Heading for extinction?

Are our main political parties like banks in 2007? I'm prompted to ask because of the widespread belief that they are insufficiently differentiated. Seamus Milne complains that "only the narrowest range of policies is acceptable" and - from a different perspective - Nick Barlow bemoans the uninspiring "politics of non-differentiation":

If all you can do to distinguish yourself is claiming ‘slightly different than X and Y, but not by too much!’ then is it any wonder no one wants to pay attention to you?

Not everyone shares this view: Simon points out that the two main parties do differ significantly on, for example, the EU and inequality. But let's, for the sake of argument, run with the Barlow-Milne view.

There's a rational economic basis for what they are complaining about. It was described by Harold Hotelling in 1929.

To see his point, imagine ice-cream sellers setting up stalls on a beach, along which sun-bathers are scattered. The first seller would place his stall half-way along the beach, as this minimizes how far customers must walk to get to him. But where does the second seller put his stall? Hotelling proved that it was next to the first's. And the third and fourth sellers also go for the middle of the beach. Buyers, concluded (pdf) Hotelling, "are confronted everywhere with an excessive sameness."

This helps explain why our towns are full of almost identical coffee shop chains, why most lager tastes the same (or cider, as Hotelling complained): and why pop music is mostly indistinguishable sub-Rn'B pap. And it is just what happens in politics. The cliche that "elections are won in the middle ground" and the well-known median voter theorem are expressions of Hotelling's principle of minimum differentiation. He himself saw this. His idea, he wrote, "is strikingly exemplified" in politics, where "each party strives to make its platform as much like the other's as possible."

From Hotelling's perspective, minimum differentiation is maximally rational.

Or is it? Let's return to the beach analogy. What happens if there's a bad summer? Or if the beach becomes inaccessible because of a landslip? Or if people decide to no longer take beach holidays?

All our ice cream sellers would then go bust. The only survivor would be the apparently irrational seller who set up his stall inland.

If there is environmental change, apparently rational Hotelling-type strategies can lead to mass extinction. For example, in 2007 most banks (pdf) were pursuing similar strategies. When the environment changed, there was a mass wipe-out.

Hotelling-type strategies eliminate ecological diversity. But such diversity might be the only way of surviving environmental change.

Hence the question I began with. The rise of nationalists, Ukip, Greens and voter apathy might represent the sort of environmental change which cause Hotelling-type strategies to fail.

The standard response to this possibility is along the line of Seamus's - to advise Labour to shift left (and the Tories rightwards): it's a neat coincidence that the recommended move just happens to be always towards the writers' preferred position.

But is this always feasible? Return to our ice-cream sellers.If they have emotional or financial attachments to the beach, it might not be easy to move. This is true for many companies: they have vintage organizational capital which locks them into specific ways of doing things and makes radical change very difficult. And the same might be true of political parties. They too are trapped by history and brand; for example, ethnic minorities don't vote Tory in part because of the legacy of Enoch Powell.

Advice such as Seamus's under-estimates the sheer difficulty of changing*.  

It's possible, then, that the main parties are heading for something like extinction and yet they cannot do much about it.

* You might object that Thatcher and Blair both transformed their parties. But they were exceptional leaders. And a glance at the trends in party membership under their leadership suggests even they were not wholly successful.

Comments

[Luis Enrique]

you don't mention proportional representation - isn't that system compatible with catering for diversity? First past post means always wanting to stand just to the side of your opponent.

[Nick]

Have you read Antony Downs' 'An Economic Theory of Democracy'? It's effectively Hotelling's theories applied to elections and parties, but does stress that the tendency for parties to converge usually only applies in two-party majoritarian systems.

But, I was principally referring to Liberal Democrat strategy for the upcoming election which appears to be devoted solely to proving to destruction that there is only a tiny market for pure unabashed split-the-difference centrism in Britain.

[FromArseToElbow]

The SNP want an entirely separate beach (with added midges), the Greens want the beach closed due to breeding turtles, and UKIP want to cover the beach in barbed wire and tank-traps.

For all that, I've got a feeling that the market for icecream may remain robust.

[Gobanian]

But the ice cream stall which set up inland won't be the only survIvor when rains wreck the beach. Because the inland stall will have gone bust in the years before. This is exactly what happened witH the banks. Banks which were cautious lost business and eventually had to sell out to the risk taking
Banks which made big money when times were good. The reason that we only had badly indebted and over extended banks like RBS in 2007 is that they had bought up all the cautious ones. Hotelling strategies are inevitable even though they do indeed sometimes lead to Minsky crashes

[Dinero]

There is another, arithmetic aspect ,with a two party situation.

If a party presents a policy that appeals to the voters of the other party they stand to achieve an advantage of two votes. One extra to them and minus one from the other party. Net advantage two votes.

If they present a policy that appeals to their own voters where the voter was decided to vote for them anyway, then there is no change. If they present a policy that appeals to an undecided voter they get an advantage of one vote. If they present a policy that appeals to the voters of the other party they stand to achieve an advantage of two votes. One extra to them and minus one from the other party. Net advantage two votes.

[Dinero]

6.42 continued.

If in the process of taking one of the other sides voters, they alienate one of their own voters then the outcome is net equal.

If in the process of taking one of the other sides voters they alienate one of their own voters who then does not participate then the net gain is one vote. That process could continue , causing dwindling turnout over time, until the turnout is very low and third party makes an inroad.

[rogerh]

Typically a safe seat tends to get little attention from the centre. Voters may seek to weaken a safe incumbent in the hope of getting attention. But a possible reaction is for all the central parties to say 'sod them' on the principle that most local projects are troublesome and expensive vote-losers anyway.

Presumably the ice cream vendors held out on the beach until seaside holidays vanished, unfortunately there is no chance politicians will vanish.

[Phil]

Footnote to a footnote: those party membership trends are fascinating - particularly the post-2013 period which they (understandably) don't include in their graphs.

Which is the largest:
- the individual membership of the Labour Party
- the combined individual memberships of the Conservative Party (or local Conservative Associations) and the Liberal Democrats
- the combined individual memberships of the SNP, Plaid Cymru, UKIP and the Green Party (or parties)

Answer: they're all about the same, in the 180-200,000 region.

I don't know what's more surprising - how far the Tories have fallen, how far the small parties have risen or how well Labour membership has held up (it's around the 2003 level, and above the level of 2008-9).

[Jim Harrison]

A similar mechanism explains why commercial products so often become mediocre over time. New products attract attention precisely because they have marked characteristics, but once they appear the marketing department guys insist that they be modified to appeal to the widest possible audience. I think of it as the jalapeño cycle because I first noticed it when the peppers in the supermarkets became milder and milder after spicy food became popular. Of course the process makes room for other products, but I expect that the habaneros will gradually follow suit.

[John Whitesell]

While parties have an understandable preference to winning elections over losing them, they're goal is to actually secure political objectives. As long as this holds, parties wont actually be identical.

[drunkard in italy]

If only the Arab spring were a bit warmer