States are unique among social institutions in that they seek to ensure that their rules predominate over the rules of other institutions such as the family, the community, the tribe, or the market. In fact, the capacity to exert authoritative control has long been a defining feature of states. Characteristically, modern states must make and enforce sets of rules related to property rights, contracts, civil and criminal justice, and the selection of those who make and implement the rules. Part of their purpose is to “reduce uncertainty by establishing a stable (but not necessarily efficient) structure to human interaction.” The most authoritative states are those in which the right to make and enforce rules is based on widespread acceptance of their legitimacy to do so.

But the history of economic and political development in Latin America and Africa is a useful reminder that institutions of state dominance are not always authoritative. The 1980s and early 1990s were replete with conflict and uncertainty over whose rules would predominate and be accepted as legitimate. Informal markets, ethnic conflict, armed subversion, sectarian claims on personal loyalties, corruption, and other evidence of institutional instability recalled the notion of the soft state, initially used by Gunnar Myrdal to refer to states that lacked capacity to enforce obligations on citizens – states unable to govern. As many states failed in authoritativeness, rival sets of institutions often set the terms for economic and political interactions.

In the previous chapter we set out a stylized description of the government formation process in parliamentary democracies. This description is, in effect, a logical model of government formation. In this chapter, we begin to unfold some of the implications of our model, exploring ways in which it might increase our understanding of what it takes to make and break a government.

Since we are interested in what it takes for a government to form and stay formed, an important thread running through the rest of the argument of this book is the concept of an equilibrium cabinet – a notion that we hope is more or less intuitive. An equilibrium cabinet, once it is formed, stays formed because no political actor with the ability to act in such a way as to bring down the cabinet and replace it with some alternative has the incentive to do so. Conversely, no actor with the incentive to replace the cabinet with some alternative has the ability to do so. Thus we expect an equilibrium cabinet to be stable, remaining in place until a change in the external environment transforms either the incentives of some pivotal actor or the “pivotalness” of some actor already possessing the appropriate incentives. (For example, an opposition party may, as a result of by-elections or defections from other parties, increase its weight and thereby the extent to which it is pivotal.) We do not expect a cabinet that is out of equilibrium to be stable, since at least one actor who has an incentive to bring down the government also has the ability to do so.

Political equilibriums can be attractive, retentive, or both.

The preceding chapter gave a glimpse of our model at work. The main purpose of that chapter, however, was to illustrate the model rather than to explore its empirical implications in a systematic way. Here we set off on a more comprehensive exploration with the ultimate objective of turning the model loose, so to speak, on the real world of government formation in particular countries. We do not do this because we have ambitions to take over the turf of the country specialists – we have no intention of trying to reproduce the qualitative analyses at which they excel. Rather we hope that an operational version of our model will provide a technology that allows us to be more systematic in how we go about specific aspects of particular country analyses. In this chapter, we begin the process of applying our model systematically to the formation of actual governments. After first presenting a series of theoretical implications of our model for government formation in the real world, we then turn to matters of operationalizing the model and using it to engage in comparative empirical analysis.

THEORETICAL IMPLICATIONS

The most fundamental principle of our entire approach states that, when the government formation process is triggered for some reason, either the status quo government remains in power or it is replaced by some alternative that is preferred to this by a parliamentary majority. We state this “ground zero” implication as:

Having outlined our assumptions about how political actors view the making and breaking of governments, we now roll up our sleeves and move on to the process itself. Here we begin to assemble the raw materials out of which we will build a model. Obviously, once we get down to the nitty-gritty of how things are actually done in the real world, we find that governments are formed according to different rules and procedures in each parliamentary democracy. Any one of these differences is potentially of great importance in some particular circumstance. There are considerable broad similarities in the rules that structure government formation, however – sufficient to allow us to model a “generic” government formation procedure that can, with modest amendments, be adapted to most particular government formation situations.

