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A MULTIPARTY SYSTEM is found in countries in which more than two parties successfully compete for office. It is different from the two-party system found in democracies such as the United States. Multiparty systems are the rule, rather than the exception, in democratic countries. A multiparty system is facilitated by the existence of multiple social cleavages and by a permissive electoral system (proportional representation). Proponents consider that a multiparty system does a better job than a two-party system in representing the variety of interests that exist in modern democratic societies, while critics argue that multiparty systems lead to unstable coalition governments and this, in turn, is a hindrance to coherent policy-making.

To determine exactly at what point a country has a multiparty system rather than a two-party system is not always easy. Through the 1980s, Great Britain's party system was included in the two-party category, while Germany was included among democracies with a multiparty system. Nonetheless, in the parliamentary elections held during that decade, Britain's two largest parties, Conservative and Labor, received together an average of the total vote (72 percent) that was far below the average vote of Germany's two largest parties, Christian-Democrats and Social Democrats (85 percent). In the same elections, Germany's third party, the Free Democrats, won an average of only nine percent of the total vote, while Britain's third party, the Liberal Democrats/Alliance, won 24 percent.

Like the vast majority of advanced Western industrial democracies, both Britain and Germany are parliamentary regimes, in which the partisan balance of power in the legislature determines who forms the government. What justifies calling the British party system of the 1980s a two-party system and the German party system of the 1980s a multiparty system is the extent to which third parties were able to translate their electoral support into representation in the legislature and the government. Britain's plurality elections prevented the Liberal Democrats from gaining more than a handful of seats, and consequently they were unable to have much influence in government formation. In Germany, proportional representation enabled the Free Democrats to translate their electoral support into a sufficient number of seats to hold the balance of power in the legislature.

If Germany had center-left governments in the 1970s, but center-right governments in the 1980s, this was primarily due to the shift in the Free Democrats' alliances. This party was located ideologically in the center, and had enough votes to give a majority to either major party. Between 1969 and 1982, Germany was governed by the center-left coalition between the Social Democrats and the Free Democrats. After 1982, it was governed by the center-right coalition between the Christian Democrats and the Free Democrats. The change of government itself was not the result of an election, but was caused instead by the Free Democrats' withdrawal from the government and their forming of a new alliance.

This indicates that there are several key variables that characterize a party system: The number of parties, their electoral and legislative strength, and their ideological location. In parliamentary regimes, the most important feature of the party system is the number of parties that can influence government formation. When there are only two such parties, as in the case of Britain, where Labor and Conservative parties alternate in office, this is called a two-party system. When there are at least three such parties, as in the case of Germany, it is called a multiparty system. More specifically, before 1990, Germany had a two-and-a-half party system, with two large parties and a third party that, though much smaller than the other two, had a key role in government formation.

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