A multi-party system is a political system in which multiple political parties across the political spectrum run for national election, and all have the capacity to gain control of government offices, separately or in coalition. Apart from one-party-dominant and two-party systems, multi-party systems tend to be more common in parliamentary systems than presidential systems and far more common in countries that use proportional representation compared to countries that use first-past-the-post elections. Several parties compete for power and all of them have reasonable chance of forming government.
First-past-the-post requires concentrated areas of support for large representation in the legislature whereas proportional representation better reflects the range of a population's views. Proportional systems may have multi-member districts with more than one representative elected from a given district to the same legislative body, and thus a greater number of viable parties. Duverger's law states that the number of viable political parties is one, plus the number of seats in a district.
Argentina, Armenia, Austria, Australia, Belgium, Brazil, Canada, Croatia, Denmark, Finland, France, Germany, Iceland, India, Indonesia, Ireland, Israel, Italy, Kosovo, Lebanon, Maldives, Mexico, Moldova, Nepal, the Netherlands, New Zealand, Norway, Pakistan, the Philippines, Poland, Portugal, Romania, Russia, Serbia, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Tunisia, Ukraine, and the United Kingdom are examples of nations that have used a multi-party system effectively in their democracies. In these countries, usually no single party has a parliamentary majority by itself. Instead, multiple political parties are compelled to form compromised coalitions for the purpose of developing power blocks and attaining legitimate mandate.
A system where only two parties have the possibility of winning an election is called a two-party system. A system where only three parties have a realistic possibility of winning an election or forming a coalition is sometimes called a "Third-party system". But, in some cases the system is called a "Stalled Third-Party System," when there are three parties and all three parties win a large number of votes, but only two have a chance of winning an election. Usually this is because the electoral system penalises the third party, e.g. as in Canadian or UK politics. In the 2010 elections, the Liberal Democrats gained 23% of the total vote but won less than 10% of the seats due to the first-past-the-post electoral system. Despite this, they still had enough seats (and enough public support) to form coalitions with one of the two major parties, or to make deals in order to gain their support. An example is the Conservative-Liberal Democrat coalition formed after the 2010 general election. Another is the Lib-Lab pact during Prime Minister James Callaghan's Minority Labour Government; when Labour lost its three-seat majority in 1977, the pact fell short of a full coalition. In Canada, there are three major federal political parties: the Conservative Party of Canada, the Liberal Party of Canada, and the New Democratic Party. However, in recent Canadian history, the Liberals and Conservatives (and their states) have been the only two parties to elect a Prime Minister in Canada, with the New Democratic Party, Bloc Quebecois and Green Party often winning seats in the House of Commons. The main exception was the 2011 Canadian election when the New Democrats were the Official Opposition and the Liberal Party was reduced to third party status.
Unlike a one-party system (or a two-party system), a multi-party system encourages the general constituency to form multiple distinct, officially recognized groups, generally called political parties. Each party competes for votes from the enfranchised constituents (those allowed to vote). A multi-party system prevents the leadership of a single party from controlling a single legislative chamber without challenge.
If the government includes an elected Congress or Parliament, the parties may share power according to proportional representation or the first-past-the-post system. In proportional representation, each party wins a number of seats proportional to the number of votes it receives. In first-past-the-post, the electorate is divided into a number of districts, each of which selects one person to fill one seat by a plurality of the vote. First-past-the-post is not conducive to a proliferation of parties, and naturally gravitates toward a two-party system, in which only two parties have a real chance of electing their candidates to office. This gravitation is known as Duverger's law. Proportional representation, on the other hand, does not have this tendency, and allows multiple major parties to arise. But, recent coalition governments, such as that in the U.K., represent two-party systems rather than multi-party systems. This is regardless of the number of parties in government.
A two-party system requires voters to align themselves in large blocs, sometimes so large that they cannot agree on any overarching principles. Some theories argue that this allows centrists to gain control. On the other hand, if there are multiple major parties, each with less than a majority of the vote, the parties are strongly motivated to work together to form working governments. This also promotes centrism, as well as promoting coalition-building skills while discouraging polarization.