Many suppose that democracy is an ethos which requires, inter alia, a degree of economic equality among citizens. In contrast, we conceive of democracy as ruthless electoral competition between groups of citizens, organized into parties. We inquire whether such competition, which we assume to be concerned with distributive matters, will engender economic equality in the long run.
The society consists of an infinite sequence of generations, each comprising adults and their children. Adults care about family consumption and the future wages of their children, which are determined by educational policy and parental human capital. A given generation is characterized by the distribution of human capital of its adults. Parties form and propose policies to redistribute income among households, and to invest in the education of children; the educational policy that is victorious determines the distribution of human capital in the next generation of adults.
The policy space on which parties compete is very large. A political equilibrium concept is proposed which determines two parties endogenously, and their proposed policies in political competition. One party wins the election (stochastically). This process determines a sequence of human–capital distributions over time.
We show that, whether the limit distribution of human capital is one of equality depends upon the nature of intra–party bargaining. If parties are highly ideological, then equality is obtained in the long–run, while if they are opportunist, it is not. This outcome is starkly different from what occurs in a unidimensional Downsian model, which, we argue, shows the necessity of this more complex analysis.