Policy Sciences 35: 163^177, 2002.

> 2002 Kluwer Academic Publishers. Printed in the Netherlands. 163

Policy choices and the uses of state power:

The work of Theodore J. Lowi*

NORMAN NICHOLSON
United States Agency for International Development, 1300 Pennsylvania Ave. N.W.,Washington,
D.C., 20523, U.S.A.

Theodore Lowi’s contributions to policy analysis are both extensive and rich in
theoretical and empirical insight. Lowi’s work is, nevertheless, largely focused
on governance in the United States and, in consequence, derives considerable
bene¢t from the author’s grounding in U.S. political history and his in-depth
understanding of U.S. political institutions. This integration of political history
with his powerful analytical model constitutes an exceptional method for
understanding the making and implementation of policy. As we will see in the
discussion below, however, additional work will be needed to realize the bene-
¢ts of this approach in periods of radical structural change and in political
environments that di¡er substantially from the U.S. constitutional tradition.
Lowi’s approach starts with two simple observations about public policy
making that focus on decisions about how public power is applied. Lowi’s ¢rst
conceptual contribution is that the analysis of public policy should focus on the
choices about how to apply the power of the state and not primarily on what
goals the state should pursue. Building consensus in support of public goals is,
of course, an important part of the political process but it remains rhetoric until
a coalition is formed supporting speci¢c policies that direct the application of
state power. A description of a public problem, combined with an expression of
concern and an appropriation of funds do not constitute policy, Lowi argues.
Legitimate coercion is a de¢ning characteristic of the state, and public policy is
made when some public authority indicates its intent to in£uence citizen behav-
ior by the use of positive or negative sanctions. It is the choice of sanctions and
the choice of institutional mechanisms for applying them, combined with the
speci¢ed intent, that constitute policymaking (Lowi, 1972: p. 286). A policy,
then, is a rule formulated by some governmental authority expressing an intention
to in£uence the behavior of citizens, individually or collectively, by use of positive
and negative sanctions (Lowi, 1985: p. 70).
Policy analysis, then, is not about issues but about the ways in which the
power of the state is made manifest. In early versions of his approach, Lowi
argues that issues, the customary focus of policy analysis, are ephemeral and
have no systematic or predictable impact on the political process (Lowi, 1963).

* The views expressed in this article are solely those of the author and do not re£ect those of the
Agency for International Development.
164

The substance of issue politics, he asserts, is data rich but theory poor and
o¡ers no theoretical insights for policy analysis, however important their goals,
incentives, political mobilization capacity, and social-economic impact might
be. In contrast, the application of public power through public agencies prom-
ises to reveal systematic variations in recruitment, political process, power
structure, and even corruption across issue areas. Thus, a predictive political
science might be built from a model rooted in the application of state power.
A second conceptual contribution of Lowi’s work is that policy choices drive
politics and are not, as is commonly assumed, simply derivative from the
political process. Policy proposals about how to use public power in pursuit of
public goals will, Lowi argues, largely determine in which arenas the political
battle will be engaged. The arena will, in turn, determine the institutional rules
of combat and the access of various interests to the policy process. Ultimately,
policy choices about the use of public power will determine the relationship of
the citizen to the state, elite recruitment, and the structure of the state bureauc-
racy. Policy choices are an independent variable in the political process.

Origins of the model

The line of enquiry began with Lowi’s work in New York City politics (Lowi,
1964). He noted that increasingly political parties in New York City faced
competition from other institutions as recruitment mechanisms for positions
of authority. This change was producing a pluralistic, ‘polycentric’ pattern of
power within the city. The second key observation was that it made a signi¢cant
di¡erence in the policy process whether New York City Commissioners served
in administrative agencies and exercised administrative power and, further-
more, which agencies they served in. Systematic di¡erences appeared in career
paths, levels of professional training, interest group connections, and tenure.
For example, expertise was important in both regulatory and welfare agencies,
but Commissioners in regulatory agencies tended to enter from the professions,
while in welfare agencies they rose within the bureaucracy. This, in turn,
suggested that a systematic explanation for the variation was needed, not ad
hoc explanations for individual di¡erences, and led to a typology of agencies
based on the way in which they used the power of the state ^ i.e., based on the
types of policy they implemented.

