but the very privileged position of their countries in the world community makes such an approach marginally acceptable—so long, that is, as prevailing conditions persist. In developing lands, however, incrementalism reduces the determination to search out and apply alternative courses of economic organization and runs counter to the prescriptions of African socialism as an "ideology of development."^[43] To the extent that modern policy analysis is based on such values and assumptions, it is likely to secure only minimal acceptance from those who reject "muddling through" and insist, for sound reasons, upon a bolder experimentation associated with comprehensive planning.

As for the implementation and effect of policy (outputs and outcomes), the limited usefulness of the current public-policy literature is readily apparent.^[44] Here liberal Western social science, by its heavy stress on input agencies, seems somewhat incidental to African needs and priorities. Unlike the Marxists, who remain ever alert to the close connection between politics and economics, Western social scientists have all too often failed to pay sufficient heed to the difficulties in the way of accomplishing ends and to the consequences of policy application. The result is an overriding concern with process rather than problem-solving—a ranking of functions and goals sharply at variance with those held by leaders in the African states.^[45]

The significant impact of interest group influence on policy application in the LDCs has already been noted. Such influence arises from interest group access to administrative

[43] On the distinction between socialism as an "ethic of distribution" and as an "ideology of development," see Ali A. Mazrui, Towards a Pax Africana: A Study of Ideology and Ambition (Chicago: University of Chicago Press, 1967), p. 98.

[44] Exceptions here are Jeffrey L. Pressman and Aaron Wildavsky, Implementation (Berkeley and Los Angeles: University of California Press, 1973), pp. 143–46; and Michael Chege, "Systems Management and The Plan Implementation Process in Kenya," African Review 3, no. 4 (1973): 595–609.

[45] We are grateful to David Leonard for suggesting some of the points made in this paragraph.

decision-makers and the extensive pressures for concessions to these sectors deriving from such contacts. Colin Leys has argued recently that there is a fundamental contradiction involved in decision-making caused by the way that developing or underdeveloped countries are related to the global economy. Briefly, his point is that investors from the trading-center countries transfer capital and industrial technology to the periphery rawmaterial-producing countries. In the latter, centrist-company interests are protected by a ruling elite whose policies are designed by two groups: first, the foreign investors; and second, local smaller-scale capitalists whose economic interests coincide with the multinational or international companies from abroad. Each has an interest in relatively low wages and higher prices, each an element in generating higher profits or relatively higher returns on capital. But these are inconsistent with the interest of an emerging working class whose aspirations are for improved material standards of living, or in other terms, higher wages and lower prices. In order to ensure system maintenance and stability, policies must be developed and implemented. Leys asserts that the one option open to policy-makers is to squeeze the local middle-class entrepreneurs—the local capitalist class. And here, he states, is the fundamental contradiction: smaller-scale capitalists, supporting the foreign investors, find that the burden of accommodating emerging working-class demands has been shifted to them.^[46] But is this the only plausible situation? Could there not be at least two others? First, unlike the zerosum framework of Leys' discussion, policies could be designed to expand the gross economic benefits that could be used to meet new and old demands. Second, unlike the stringent nature of the neo-Marxist concept of central dominance of the periphery, policies could be designed to redistribute gross economic benefits to new demands at the expense of old ones.

We are not suggesting that Leys' or other neo-Marxist points are wrong. per se. What we are saying is that situations vary, and policy-makers in some situations do not act in the interest of narrow economic groups. This, however, does not

[46] Colin Leys, Underdevelopment in Kenya: The Political Economy of Neo-Colonialism, 1964–1971 (Berkeley and Los Angeles: University of California Press, 1974), chaps. 7–8.

rule out situations where policy reacts to broader and more community-oriented demands. In particular, the points do not offer the kind of optimism required for generating public-interest policies.

Furthermore, policy implementation in the LDCs contrasts with that taking place in the planned economies of the developed countries in the quality of policy-making, the inability to implement policies, and the difficulty of assessing the impact of policies.