First, since our rational foresight approach assumes that sophisticated political actors take account of, and adjust to, events that they can foresee in the future, we must specify what it is that triggers the government formation process in the first place. Second, we must be clear about the status quo that determines policy outputs if attempts to make a new government, or break an incumbent one, are unsuccessful. Third, we must provide a stylized description of the process that is triggered. Fourth, we must transform our stylized description into a model. Finally, we must explore implications of our model for the making and breaking of governments.

TRIGGERING THE GOVERNMENT FORMATION PROCESS

The process of government formation can be triggered in several different ways. These include an election, a government defeat in the legislature, or a government resignation.

In Part I we described the background to the making and breaking of governments in parliamentary democracies. In Part II we developed and elaborated a theoretical model of this process. We move on in Part III to apply our model in a systematic way to the real world of government formation. In Chapters 7, 8, and 9 we describe an extensive empirical investigation of the model in a wide range of government formation situations in postwar Western Europe. Before we do this, however, in order to get a feel for what is going on and to understand what we need to do before we can apply the model to the real world, we look here at two particular cases from our dataset in some detail – Germany in 1987, and Ireland in 1992–1993. We make no claim that these examples are typical of government formation in parliamentary democracies. We have chosen them for purely didactic purposes: Each case allows us to elaborate a number of key features of our model in a relatively simple context. A more systematic empirical analysis of the universe of such cases appears in subsequent chapters.

GERMANY 1987

Our model of cabinet government uses information about a number of features of the party system to determine whether there are equilibrium allocations of cabinet portfolios between parties, and to identify these if they exist. The basic pieces of information that are needed are the number of legislative seats controlled by each party and the number of legislative votes needed to pass a motion of no confidence (between them these determine the decisive structure); the policy positions of each party on each salient dimension of policy; and the cabinet portfolio with jurisdiction over this policy dimension.

When we first began collaborating on a strategic spatial model of parliamentary government in 1988, we were struck by two patterns in the professional literature. In the United States, theories of political coalitions, close to the mainstream in the 1960s largely due to the impact of Riker's important book (Riker, 1962), had been relegated to a quiet tributary by the mid-1970s. The American modeling community had turned its attention to institutionally enriched models, with special emphasis given to the institutions of the U.S. legislature and executive. On the other side of the Atlantic, coalition theory was alive and well, principally as an empirical enterprise applied to European parliamentary democracies. This apparent divergence in interest and emphasis stimulated us to think about how to apply institutional models of politics to the making and breaking of European coalition governments. It was our strong belief that there was nothing in principle distinctively “American” about such institutional models, despite the fact that in practice such models had been applied primarily to American institutions. The result is the present volume, an exercise in intellectual and geographical arbitrage.

Part I of this book lays out the institutional context of government formation in parliamentary democracies. In any parliamentary democracy, there is always an incumbent government – by which we mean a cabinet seen as an allocation of ministerial portfolios. The incumbent government remains in place until supplanted by some alternative. Parliamentary parties with policy preferences, bargaining reputations, a stable of senior politicians and a strategic weight determined by their proportion of legislative seats, continually assess and reassess the sitting cabinet.

INTRODUCTION

We did a number of things in the first three parts of this book. In Part I we described the context surrounding the making and breaking of governments in parliamentary democracies. In Part II we developed an explicit model of government formation, derived theoretical propositions from this model, and used simulations to explore parts of our model that these propositions could not reach. In Part III we confronted our model with the real world. We looked at two case studies of government formation, teased out empirical implications from our propositions, and brought real-world data to bear on these implications in an attempt to evaluate them. In Part IV, we apply and extend our model. We began in Chapter 10 by interrogating our model on the question of cabinet stability. In the present chapter we reexamine some of our assumptions and explore the extent to which our approach is affected by relaxing them. In the next chapter we look at some specific applications of our approach. In the final chapter of the book, we draw some lessons from our approach for the study of party competition in general and government formation in particular.

As the reader well appreciates, any theory is based on assumptions and conceptualizations. Once stated, these must be taken as fixed for the purposes both of theorizing and of exploring the empirical consequences of theory. Otherwise, we do not know where we stand. It is at this early stage that compromises must be made and restrictions imposed in order to get on with the business at hand.