Development of the model

Lowi’s policy typology was elaborated and re¢ned over time and articulated as
four policy types: regulatory, distributive, redistributive, and constituent (Lowi,
1972). This formulation clearly links the four policy types to recognizable di¡er-
ences in the application of public power. The application of public power is
di¡erentiated in two dimensions, yielding a four-fold table (Table 1). The ¢rst
 165

Table 1.

Speci¢city of coercion Likelihood of coercion

Immediate Remote

Individual conduct Regulative Distributive

Environment of conduct Redistributive Constituent

dimension is the coerciveness of public action and yields two categories ^

immediate and remote. It is important to recognize that coerciveness is the
central attribute of power and that power is a de¢ning characteristic of the
state. Further, power is to be distinguished from in£uence by the ability to
impose negative sanctions or positive rewards. Coercion can be ‘remote,’ for
example, if the distribution of bene¢ts is permissive but the coercive element is
displaced on the general revenue system. The second dimension is the speci¢c-
ity with which power is applied. Speci¢city means the extent to which the public
policy in question can apply public power (coercion) directly on a speci¢c
individual in response to a speci¢c act or, in contrast, impacts on the general
environment that structures individual choice. Lowi divides this spectrum into
two categories ^ high and low speci¢city.
Taken together Lowi’s four arenas of power de¢ne the functions of the state
and the parameters of political activity. His theoretical contribution lies in the
insights his model provides into the predictable institutional consequences of
the policy choices made to move the pursuit of public goals into one or another
of the four arenas. In all components of conventional politics ^ legislative,
administrative, judicial and civil society ^ the choice of policy mechanisms
imposes predictable constraints on the outcome of public action and is not
simply derivative from either the electoral process or the con¢guration of
interest groups (Lowi, 1972: p. 300).
To illustrate the typology, when a customs o⁄cial requires that a business-
man produce an import license for goods at the airport, the coercion is both
immediate and highly speci¢c to the transaction and individual ^ regulative.
When the government provides condoms or foodgrains for free or at subsidized
rates the bene¢ts are very real and are speci¢c to the recipient, but the coercion
is typically buried in the national budget and, therefore, remote ^ distributive.
Market reforms in developing economies in£uence the environment of choice
by altering factor prices for individuals and ¢rms. Reforms also reduce oppor-
tunities for rent seeking by expanding competition, and massively and suddenly
alter power structures, welfare and opportunity ^ redistributive.
The fourth category, ‘constituent’ policies are characterized by remote coer-
cion and low speci¢city. Lowi explains that constituent policies set the rules for
policy making ^ they are procedural. He illustrates this with the procedural
rules of Congress and civil liberties. This category generally receives less atten-
166