The Quality of Policy-Making

The quality of policy-making in the LDCs tends to be lower than that in the developed countries primarily because of the lack of resources at the disposal of the planning organizations. In the U.S.S.R. and the more effectively planned societies of the West, trained staffs, consultants, computer facilities, data banks, and research funds are in relatively abundant supply; in the developing countries such resources are frequently unavailable. The effect may well be very substantial. In any political system, policy-making involves decisional actions based on partial knowledge. As Dror affirms, "Decision-making in the face of uncertainty constitutes . . . a main component of prescriptive policy analysis."^[47] But the relative degree of information at the disposal of policy analysts may prove a decisive factor in the determination of priorities. Where data is rudimentary or non-existent, as in many of the LDCs, policy formers are compelled to rely extensively on guesses, intuitions, ideological preferences, or hunches; by contrast, the existence of a body of reasonably accurate data in some of the developed countries enhances the capacity of their planners for more efficacious collective choices. In the more developed societies, the resource limits on organizational effectiveness are minimized, allowing the trained analysts greatly increased scope to apply the latest instruments and techniques to the solution of problems at hand.^[48] Since it will take some time before the developing

[47] Dror, "Some Diverse Approaches to Policy Analysis," (n. 7 above), p. 259.

[48] Joyce M. Mitchell and William C. Mitchell, Political Analysis andPublic Policy: An Introduction to Political Science (Chicago: Rand McNally, 1969), pp. 404–406.

countries can afford to allocate sufficient resources to achieve a high level of policy-making performance, their efforts at plan implementation and the effects of their decisions seem likely to remain comparatively costly (i.e., involving inefficient uses of scarce resources) in the years immediately ahead.

Not only does the quality of policy-making in the LDCs suffer by comparison with the more developed societies, but the conditions prevailing in them make policy application a considerably greater challenge as well. We do not wish to imply very extensive abilities here on the part of developed societies. But whereas a developed country can determine a line of action with some reasonable expectation that it can be implemented, no such assumption is warranted for most of the African states. This incapacity to effect policies can be attributed to a number of aspects: the inability to cope with powerful demands, the fragility and ineffectiveness of administrative structures, the weakness of authority systems, the frailty of available conflict management instruments, and defenselessness in the face of external power manipulations. The paucity of administrative structures acts as a major constraint on the application of policies. Thus, Botswana's scarcity of human, fiscal, and material resources for administrative purposes, largely attributable to inaction on the part of colonial officials, remains an inhibiting factor with respect to developmental efforts in the 1970s. Although the central administration had been expanded from 25 officers and a resident commissioner in the colonial period to 275 equivalent ministerial posts by 1967, the civil service continues to be inadequate to deal with the expanded economic and social activities of the independence period.^[49] In addition to these limitations on trained manpower are the fiscal constraints arising from underdevelopment. Thus the Botswana budget allocates only twelve million rand ($16,800,000) in the 1969–70 fiscal year to the bureaucracy for ordinary recurrent expenditure purposes, an amount barely adequate for any but

[49] Republic of Botswana, National Development Plan 1970–75 (Gaborone: Government Printer, 1970), p. 121.

the most essential administrative services.^[50] Under such circumstances the most rational of plans can be rendered ineffective by an insufficiently developed political and administrative infrastructure. To launch a sophisticated program only to see it atrophy because of ineffective implementational machinery is frustrating in the extreme, and quite possibly a misallocation of scarce resources. The politically articulate members of society may come to lose confidence in the efficacy of comprehensive planning before giving it an opportunity to organize the process of change.

Finally, where policies can be implemented it becomes difficult in the developing countries to appraise the effect of these actions on the economy and the society. The problem of evaluation, substantially greater than in the more developed countries, is primarily attributable to a lack of reliable knowledge. Because feedback information is often inadequate, planning organizations find it difficult to determine the effect public measures have had in the real world. All too often policy-making agencies in developing lands find themselves isolated (often in the main urban center) from events taking place around them, unable to gauge the actual consequences of public decisions through lack of contact and communication. And if the task of securing reliable data on the effects of programs is not trying enough, it is complicated further when attempts are made to compare results with those in other countries. What is to be the basis for meaningful comparison? Political cultures, developmental objectives, institutional capacity, expenditure patterns, and so forth tend to be insufficiently comparable. Therefore the paucity of cross-national data is often matched by an inability to utilize existing information from other countries in an effective manner.

