ABSTRACT
In the 1980s and 1990s, governments across the world sought to roll back the borders of the state, and to pursue, to the extent possible, the satisfaction of demands for essential services and utilities by way of competitive markets. It is common to analyse this transition in terms of the economic theory of public choice. In this theory, the behaviour of governments is best explained by the idea that political actors selfishly seek to maximise their own welfare, rather than selflessly furthering the public interest (e.g., Buchanan and Tullock 1965; Niskanen 1968, 1971). Because of the different parameters of markets to those of governments, the selfishness that is a virtue in the former becomes a vice in the latter. The normative thrust of most public choice theory is the desirability of smaller government. Public choice theory therefore provided a theoretical pedigree for the roll-back of the modem state over the last two decades, even though it was hard-pushed to explain why selfish politicians would behave in this uncharacteristic welfare-increasing manner.