tion than the other three in Lowi’s work. This is perhaps a weakness given the
fact that in the majority of the world’s nation states, the fundamental rights of
citizenship, gender equality, and basic human rights are either unde¢ned or
hotly contested. Furthermore, the process of globalization promises fundamen-
tally to restructure our processes for rule-making as international treaties and
institutions constrain national choices.
Policies that impact directly on individual conduct, by necessity, must de-
centralize and disaggregate power. Individuals must be identi¢ed, their behav-
ior monitored, and public power both targeted and applied appropriately to the
speci¢c case. Policies that impact the environment of conduct are applied
through systems-level interventions and are restricted to interventions that
impact on incentives and information sources that are widely shared by broad
categories of people. By their nature such interventions are associated with
ideology and the interests of large groups and classes of citizens. Where the
likelihood of coercion is immediate there are strong incentives for groups to
organize to defend their own interests and to operate in an arena as close to the
decision point as possible and within which they can bargain directly with
decision makers. Where coercion is remote, i.e., the sanctions and bene¢ts are
less immediate or where the individual cost/bene¢t of political participation
may be low, political parties or other intermediaries that can aggregate interests
and broker logrolling are likely to prevail.
In later versions of the model, Lowi alters the horizontal axis (Likelihood of
Coercion) and substitutes ‘Type of Rule,’ distinguishing between ‘Primary Rule’
and ‘Secondary Rule’ (Lowi, 1985: p. 74). The type of rules is a concept he
borrows from the work of H.L.A. Hart’s The Concept of Law (1994: Ch. V).
Hart de¢nes a primary rule as a rule (policy) that imposes an obligation on
citizens and then applies a sanction for nonperformance. A secondary rule
(policy), in contrast, imposes no direct sanctions but, instead, empowers or
enables citizens to act in their own behalf or interests. Property rights, for
example, have elements of both. Property rights enable an individual to develop,
exploit and transfer the de¢ned property (secondary rules). At the same time
property rights typically impose sanctions (primary rules) on the owner for
misuse of the property or harm to others, and on others for violating or
damaging those rights. This reformulation is helpful in that it focuses on the
form in which state power is applied and avoids possible confusion embodied in
the term ‘likelihood of coercion.’ The ‘likelihood of coercion’ can easily lead to
a focus on the factors which in£uence the probability of e¡ective state action ^
information costs, ine⁄ciency of the state bureaucracy, and the power of
interest groups. All of these are important considerations in policy choices but
are derivative from the initial policy choice.
Lowi has also come to abandon the term ‘distributive’ in favor of ‘patronage’
(1988). He argues that patronage evokes a patron-client relationship between
the state, or its representatives, and the citizen. The choice of terms highlights
two key conceptual issues associated with this particular category. Distributive
policies may be viewed from both a macro and micro perspective, but the two
 167

perspectives evoke a di¡erent notion of the state as a muni¢cent patron (Nichol-

son, 1978). At the macro-level, ‘distributive’ policies can be perceived as broad
instruments of social policy to improve, for example, educational levels, public
health, or access to information on weather or market conditions. At the micro-
level, distributive services are directed toward speci¢ed groups. At this level
distributive policies frequently experience problems of access even though they
are free. For example, free education in poor agrarian societies may not really
be available to farm children who are needed by their parents to work the farm.

Extension of the model

National legislative politics

Extending the model beyond the New York City study, Lowi subsequently
addressed national politics (Lowi, 1972; 1985). In an analysis of 17 case studies
of legislation stretching from the ’30s to the ’50s, Lowi discovered systematic
di¡erences among three policy types (there were no constitutive policies in the
data set). In distributive legislation, the President was virtually absent from the
legislative process and the Congressional Committees were dominant actors. In
the regulatory cases, whether or not the President was engaged, Congressional
party leadership controlled the process and £oor action dominated the process.
In the redistributive bills, the President’s role was decisive and Committee
power was minimal. The data strongly suggest that the choice of policy type
dictated the ensuing political process, including the institutional locus of the
struggle, the respective in£uence of the actors, and the perception of the issues.
In addition to clarifying the impact of policy choices within existing institu-
tional arrangements, Lowi’s model also provides valuable historical insight.
His analysis suggests signi¢cant di¡erences in the preponderance of speci¢c
policy choices over time. Furthermore, his historical analysis indicates water-
sheds when new legislation restructured policy choices in ways that fundamen-
tally altered federal relations and Congressional-Executive power. Landmark
legislation has been important not only for the sectors it impacts on, but also
for shifting policy arenas and thereby shifting institutional rules, power rela-
tionships, and public perception of the issues.

The bureaucracy
Lowi accepts the Weberian argument that all bureaucracies have some com-
mon features. However, he also suggests that all bureaucracies are also in£u-
enced by their missions in ways that are essentially determined by the type of
policy that they are expected to implement. A comparative analysis of state
bureaucracies in the U.S. and France (Lowi, 1978: p. 178) reveals, not surpris-
ingly, signi¢cant structural and cultural di¡erences. Nevertheless, it is likewise
evident that a French regulatory agency also shares important features with
American regulatory agencies and di¡ers systematically from distributive or
redistributive agencies in the same way that U.S. regulatory agencies do. The
168