Conclusion

Decision-makers in the less developed countries are immersed in the problerms of development administration. They

[50] Republic of Botswana, Statistical Abstracts 1970 (Gaborone: Central Statistics Office, 1972), Table No. 58.

appear to be seeking a comprehensive framework for making rational choices on questions of public concern. Combining analytic and prescriptive insights, a political economy approach seems appropriate as a conceptual framework. It can be utilized by students and decision-makers alike to evaluate policy choice, including policies related to the costs and benefits of extracting and distributing resources; establishing regulations on enterprise and activities; and making recommendations on stimulating the growth of new resources.

Nevertheless, the relevance of the current public-policy literature and the usefulness of applying such findings in the LDCs remains limited. In large part, this assessment is founded on the origins of research and application of the policy sciences in the developed countries. All too often the conceptualization that takes place outside the Third World is not relevant to the African states; it gives inadequate consideration to differences in political culture and seems frequently to rest on deterministic thinking, narrow time perspectives, static theoretical orientations, and insufficient emphases on life-affirming objectives. The genesis of the policy sciences in Western and, in terms of planning experience, Eastern circumstances also inhibits its practical application on the African continent because of the nontransferability of experiences from these highly industrialized societies. Soviet experiments with planning may have little practical utility for Chad; moreover, Western-based research, with its pluralistic and capitalistic orientation, includes assumptions, values, and goals that may well be at odds with the dynamic of transformation manifest in Africa today. In addition, the Eastonian process model applies somewhat less neatly to the interactions of the political system occurring in the Third World. At each stage sharp differences of behavior can be delineated: the sources of demand-inputs, the brittleness and ineffectiveness of governmental structures, the extent of choice open to policy-makers, the capacity to implement decisions, and the ability to appraise the consequences of policy actions. The result of this is to reduce greatly the relevance of existing public-policy research and experience to Africa's developmental efforts—at least in the period immediately ahead.

If public-policy research and application has not always

proved meaningful to Third World experience, recourse to the more generalized comparative policy-making field has, not unexpectedly, been no-ticeably slower yet. Perhaps applicable in principle, a comparative public-policy overview has nonetheless exhibited serious methodological and practical drawbacks as employed in African circumstances. Not only is current statistical data unreliable and lacking in comparability, but the nature and processing of demands are so unlike those in the more developed countries that cross-national analysis can become a somewhat futile exercise. In developing countries, governments lack the capacity to put policies into effect, and where policies are implemented, the task of evaluating the consequences of these actions is difficult in the extreme. Thus the impediments to meaningful comparative analysis are high. Even so, it is not wise to lose sight of the unrealized promise (in terms of decisional efficiency) of a comparative approach between less developed areas sharing similar problems throughout the world. To the extent that a comparative overview can enhance the efficient use of resources and increase African choice, it offers students and statesmen a potentially useful instrument for both analysis and prescription.

Appendix. An African Community's Decision-Making Model

African communities make decisions in situations of significant scarcity of resources. Some African nations are among the world's resource poorest. Not only are per capita income levels low throughout the continent, but their increases tend to lag as well. The gap between the rich and the poor is becoming more accentuated despite the fact that from 1950 to 1970 it has been estimated that African countries grew economically at a rate approaching 4 percent per annum. This rate is rather greater than the rates experienced by contemporary industrialized countries during their earlier stage. However, population increases in Africa have decreased the per capita growth rate below the level generally experienced in these industrialized countries.

