The seniority system in the American Congress exhibits many characteristics of its parent institution. Both are held to be powerful, durable, and somewhat peculiar. Both celebrate age, tradition, and a particular kind of experience. They are skeptical of new things – whether policies, computerized information systems, or newly elected members. Both can be attacked for sluggishness, defense of the status quo, and lack of vigor and merit in leadership. The family resemblance goes further. Both have been century-long targets of criticism and attempts at reform. And both have resisted these attacks by doing what they do best – by simply outlasting the reform attempts and the reformers.

Public expenditure is quite the most visible and quantifiable measure of government activity. It is therefore surprising that in Britain, as distinct from the United States, this area has been massively neglected by political scientists. This neglect is all the odder since public expenditure in Britain – comprehensively and conventionally defined to include all spending by central and local government, as well as capital investment by public corporations – has been increasing rapidly both in absolute terms and as a proportion of the national income: between the early 1960s and the middle 'seventies, it rose from just under two-fifths to almost three-fifths of the Gross National Product. So, in effect, the scope of political decision-making about the distribution of national resources has grown considerably, reflecting the changing balance between the political market and the economic market. The dynamics of this process are highly relevant for an understanding of the British political system.

Over the last twenty years a succession of theories of politics has appeared of which the hallmark is an attempt to adapt utilitarian marginalism to the purpose of political explanation. Theories in this intellectual style may be designated ‘economic’ theories of politics since utilitarian marginalism was first developed in the context of economic theorizing; its invention was indeed the birth of a notion of ‘economies’ as distinct from the ‘political economy’of Smith, Ricardo, Marx and J. S. Mill. Anthony Downs pioneered the economic approach with his bravura economic theory of democracy in 1957, which remains probably the best-known example of it. Many of the fundamental objections to economic theories of politics were explored by C. B. Macpherson in 1961 in a brief but penetrating essay; but Macpherson's essay was not decisive in checking the popularity of such theories. Despite his criticism, they have continued to proliferate.

The notion of power may well be central to all of the social sciences, yet the prevailing ways of thinking about power are very unsatisfactory. Intuitive ideas about power appear at first sight to have little logical consistency and are therefore confusing, while the more precise ideas that have been offered appear to be too narrow and are therefore ignored. Perhaps the main reason for the intractability of the concept is that it encompasses a number of seemingly unrelated ideas; it is ‘not a thing at all but many things’. This view is shared by many of those who have worked most closely with the concept. William Riker, for example, feels that the concept should be banished, James March says that it is disappointing, and Robert Dahl admits that there are students of the subject who feel that the whole study of power is a bottomless swamp.

In his recent review of Albert O. Hirschman's book Exit, Voice, and Loyalty Brian Barry suggested that the next step was ‘to look more systematically at ways in which exit and voice can be related, and to try and bring all the variables relevant to each kind of relationship into an explicit theoretical structure.’ This paper is an attempt to move in this direction by locating the concepts involved unequivocally within the so-called ‘economic’ or ‘rational choice’ paradigm. It is hoped that any resulting loss of richness will be more than compensated for by an increase in the internal consistency of the argument. It will be demonstrated that most of the logic of Exit, Voice, and Loyalty rests on ‘economic’ assumptions – Barry has already shown that where Hirschman departs from these his argument is at its weakest – and that making this reliance fully explicit not only increases the rigor of the approach but reorients some of the conclusions.

Rudolf Klein's article not only brings together many current theories of policy analysis and of public expenditure but also creates the anxiety that the use of phrases such as ‘public expenditure’ might turn what are obstinate and worthwhile issues into abstractions. Klein's opening statement that ‘public expenditure is quite the most visible and quantifiable measure of government activity’ gives us due warning that public expenditure is being regarded as an independent category, the characteristics and behaviour of which are capable of definition and analysis in their own right. But public expenditure is meaningful only if it is treated as a summation of multiple decisions (and on one dimension only) and of institutional relationships.

If the study of politics is about trying to make sense of what governments do (or think they do) then, surely, it is not only legitimate but necessary to consider the totality of public expenditure. For this is, in fact, what governments do worry about. They do have policies aimed at controlling total public expenditure at particular levels, and these policies in turn affect how much money is spent on individual programmes. To this extent there is, indeed, a common unit of currency: if Department X gets more than Department Y, both the success of the former and the failure of the latter will be measured in millions of pounds.

In summary, we do find that levels of services and expenditures are more closely related across time than they are in cross-sectional studies and that, further, these relationships are functionally specific. At the same time, however, it would appear from these data that the extension of services precedes the expansion of the budget. It may, therefore, be argued that the extension of services can be used as a rational means of expanding the budget available to an agency rather than as a response to the increased availability of funds. This expansion may also be seen as a function of demand creation on the part of the agencies in increasing these services.

A second point to be made is the importance of differentiating different categories of service. For those indicators of service that concern output or a service rendered, expenditures and policy are positively related. For those indicators of service that are more related to impacts – or needs – there is a negative relationship – i.e. lower quality associated with higher expenditure. Therefore, we find that the policy-making system of Sweden may have been making policy in relation to important objective changes in its service environment. It further leads us to expect quite different relationships between services and expenditures dependent upon the type of service measure being used.

The research site and the measures of services used here are obviously different from those of Sharkansky. However, these findings do speak to the general theoretical point of the connection between public expenditures and services. They demonstrate the need to examine this important research question within a more dynamic framework and in a variety of social and cultural settings. Sharkansky's findings for the American states should be tested, for example, in an examination of the same question for sub-national units in Sweden and other European systems. Through the gradual accretion of these findings, we can elaborate theoretically the linkages between expenditures and policy outputs.