French and American similarities as well as the di¡erences among policy types
extend to such fundamental bureaucratic characteristics as the recruitment and
career patterns of management elites, the structure and process of control, and
relationships with clients, including the management of con£ict (Lowi, 1978:
pp. 186^189). Lowi’s ¢ndings can be illustrated by his analysis of regulatory and
redistributive agencies in the French and U.S. governments.
Administratively, regulation is usually geographically dispersed and is applied
one case at a time. In consequence, sta¡ must be dispersed to the ¢eld and
requires considerable authority and discretion. Wherever this is the case, prob-
lems of inconsistency, poor coordination, and misuse of power are likely. This is
common in both the United States and France. Coordination, in consequence,
tends to be rule-based, which commonly increases transaction costs but also
provides safeguards, reduces inequity, and reduces con£ict. Senior sta¡ is
recruited from within the bureaucracy to assure familiarity with the issues and
procedures, and the aberrations. Senior sta¡ is also decentralized to place its
members closer to the decision making process, thereby increasing the manager
to sta¡ ratio.
Agencies that implement redistributive policies in£uence the comparative
welfare of large groups of people ^ classes, industries, regions, and ethnic
groups. Individual transactions and interactions are largely irrelevant. Further,
marginal decisions, such as the change of an interest rate, have enormous
economic and political impacts, which tends to discourage decentralization
and discretion in decision making. By necessity, decisions are large scale and
centralized. Decisions also tend to be stable and infrequent. In both France and
the U.S. leadership in redistributive agencies is deliberately insulated from the
public, internally recruited, steeped in the organizational culture, and fre-
quently of high social status. Power is concentrated in headquarters. Field units
are constrained by tight rules, close supervision, hierarchical decisions and
clearances, routinization and detailed monitoring of decisions. Central bankers
would be disinclined to allow regional banks to alter rediscount rates, for
example.

Issue area
Lowi has also applied his analytical model to speci¢c issue areas, his discussion
of population policy being particularly instructive (Lowi, 1972). He reminds us
that it is wise, especially in social policy, to remember that policy making
always has an element of coercion, positive or negative, as incentives and
constraints are marshaled to in£uence citizen behavior. Ultimately, of course,
some portion of the costs of the policy is born through a coercive system of
taxation, however remote from the service being delivered. Choices among the
four policy types in the Lowi model can have important political consequences
that in£uence equity, social con£ict, corruption and rent seeking, political
participation, or even the balance of capital and recurrent costs in public
programs. The consequences of policy choices can be illustrated by Lowi’s
description of distributive and constituent population policies.
 169

Distributive policies appear least coercive to the potential client because

they are permissive, dispersed, and exclusion can be mitigated by logrolling
selected bene¢ts for speci¢c groups. As such, distributive approaches seem
ideally suited, Lowi argues, for the early entry of government into a new and
controversial issue area such as population. Nevertheless, there are real poten-
tial dangers in the approach. The free services are not free to the taxpayer. The
permissive nature of the services makes it di⁄cult to demonstrate results and
justify public expenditure. Free services also invite ‘misuse.’ For example, moral
issues can easily be raised as with the current debate over provision of services
to teens or abortion clinics. In addition, groups with a preference for large
families may use family planning services only after they reach their preferred
family size. Distributive policies also tend to build up close political ties
between the bureaucracy and politicians providing services and the clientele
bene¢ting from them. Whether it is population services, food subsidies, cheap
irrigation water, or agricultural extension services, distributive programs tend
to become entitlement programs and insulated from reform. In fact, there is
ample evidence that the separation of the costs and bene¢ts, characteristic of
distributive programs, can have perverse e¡ects on the e⁄ciency of services,
and encourage factional politics and patronage.
Lowi describes constituent policies related to population such as establish-
ing new administrative units and public information programs that have the
objective of changing the parameters of behavior. The constituent approach
would normally focus debate and politics heavily among administrative, politi-
cal and judicial elites. But that is not necessarily the case in population policies,
when media, mass organizations, and con£ict mobilize the public on social
issues. Examples include attempts to change pro-nativity values by encouraging
smaller family size in the name of choice or improved opportunity for children,
or advocacy of later marriage and safe sex. Although coercion is quite remote
in these e¡orts, the inherent attack on traditional values, combined with con-
cerns of bias and discrimination as messages are targeted on speci¢c popula-
tions, easily sparks intense political responses. Lowi warns that signi¢cant
political costs may ensue when emotions are aroused, groups mobilized, lines
are drawn and winners and losers are de¢ned in absolute moral terms. As we
shall see below, it is precisely the potential for mass movements to emerge that
has required a signi¢cant restructuring of the Lowi model.