We offer this formalized model of community decision-making in order to isolate the particular decisions that a community must make. In focusing on the key issue of what to produce, we employ indifference-curve analysis, and we make three assumptions. First, we assume that a significant number of the community's population have similar patterns of taste and, consequently, preferences for benefit patterns as they relate to community output. Second, we assume that certain citizens do in fact deviate to a limited extent from the community's preferences and that others deviate from them so greatly that they are alienated from, or are violently in conflict with, both the pattern of benefits produced by the system and the institutions and processes through which that pattern is determined. Third, we assume that the community's institutions, rules, and processes are broadly responsive to majority demands. In making these assumptions, we recognize that the manner of determining community preferences is significantly different in more developed and in less developed countries. Whereas elections, competitive parties, and interest groups contribute significantly to the setting of these community preferences in the West, the community's leadership has a wider scope for initiative in determining preferences under modern African circumstances.

We begin our analysis by assuming that there are only two benefits, X and Y. In terms of these benefits, the community's satisfaction depends on the amounts of X and Y that it can acquire. In Figure 1, in which the two coordinates represent amounts of X and Y, all points on a contour line represent collections of benefits that are equally satisfying to the community, or among which it is indifferent. That is, if a given collection of benefits is represented by a point A on the graph, it can be presumed that individuals are indifferent to any choice among collection A and all other possible points or collections, B, C, D, on the same contour line I₁ . Other indifference curves can be drawn on the diagram, depicting other degrees of satisfaction. All combinations on higher indifference curves are satisfying, and combinations on higher indifference curves are preferable to those on lower indifference curves. In effect, those indifference curves lying farther from the zero intercept are the more preferred ones on the indifference map. In Figure 2, all

Figure 1

Figure 2

points on indifference curve I₂ , such a point E, are preferred to points D, C, B, and A on I₁ .

In Figure 2, we define units of X as public goods and Y as private goods. Public goods are collections of benefits provided by government and include a vast array of specific outputs such as, for example, research, education and public health services. Private goods are all of those outputs ranked and produced by nongovernmental entities, particularly business firms. They range from consumer products to investments.

The community will wish to choose some combination of X and Y on indifference curve I₂ , any point on which is preferable to any point on I₁ . The combination of public and private goods chosen is often referred to as the "social balance." What should constitute this balance is an extremely important political question; indeed debate on the issue represents one of the major cleavages within African and other communities.

The indifference curve indicates what benefits the community would like to achieve. But what the community actually can achieve is another matter. The extent to which the most preferred position, represented by the highest indifference curve (I₂ in Figure 2), can be attained depends on resource endowment, technology, and social institutions. To cope with these variables, we shall describe what economists call the community's production possibilities curve.

A production possibilities curve can isolate community choice in regard to what can be produced. It can conceptualize

the issue of scarcity by pointing out that only a limited amount of output can be produced, and in order for the community to reach the highest indifference curve possible, scarce community resources must be used as efficiently as possible. In deciding on tests of efficiency, the community's decision-makers can be guided toward implementing policies that determine whether production should take place through public or private enterprise, a crucial decision in regard to institutional structure.

A production possibilities curve represents the alternative quantities of benefits which a community is capable of producing given the limitations of its resource base, state of technology, and institutional structure. In Figure 3, the production possibilities curve P₁ represents the alternative quantities of X and Y which can be produced by a given resource endowment, fully used and combined, through appropriate social and political institutions, in the most technologically productive manner. It is reasonable to assume that increasing the production of benefits will result in an increased use of resources. The production possibilities curve is concave to the original because we assume that each is produced under conditions of diminishing returns. Combinations F, B, and G are among those possible along production possibilities curve P₁ .

The community would like, however, to produce beyond the production possibilities curves. To do so would mean more goods and services and a higher standard of living. But the curve is the boundary beyond which production cannot go, because there are no other resources from which to produce. If new natural resources are made available, or if the population becomes better skilled, more productive, or better organized, or if technology improves, the production possibilities curve can be shifted from P₁ to P₂ , as in Figure 4.

