19911 A POLITICAL THEORY OF THE CORPORATION 31 fail to monitor managers effectively.Or,the networks could represent politically intolerable concentrations of economic power.But the point here is not to evaluate the networks.The point is that politics either makes them costly or prohibits them Hence,the first step in my argument is that portfolio rues guide the uneasy relationship between financial institutions and industrial companies:financial institutions can shuttle capital in and out of indus- trial companies,but rarely can they exercise controlling influence. 1I1.ELEMENTS OF A POLITICAL THEORY The second step in my argument is that these portfolio rules are not solely the result of political drift or public-spirited laws;behind them lies an array of political forces that helped determine and main tain the em.Public cho ce the ory helps the ownersh of the public corporation. Ther explain uctu were winners in fragmenting financi institutions. These winners had a large voice in Congress and their goals matched public opinion. Public choice is about politicians making decisions.Politicians ad- vance their s,their their to win the next ele tion by the decisions they make Popular ideol ogy m de it easy for politicians to fragment financial institutions;if the politician believed that was the best result,the voters would impose no penalty.Interest groups also pressured politicians to fragment financial institutions. The simplified political picture I shall use is of politics as the inter- play between selfish economic interests and ideology on the playing field of the nation's institutions.Policy choices depend on ideology and interest group power,each of which is impeded or enhanced by American federalism magnified the ons;fragmented fin ial institu no want to co pete large,power ncial institu- tions;politics helped small financial institutions maintain themselves as winners.Neither interest group power nor ideology alone appears strong enough to have fragmented ownership patterns.Together they achieved financial fragmen Ideology is not centra al in the public choice stories about financial rules.This is understandable,but incorrect.Ideology-the opinions of average people without a direct economic stake in the political out- come-is often irrelevant in politics.People are confused and uninter- ested;those with opinions have differins often cancel each other ou Politic ODV ma s and ided ogies can influence votes,but when the political issue at hand evok es cross-cutting ideological preferences,confusion,and disinterest,politi- cians can safely ignore ideology.The implicit public choice assumption that ideology doesn't count,or doesn't count much,is usually correct. But when the broad m ass of average peop ple hay and that preference is the same for most people,then ide a weak prfere ology does matter 1991] A POLITICAL THEORY OF THE CORPORATION 31 fail to monitor managers effectively. Or, the networks could represent politically intolerable concentrations of economic power. But the point here is not to evaluate the networks. The point is that politics either makes them costly or prohibits them. Hence, the first step in my argument is that portfolio rules guide the uneasy relationship between financial institutions and industrial companies: financial institutions can shuttle capital in and out of indus￾trial companies, but rarely can they exercise controlling influence. III. ELEMENTS OF A POLITICAL THEORY The second step in my argument is that these portfolio rules are not solely the result of political drift or public-spirited laws; behind them lies an array of political forces that helped determine and main￾tain them. Public choice theory helps explain the ownership structure of the public corporation. There were winners in fragmenting financial institutions. These winners had a large voice in Congress and their goals matched public opinion. Public choice is about politicians making decisions. Politicians ad￾vance their careers, their ideologies, their chance to win the next elec￾tion by the decisions they make. Popular ideology made it easy for politicians to fragment financial institutions; if the politician believed that was the best result, the voters would impose no penalty. Interest groups also pressured politicians to fragment financial institutions. The simplified political picture I shall use is of politics as the inter￾play between selfish economic interests and ideology on the playing field of the nation's institutions. Policy choices depend on ideology and interest group power, each of which is impeded or enhanced by existing political institutions. American federalism magnified the power of fragmented financial institutions; fragmented financial institu￾tions did not want to compete with large, powerful financial institu￾tions; politics helped small financial institutions maintain themselves as winners. Neither interest group power nor ideology alone appears strong enough to have fragmented ownership patterns. Together they achieved financial fragmentation. Ideology is not central in the public choice stories about financial rules. This is understandable, but incorrect. Ideology-the opinions of average people without a direct economic stake in the political out￾come-is often irrelevant in politics. People are confused and uninter￾ested; those with opinions have differing, weakly-held opinions that often cancel each other out. Politicians obviously want votes and ideol￾ogies can influence votes, but when the political issue at hand evokes cross-cutting ideological preferences, confusion, and disinterest, politi￾cians can safely ignore ideology. The implicit public choice assumption that ideology doesn't count, or doesn't count much, is usually correct. But when the broad mass of average people have even a weak preference, and that preference is the same for most people, then ideology does matter