The limits of the model

Early criticism of Lowi’s model addressed the empirical di⁄culty of distin-

guishing the four policy types (Wilson, 1974: Ch. 16; Kjellberg, 1977). Part of
the analytical problem is that, for Lowi, the type of policy is de¢ned by the
structure of the relationship between the citizen and state power, and not, as
Wilson suggested, by the social or economic consequences. But Wilson was
undoubtedly correct in arguing that the political and economic consequences
170

of choices among Lowi’s four policy types cannot be directly deduced from the
typology. One must take into account the institutional context, the organiza-
tion of interest groups, and other contextual variables. Further, Lowi’s e¡orts
to classify administrative agencies within his four-fold scheme seems to invite
further ambiguity, because it is not unusual for laws and bureaucracies to
embody multiple policy types. It would appear that there is a necessity for
‘mixed’ categories, a possibility Lowi does not allow for. Without such mixed
categories, the empirical conclusions that can be deduced from the model may
be limited. Spitzer (1983: p. 30) has proposed a helpful scheme for analyzing
‘mixed’ cases, but his revised model does not appear to have been picked up by
others and tested.
Those of us who have tried to apply Lowi’s model in diverse non-American
political systems have certainly felt constrained by the extent to which his
analysis is deeply rooted in the speci¢cs of the U.S. federal system. Many of his
insights are speci¢cally related to Congressional politics, a fragmented political
party system, and a constitutional principle of division of powers. Alternative
constitutional arrangements do not necessarily lead one to dismiss Lowi’s
policy typology, but they do complicate its application. More important, how-
ever, is that Lowi’s own historical analysis recognizes the importance of broad
social and economic changes, these changes are not integrated into the model
itself. He further implies (1972) that the model seems to lose its predictability
and its intellectual anchor when social con£ict, basic moral values, and the
cultural identity of groups are threatened. Under these conditions behavior is
no longer shaped e¡ectively by established institutional norms. Mass mobiliza-
tion necessitates changes in institutional arrangements. Under these condi-
tions, as he recognizes, the commonplace exercise of regulatory authority by
local o⁄cials can produce violence and induce mass movements. The model as
it stands is a tool of microanalysis, but o¡ers no theory of institutional change
that can help us to integrate it into the analysis of systemic change. This is not a
fatal £aw and it does not, in and of itself, undermine the utility of the model so
long as one applies it safely within particular historical eras and speci¢ed
institutional frameworks.
Tatalovich and Daynes (1988), former students of Lowi, address the issue of
social mass movements in the context of the Lowi model. Their argument is
essentially that the Lowi model is rooted in the politics of interest groups that
rationally pursue their own advantage. Ideological politics, they suggest, focus
on symbolic goals from which the advocates derive moral satisfaction and
which far exceed immediate tangible bene¢ts. Single issues, such as gun control
or abortion, may become the focus of broader concerns about life style, status,
and insecurity. It is characteristic of such movements that they mobilize the
passionate, inhibit bargaining and compromise, and bring into question funda-
mental questions about the relationship of the citizen to the power of the state.
These movements may sometimes step over the line to illegal or even violent
behavior. Tatalovich and Daynes suggest that these cases demonstrate a ¢fth
category in which radical politics engender institutional changes in the polity,
 171