We are now in a position to bring together the community's indifference and production possibilities curves. In Figure 5, the community's indifference map includes community indifference curves I₁ and I₂ , and production possibility map including P₁ and P₂ . Clearly the community prefers a point on I₂ , such as E, to any point on I₁ , such as point B. The production possibility map includes production possibility curves P₁ and P₂ and an unspecified number of others not

Figure 3

Figure 4

Figure 5

shown. If the community uses all of its resources most efficiently, through the technically most productive methods at its disposal, we assume that it can reach only P₁ . Less than full use of its resources would limit the community to a production possibilities curve to the left of P₁ . But full resource use permits the community to attain the I₁ only at B. Production possibility curves lying to the right of P₁ are potential and require expanding resource endowments, technological changes, or the improvements in social institutions. If such changes take place, then the community can move transitively from the zero intercept from point B on I₁ to point E on I₂ . This is because the community's production possibilities shifted from P₁ to P₂ . Thus the community has become "better-off" because it has become more productive. This means that the community

"can" make each individual "better-off." Whether this takes place depends on how equitably economic output is distributed among the community's people.

Thus far we have dealt only with resource use, noting that an indifference map tells us something about what a community wants to do and that a production possibilities field tells us something about what it can do in terms of the available community resources. Money is earned by productive factors and it is spent on taxes (or direct government payments) to cover the resource costs of public production. Money is also spent on privately produced goods and services. The public and private market decisions that give rise to establishing wages (and incomes) and prices essentially determines for whom the community's production will take place. That is, the decisions are pertinent to economic distribution.

We now turn our attention to the matter of money costs paid to resources used in production. In effect, in an economy based on specialization and exchange, money must be paid to resources for their services. In the private sector, prices are paid for goods, and this money is distributed to resources (or their owners) in the form of wages, salaries, rents, and profits. In the public sector, the same type of distribution takes place. When money payments are made in the form of taxes, they are paid to publicly employed resources. The term "money price-ratio line" refers to the ratio of all money prices paid for public goods to all money prices paid for private goods. This line is also called the community's budget line. We develop this line labeled B₂ by assuming that the community's money income is $600 million, the price of a unit X, a public good, is $3.00, and the price of a unit of Y, a private good, is also $3.00. Figure 6 shows that, if the community should allocate all of its income on Y, it could attain 200 million units shown at point R and private spending would be 100 percent of income. The community could consume the same amount of X at point T and pay all of its income in taxes for public goods. It could also spend this income on varying proportion of X and Y. A straight line joining these points shows the alternative combinations of X and Y that the community can attain with a given money

Figure 6

Figure 7

income, given the prices of private and public goods. This line we refer to as its money cost ratio line, or budget line.

Community's indifference curve, a production possibilities curve, and a budget line are brought together in Figure 7. This figure shows that the community can allocate resources between X and Y in order to achieve the preferred position on indifference curve I₂ . Combination E will give the community a higher level of satisfaction than will any other combination allowable with its resources (as shown on production possibilities curve P₂ ), its income, and the prices of X and Y. The community maximizes its preferred position by choosing that combination of X and Y where its budget line is tangent both to the highest indifference curve it can reach and to the production possibilities curve that reflects the fullest and most productive use of all its resources. These conditions are met at point E. In terms of this example, we conclude that one half of the community's income goes to taxation while the other half is retained in the private sector.

Our brief model^[51] is usable in the sense that it provides a conceptual basis for analyzing institutional structures and processes that a community might develop in order to decide on

[51] Larry L. Wade and Robert L. Curry, Jr., A Logic of Public Policy (n. 18 above), pp. 60–73; and Thomas L. Dye, Understanding Public Policy (n. 2 above), chap. 1.

what to produce, how to produce, and for whom to produce. The model's orientation is to rational decision-making by a community. In succeeding chapters we shall deal with particular types of decisions, kinds of decision-makers, and various decision-making rules. An understanding of them, we feel, is pertinent to an understanding of the function of a developing country's polity and economy as it strives to make rational choices.