An Organizational Theory of Political Parties

Abstract

Political parties are ubiquitous features of political systems around the world, topping the lists for the largest and most powerful organizations in the world. Yet, political economy does not use organizational economics to build theories of parties, and organizational economics does not have any models tailored to the unique characteristics of political parties, as opposed to private profit-maximizing firms. In this work, I build an organizational economics style model of political parties, tracing through the emergence of the modern political party through an adapted theory of the firm lens that incorporates political-party-specific features. I show how party leadership can wield effective power even when the members that face their power can always depose them. I then use this model to inspire a reduced-form for a multi-party model of coalition formation. I show how having an ``organizational" conception of political party-coalitions changes the logic of ideological conditions which make parties strong, and what party systems can be stable. Finally, I use the empirical findings from the firm organizational performance literature to motivate an analysis of what these same empirical patterns of parties' organizational performance would mean for the macro behaviors of political systems over time.