p We already pointed earlier to one of the most vulnerable points in the pure theory of public finance. This theory essentially goes beyond the bounds of the examined models in the solution of any essential socio-economic problems: their “strictly scientific" solution is fully dependent on the social welfare function and the latter, as Western authors unanimously admit, belongs among the least elaborated categories of economic theory.

p That is why some economists are trying to save the model of the “pure theory of public finance" along the following lines: the decisive role is assigned not to the social welfare function but to the political mechanism of decision-making. Thus, Professor Musgrave in his book, The Theory of Public Finance, states: “Political action is needed to translate individual preferences for social wants into a specific budget program. Since the responsible organs of government in a democratic society are the electorate and their representatives, budget determination by these responsible organs is determination through the democratic process."  [120•2 

p Thus, as can readily be seen, many formerly rejected premises about the “purchase” of public expenditures are again introduced. The role of ordinary competitive bids is performed here by the mechanism of voting and rivalry of different political groups and parties.  [121•1 

p In such an interpretation, the pure theory of public finance finally loses its reality. The entire complexity of the proposed mechanism of the social system is completely ignored. Let us refer merely to one of these problems—the problem of every taxpayer being sufficiently informed. Anthony Downs, the author of a number of works on the theory of the political process, characterises as follows the real state of affairs in this field: “It becomes harder and harder for even experts to keep well-informed on possible benefits to be gained from government policies. . .. Society’s complexity demands more government action, but it also makes each field of action more remote from the ken of the average man. Faced with gigantic maze of government agencies, each grappling with incredibly intricate problems, a normal citizen . . . wraps himself in a mantle of rational ignorance. .. ."  [121•2  Moreover, it is because of the negligible influence exerted by individual consumers on the general policy of government spending that the consumer has no sufficient stimuli for accumulating such information.

p The nature of state power and the processes of centralised administration are given an extremely primitive interpretation. W. Ehrlicher in his review of financial theories remarks on well-founded grounds: “Such theories have recently been reviving the former notion of ’natural right’ stemming already from the idea of the social contract: the 122 state is a result of individual efforts, its operations are determined by the members of society and the economy of the state is nothing else but a single economy among other ( private) economies."  [122•1  Such notions cannot withstand criticism even from the viewpoint of the modern Western political science. Thus Anthony Downs, Fred Harding and other authors have shown that even given the full equality of political rights of voters, time and again situations arise when governmental policy does not reflect the real preferences of the population.  [122•2 

p The greatest objections, however, are naturally aroused by the too formal, non-social approach to the concept of democracy and the ignoring of the sharp contradictions which characterise the antagonistic political structure of contemporary capitalism.

p The exacerbation of these contradictions is also reflected in the positions of “academic” financial science. One of the reports on public expenditure points out that the Western democracies show a tendency to be displayed in a system of corporative pressures which express only their own interests.  [122•3 

p Of definite interest in this respect is the interpretation of public expenditure in the concept of Albert Breton.  [122•4  Like Musgrave, Breton seeks to develop the pure theory, linking the economic and political factors of determining government spending with factors of political influence and pushes to the background all the theoretical constructions connected with the social welfare function.

p Moreover, an analysis of the political factors is of a somewhat more realistic nature: instead of general, declarative statements about ideal democracy there figures the activity 123 of political groups, which could unite to represent common interests, engage in lobbying, organise representations and demonstrations, bring pressure to bear on senators and congressmen, organise protests, send their statements to the appropriate organisations, render financial and other support to political action groups and also employ many other means. A mere enumeration of these means could serve as a good commentary on the “idyllic” schemes for determining the range of public goods in conditions of some kind of an “abstract perfect democracy".

p Efforts to take into consideration the influence of different political groups with the aid of elementary equilibrium models lead Breton to the conclusion that the scale and composition of government spending in conditions in which the equilibrium is being formed, will ultimately reflect not so much the system of society’s ethical values as the concentration of political power in the hands of one or another group of the population.

p At the same time it should be noted that Breton’s arguments are too general in nature. For example, he enumerates the various instruments of political pressure accessible in fact only to Big Business. But he carefully avoids any concrete answer to the question, what class forces and social groups directly influence the mechanism which determines government appropriations. Yet Breton’s conclusions could acquire a more concrete content if he were to introduce into the model at least the most elementary terms that the majority of the population has very limited, if any, access to pressure groups, lobby organisations, and so on, terms mentioned in many works on political theory.  [123•1 

An analysis of the models of decision-making within the bounds of the pure theory of public finance leads to the conclusion that all efforts to solve the problem of the optimal size of a budget, proceeding from the premises of socalled “ideal democracy”, are characterised by deep inner contradictions. Borrowing premises of atomistic models of perfect competition and equilibrium models of self- regulation, the authors of the models apply these premises to a 124 characteristic of a fundamentally different social process which develops as a negation of former commercial operations and goes beyond the bounds of the ordinary market equilibrium.

p The pure theory of public expenditure from the very beginning was constructed as an abstract model, proceeding from a number of purely formal premises and hypotheses. Not one of its subsequent interpretations has succeeded in linking this concept with the real policy of governmental appropriations. It is not by chance that immediately after the publication of Samuelson’s first article, Stephan Enke, an American economist, noted: “One might expect that an article on public expenditure (however ’pure’) might throw out a few hints to responsible government officials (or at least to the economists on their staff) on how policy implications (if any) might conceivably be derived. Not to do so is to imply that there will be none."  [124•1  Many West European economists assessed the possibilities for the practical application of this theory in a similarly sceptical vein. Thus, K. Hauser, Professor of Frankfurt University, the Federal Republic of Germany, remarks: “For such an imposing integrity and completeness of this theory a high price has to be paid because the theory obtained in this way is extremely impractical and is as good as unsuitable for the solution of real problems."  [124•2 

p Thus far, all the interpretations of the pure theory of government expenditure and the practical financial policy are divided by a deep abyss. Among the numerous theoretical models of government spending it is impossible to find one which could concretely show the optimum size and structure of appropriations for the given conditions or, at least, the tendencies of their development. As for the models of an optimum budget which gained currency recently, they are abstract and schematic to the utmost—that is why 125 such models simply cannot be utilised in the real processes ol planning and allocating budget appropriations.  [125•1 

p Such a gap between the theory and practice of government financial policy cannot be considered accidental. Relegating to the background a concrete socio-economic study of tendencies and processes which characterise the development of capitalism’s financial system and seeking only to construct the “most general" deductive theories, Western financial theory thereby develops first of all formal, logical methods of analysis which are divorced from a penetrating institutional and other studies.

These features in the evolution of the theory of finance are widely utilised for apologetic purposes by the defenders of the aggressive imperialist policy. From the viewpoint of the pure theory of public finance, the difference between appropriations for the intensification of the arms race and, say, expenses for improving the medical service system may be inessential. Utilising the extremely abstract nature of such a category as the social welfare function or replacing the antagonistic political structure of contemporary capitalist society by models of “ideal democracy”, a number of economists are trying to portray appropriations for an aggressive policy as financing some kind of an “ optimum range" of public goods. It is clear that vulgar concepts of this kind actually conceal the mounting social conflicts within capitalist society, the exacerbation of the contradiction between the government’s policy, effected in the interests of the military-industrial complex, and the vital interests of the working people.