The political process that dominates our discussion in the rest of this book involves a set of politicians in a parliamentary democracy, each motivated to achieve some objective or another, competing and cooperating among themselves to form a government. The hopes and fears, aims and aspirations of each politician are fulfilled to a greater or lesser extent depending on the outcome of this process.

Before we can develop any systematic analysis of this crucial aspect of democratic politics, we must be explicit about our assumptions. In this chapter, therefore, we elaborate assumptions on a range of matters relevant to the making and breaking of governments in parliamentary democracies. These include the aims, aspirations, and rationality of key actors; the institutional process by which a government is formed; the manner in which actors forecast the likely consequences of having different governments in power; and collective decision making both between and within parties. We begin with perhaps the most fundamental assumptions of all, which have to do with the hopes and fears of politicians and the rational calculus that they use to make decisions.

THE MOTIVATIONS OF POLITICIANS

Those writing on the politics of government formation tend to assume one of two things about the fundamental motivations of politicians involved in political bargaining. Some assume that politicians are concerned above all else to get into office – and that they will say and do whatever is necessary to achieve this. In their search for power, politicians may make policy promises either to each other or to the electorate but, on this interpretation, such policies are promoted for purely instrumental reasons.

Thus far in this book we may appear to have talked more about the making than the breaking of governments. In fact, we model a continuous process characterizing the birth, life, and death of governments. Our model of government formation, therefore, is also a model of government duration and government termination. Each government that is born inevitably rises from the ashes of its predecessor. Thus, one of the most significant reasons to understand the government formation process has to do with the stability of governments. In most countries, government formation takes a relatively short time – a matter of days, at most a few weeks rather than months. Uncertainty about the partisan composition of the new government is thus typically resolved quite quickly. Something that is never fully revealed as events unfold, however, at least until the government actually falls, is how long the incumbent cabinet will last. An effective model of cabinet government should clearly provide an account of what breaks governments as well as what makes them, an account that can be used to estimate the durability of an incumbent government – or, indeed, of any prospective government. In this chapter, therefore, we set out to develop our model in a way that allows us to analyze the potential stability of governments.

Previous approaches to the analysis of government stability have for the most part been inductive, approaching the problem from one of two basic directions.

In the preceding chapter we made a determined attempt to derive testable empirical implications from our model of government formation and to evaluate these using data on actual government formations in 12 postwar European democracies. We found considerable empirical support for our approach. Many of the implications we derived – in particular those dealing with the cabinet membership of very strong and merely strong parties – give the analyst a massive improvement over chance in making forecasts about the allocation of cabinet portfolios. In this chapter we extend our empirical analysis in three substantive directions, using more powerful statistical techniques.

The substantive extensions of our empirical analysis are concerned with two important features of the strategic position of any legislative party in the government formation process – its size and its position in the policy space. In Chapter 5 we investigated the relationship between size, policy, and strong-party status in large numbers of simulated legislatures. In the present chapter, we investigate this relationship in real legislatures. We have three key objectives in this phase of the analysis. First, we know from Chapter 5 that, in simulated legislatures, strength is strongly related both to the weight of parties and to their position in the policy space. Larger parties, and parties at a median position on at least one policy dimension, are far more likely to be strong or very strong in our simulations. We noted when reporting these simulations that party positions in real party systems are not randomly located; in this chapter we assess the extent to which a party's strength is related to its weight and policy position in the real world.

INTRODUCTION

Thus far we have elaborated our model, set out some of its implications for coalition formation in the real world, explored these implications in a couple of particular settings, and discussed how these implications can be more generally evaluated using data that are actually available to us. We are now in a position to look in a more systematic manner at how well the model seems to capture important features of the making and breaking of real governments. We do this by determining whether each of the cabinets in our dataset conforms to each of the theoretical implications of our model set out in Chapter 7.

Using our data for each government formation situation that we consider, we use Winset to calculate which of the possible cabinets that could have formed were consistent with the theoretical implications of our model. Since, out of very many cabinets that could possibly have formed, our model typically identified rather few as potential equilibriums, if the actual cabinet that formed was one of these equilibrium cabinets identified by our model, we regard this as an empirical “success.”