fundamentally altering the meaning of citizenship, the relationships among

citizens, and the relationship of the citizen to the state.
Lowi himself addresses some aspects of political movements that operate
outside established political institutions and may lead to signi¢cant structural
changes (Lowi, 1976: Ch. 16). Lowi’s discussion distinguishes three types of
radical politics ^ withdrawal, revolution, and rebellion. The distinction be-
tween revolution and rebellion is that the former involves a change of regime,
whereas rebellion uses violence to alter the behavior of an existing regime. The
concept of ‘rebellion’ is important and is at the root of the Tatalovich and
Daynes analysis. However, it may well be that a resort to violence, although
common, may not be the de¢ning characteristic of mass movements that
attempt to e¡ect structural change. Further, social marginalization, moral out-
rage, or threatened interests may all increase the likelihood of violence, but not
always against the state. The key to the rebellion category would appear to be
mass movements that attempt to alter the rules of the game. There are, how-
ever, other mechanisms, other than mass movements, for e¡ecting structural
change.

New directions

Lowi’s work on policy analysis has added greatly to our understanding of the
interaction of policy types with changes in institutional arrangements and
culture in U.S. political history (1969; 1995). In addition, it is implicit in Lowi’s
policy model that policy choices engender institutional and political changes in
predictable directions (Lowi, 1972). Some of the most interesting possibilities
for extending Lowi’s model lie in its potential contribution to understanding
policy and institutional choices in the rapidly changing environments of devel-
oping countries and the transitional countries of the former Soviet bloc. In both
of these contexts the range and immediacy of policy and institutional choices
combined with the di⁄culty of anticipating consequences of choices is a formi-
dable challenge to existing theory in political economy. To accomplish such an
analytical adaptation, however, will require that we understand better the path
dependency of policy and institutional choices in non-American settings. Fur-
ther, we must articulate an adequate theory of institutional change that in-
cludes the impact of policy choices, and that we document the impact of policy
choices in diverse constitutional/institutional settings.

Structural reform
Among development experts, a strong preference has emerged for macro-eco-
nomic restructuring as a policy response to poverty. The argument can be made
that a competitive market is ultimately more equitable and e¡ective in o¡ering
opportunities to the poor than most current institutional alternatives. Structur-
al reform would appear to ¢t the requirements of Lowi’s constituent policies. It
is low in coercion at the individual level and operates on the environment of
172

choice. However, it is probably closer to a new category of radical constituent

policies in that it is transformational, represents a revolution in the role of the
state, and has elicited intense value-based disputes.
Bates and Krueger (1993) provide an excellent analysis of eight structural
reform programs in Latin America. The evidence is clear that reform is induced
by economic crises exogenous to the political system, threatening the power of
political elites and of the state itself. A surprising ¢nding of the study is that
interest group analysis fails to explain either the initiation or the process of
reform. Bates and Krueger argue that the explanation lies in the fact that
reforms are complex and yield a set of public goods and private opportunities
with uncertain bene¢ts. Political action by the presumed bene¢ciaries is, there-
fore, hard to organize and existing political institutions are ine¡ective in any
case. Resistance, in contrast, is consistent with interest group theory because
the costs of reform, unlike the bene¢ts, are clear and immediate for those who
are collecting rents under the failed regime. In these conditions, ideology, not
interests, tends to prevail in driving public policy toward reform and radical
politics are needed to displace vested interests.
Implementation of the reforms, however, is a di¡erent story, Bates and
Kreuger argue. To succeed in reform, the new elites need a constituency, which
they acquire by trading an expansion of social services for a liberalization of the
economy and greater independence of macro-economic institutions. It is no
accident, therefore, that the dominant paradigm for successful development
currently is a liberal economy linked to strong poverty focused public invest-
ments in social services. The similarity of this analysis to Tatalovich and Daynes’
is intriguing. Crisis induced dramatic political and institutional change with
concomitant changes in prevailing policy types are widespread conditions.
The Tatalovich and Daynes collection is an important contribution precisely
because it addresses the capacity of the Lowi model for addressing fundamental
structural changes in the political system and bridges the gap between routine
and transformational politics. When individual expectations change from mar-
ginal utility gains to broad status and symbolic rewards, concomitant changes
in the way institutions structure incentives must occur. It is also clear that when
policy goals include structural transformation, signi¢cant changes in the insti-
tutional structuring of incentives, the resolution of con£icting demands, and
the relationship of citizen to the state must also result. Lowi (1988) agrees that
his initial model would bene¢t from greater attention to the fundamental
distinction between radical and routine politics, but rejects the idea of a ¢fth
category of policies engendered by the radicalism of social movements. Rather,
he suggests that each of his four policy categories requires the elaboration of a
radical dimension ^ in e¡ect, a third axis in the model. The radicalization of
social issues does not alter the nature of regulatory policies, but it does alter the
institutional context and political process. This promises to make the model
more dynamic than in its original version.
 173

