Toward a Rational Theory of Decentralization: Some Implications of a Mathematical Approach

This paper seeks to open for exploration the field of decentralization in politics and organizational design. As a first approach, it examines conditions under which decentralization is preferable from the viewpoint of rationality or cost-effectiveness. Our normative statements as to what would be best, or what should be done, are formulated first from the viewpoint of the subjects or clients, but they are expected to include the interest of the community in ensuring adequate service at low cost, and they also include the interest of the rulers, insofar as their power in the long run depends on their capacity to respond to the demands made upon them quickly enough and adequately enough to retain their political support. The political theory underlying our study assumes that modern governments retain “their just powers by the consent of the governed,” and hence that both their legitimacy and their power will depend at least in significant part on their ability to respond adequately to the popular demands made upon them. We do not deal in this study with other important criteria of preference, such as the psychological value which some of those who take the role of powerholders may put upon centralized control, or the contrary value which some of those who identify with their subjects may put upon power sharing and decentralization.