Furthermore, since every day in politics is one in which the incumbent government must survive in the face of the possibility of being brought down, every day is in a sense a new government formation situation. If the parameters of the situation change in such a way that the incumbent government is no longer equilibrium, then our model implies that the government should change. We thus consider the duration over which the theoretical implications of our model are fulfilled in each case.

As is conventional, we bring this book to a close in the next two chapters by pointing out some directions for future research. The usual way to do this is to throw out a few general ideas in a relatively haphazard manner, some tough and not necessarily very tasty bones for graduate students to get their teeth into. However, we regard one of the great virtues of our approach – indeed its greatest virtue – to be the rich and varied menu of potential applications that it opens up for future research. We do not see these as the boring bits we could not be bothered to chew over ourselves. We see them as the exciting rewards that can be reaped as a result of developing an explicit and we hope realistic model of the government formation process. Accordingly, in this chapter we limit ourselves to three of the most promising potential applications of our approach, and take time to develop them in some detail.

The first application that we consider concerns the interaction of intraparty politics and government formation. We consider the general area of intraparty politics to be one of the most exciting and underdeveloped in the entire literature, since it generates the potential to provide some motivation for the actions of political parties, hitherto unrealistically seen by most theorists as anthropomorphic unitary actors. The second application concerns minority and surplus majority governments. The third and final application of this chapter focuses on administrative reform. Here we raise the prospect of endogenizing the assignment of issues to ministerial portfolios, thereby affecting the very way in which governments go about their business once installed in power.

One of the key conclusions of the previous chapter – and indeed of our entire analysis – had to do with the role of strong parties in the making and breaking of governments. In a nutshell, if a party is very strong, then the cabinet giving that party all portfolios is preferred by some legislative majority to any alternative cabinet. A party may also be merely strong, however, if it participates in every cabinet that is preferred by a legislative majority to the cabinet in which it controls all portfolios. In the previous chapter we show that there can be at most one strong party. Our central result, stated in Proposition 4.2, is that a strong party can dominate the business of government formation and guarantee itself a place at the cabinet table. This result has fundamental implications, both for the analysis of particular cases and for our general understanding of the making and breaking of governments in parliamentary democracies.

If we want to analyze a particular government formation situation using our model, one of the first things we need to know is which party (if any) is the strong party. If we want to understand the process of government formation more generally, then we need to know about the conditions under which a configuration of legislative parties generates a strong party. Thus in this chapter we take a closer look at strong parties and the party configurations that sustain them.

We do this in several ways. First, we briefly discuss how to squeeze as much juice as we can out of our model by focusing on necessary and sufficient conditions for the existence of a strong party.

The Cambridge series on the Political Economy of Institutions and Decisions is built around attempts to answer two central questions: How do institutions evolve in response to individual incentives, strategies, and choices, and how do institutions affect the performance of political and economic systems? The scope of the series is comparative and historical rather than international or specifically American, and the focus is positive rather than normative.

Laver and Shepsle's theoretically innovative book pushes the study of government formation a big step forward. Rather than concentrating on the equilibrium collective policy that emerges from the balance and distribution of party strengths in the parliament, they treat governments as collections of ministers with individual jurisdictions and policy as a bundle of individual party-preferred policies, depending on which party receives which portfolio. Jurisdiction is the key concept, in their view. It makes a party's promises credible to its electors, for it can carry them out (only) if it receives the relevant ministry. At the same time portfolio allocation monitors party behavior, for the party receiving a portfolio has no excuse for not carrying out its preferred policy.

Their portfolio-based model of government formation is based on constitutional features carefully documented in a massive 14-country study, published in the companion volume Cabinet Ministers and Parliamentary Government. The model bases its predictions on a sequence of proposals from an historically determined status quo. Bargaining takes place among rationally foresighted policy-motivated parties, each with an explicit veto over every cabinet in which it could participate, in a lattice of feasible governments. Laver and Shepsle's predicted importance for “strong” parties opens up significant possibilities for comparative empirical evaluations of theirs and other contending models.