Institutional change and choices

Lowi’s model is consistent with an institutional approach to the analysis of
social interaction and, therefore, o¡ers productive contributions to the current
trend in institutional economics and political economy (Ostrom, 1990; Wil-
liamson, 1975; North, 1990; Wolf, 1988; Ostrom, Schroeder and Wynne, 1993).
In Lowi’s work, as in the institutional tradition, the impossibility or impracti-
cality of either predicting or explaining aggregate behavior on the basis of
individual perception and motivation is taken as a given. Rather, prediction
and explanation become possible only to the extent that individual behavior is
shaped by systems of transactional rules (institutions) that structure behavior.
The link to individual behavior in the institutional literature is that the institu-
tional rules provide strong incentives for compliance with the rules, over a wide
range of individual motivation, by reducing transaction costs, increasing the
predictability of outcomes, and through the evolution of supportive power
structures.
A conscious integration of Lowi’s model with institutional analysis can
expand predictability by permitting us to explore how the character of the
good or service provided by public action interacts with the policy choices and
can guide experimentation and innovation. For example, regulatory policies
will have dramatically di¡erent e¡ects when applied di¡erentially to the use of
private goods, pure public goods, or ‘mixed’ goods. Further, public power can
be di¡erentially applied to the production, provision (¢nancing), and consump-
tion of goods and services with strikingly di¡erent political and policy outcomes
(Ostrom, 1990; Ostrom and Ostrom, 1991). Finally, institutional approaches
provide a model for explaining institutional change through the interaction of
changing factor prices and changing transaction costs (Ruttan and Binswanger,
1978; Williamson, 1975). Lowi’s analysis adds richness to the lines of inquiry
above by clarifying how choices of policies drive institutional choices, trans-
action costs, the scale of political mobilization, and the behavior of political
elites. For example, corruption and lack of transparency in government pro-
grams is widely cited as a leading cause of governmental failure in developing
countries and combating corruption is at the top of the reform agenda. How-
ever, the extent to which the form of corruption is driven by policy choices
made is less commonly recognized. Finally, Lowi’s model can demonstrate that
policy choices will signi¢cantly, and predictably, alter the use of state power
and, in consequence, the incentives that can be applied.
The example of subsidized irrigation water is legendary among students of
agricultural development and illustrates the possibilities (Upho¡, 1992; Ostrom,
1992; Repetto, 1986). Subsidized irrigation water (distributive policies) encour-
ages the physical expansion of irrigation systems (capital costs), usually at the
expense of maintenance budgets. This outcome is due to the rents to be
achieved by contractors and bureaucrats from letting construction contracts
and the pressure in distributive policies to emphasize broad coverage over
quality of service. The great geographic dispersion of large systems means that
irrigation bureaucracies are typically unable to monitor and regulate water use
174

e¡ectively (regulatory policies), which encourages cheating by farmers. Cheap

water, poor maintenance, and cheating encourages wastage through over-
watering and leakage, which in turn leads to the long-term deterioration of the
soil and salinization in some soil conditions. At the same time, poor farmers, at
the tail of the irrigation systems, get little water and cannot control its timing (a
redistributive outcome).
The problem is evident. The policy choices are inconsistent with the institu-
tional arrangements ^ the capacity for decentralized monitoring and sanctions.
In consequence, neither the equity goals nor the e⁄ciency goals of water policy
are met. Yet most of these outcomes can be deduced from the policy choice,
with the application of Lowi’s model. The solution that has emerged from
experience satis¢es the Lowi model’s institutional requirements for a regula-
tory policy, but cannot be derived from it. Water user associations need to be
vested with some of the water bureaucracy’s authority to monitor and regulate
water £ow and to perform maintenance. The incentive structures of a commun-
ity organization as well as the information costs of community monitoring and
decision making typically make them superior to typical bureaucratic practice.
If, in addition, water can be priced more realistically, the bureaucracy can
reduce its regulatory functions to periodic dispute adjudication and can focus
on a di¡erent set of distributive policies ^ information and technical support.
Lowi’s reformulation of his model illuminates a prevailing problem with the
community organization solution ^ national social goals are di⁄cult to achieve
by regulatory means when they contradict strong community values, a point
amply documented in the rural development literature. Finally, one might
inquire of Lowi’s model what policy choices are indicated where strong ethnic
or religious di¡erences divide communities. However, Lowi’s analysis needs to
be expanded to include institutional alternatives, such as community organiza-
tion and public/private partnerships, which can alter incentive structures and
restructure power relationships between the citizen and the state, especially in
the regulatory arena.

Macro-micro interactions
Macroeconomic and constitutional restructuring are not generally su⁄cient to
yield desirable growth and welfare bene¢ts in developing polities or in econo-
mies in transition. A recent controversial analysis by Birdsall and De la Torre
(2001: Part 2) suggests a set of 10 second-tier adjustments needed for the
success of reforms. These include dealing with discrimination, broadening
opportunities for entrepreneurship, and rule-based ¢scal discipline, among
others. One cannot escape the necessity of making detailed institutional and
policy choices that rebuild the state and restructure the relationships of citizens
to the state. Investments in human capital (health and education), natural
resource management (environment), economic infrastructure (roads, irriga-
tion, etc.), economic governance, and the management of ethnic con£ict all
combine high transaction costs and elements of collective goods that require
specialized institutional arrangements to achieve positive outcomes. There is
 175

also considerable path dependency in these policy and institutional choices.

For example, rural development in India depended for decades on regulatory
policies because the government had an extensive and able District administra-
tion to handle police, revenue and infrastructure, but lacked the capacity for
macroeconomic management, regulation of ¢nancial markets, and the social
infrastructure for the delivery of services. The institutional gaps meant that
distributive and redistributive policies were simply not e⁄cient choices. Lowi’s
model seems well suited to illuminating policy choices necessary in responding
to such a reform agenda.

Conclusion

The fundamental contribution of Lowi’s work is his thesis that choices about
the use of public power are the foundation of policy analysis. The policy choices
then structure the relationship between the citizen and the state in ways that
manifest public power, according to Lowi’s model, in four di¡erent patterns.
Lowi also demonstrates that e⁄cient policy implementation requires that im-
plementing mechanisms parallel the four policy choices and must be consistent
with the type of policy selected. Finally, the broad application of Lowi’s work
indicates that each policy type and its associated implementation mechanism
contain inherent sources of policy failure.
The discussion above suggests that at least one important potential exten-
sion of the Lowi model should be a link to current work in institutional
economics and political economy to improve our analysis of institutional
choices and institutional performance. To accomplish this objective, however,
analysis will need to enhance the ability of the Lowi model to treat situations of
fundamental structural change, perhaps along the lines suggested by Tatolovich
and Daynes. Second, the model will need to be more £exible in dealing with
mixed cases, both policies and institutions. Third, the model could provide
considerable insight in illuminating the interaction of policy choices with
diverse institutional choices, many of them designed to o¡set some of the
inherent risks of the policy selected. Fourth, there is an important link, cur-
rently not exploited, of the Lowi model to institutional analysis through the
model’s insights into how policy choices shape incentives of the institutional
players. Finally, the model might bene¢t from introduction of an explicit refer-
ence to the type of collective goods being provided ^ pure public goods,
common pool goods, and toll goods. In short, the tendency to focus on the
U.S. applications of the Lowi model, where its utility is already well estab-
lished, has seriously neglected its potential value in addressing a broader range
of policy and institutional issues.
176

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