PUNDITS and politicians decry the state of American politics. Two recent book titles tell the story: "Parliament of Whores," by P. J. O'Rourke, and "Why Americans Hate Politics," by E. J. Dionne. United States politics are not in a rosy state.Frequently cited culprits and symptoms include: our current system of campaign financing; the influence of political action committees; the decline of political party identification among voters; the absence of "real" competition in elections; passive interest, to name a few. With congressional redistricting under way in many states, with the announcement that the National Organization for Women may launch an independent political party, and with the start of the 1992 presidential campaign, it is time to broaden the current debate. We should examine something more basic to the shaping and practice of our politics. I'm speaking of our electoral system, inherited two centuries ago from Britain. Electoral systems matter because they determine how votes are translated into political power. Not all systems are equal: Witness the plurality system vs. true pluralism. Britain and her former colonies, the US included, employ the "plurality" or "first past the post" system of electing members of Parliament/Congress from "single-member" districts. The candidate who wins the most votes in a district gets elected. Votes going to other candidates are discarded, even if one garners 49 percent. Plurality systems tend to have two parties. A good example of how unfair the plurality system can be comes from the UK where the Conservative and Labour parties dominate, even though in recent years the Liberal/Social Democratic Alliance has done well in the popular vote. Because of the plurality system, however, the Alliance has not done as well securing seats in Parliament. In 1983, for example, the Conservatives won 42 percent of the vote and 397 seats in the 650-seat House of Commons. Labour won 27 percent and 209 seats. The Liberal Alliance won 25 percent, but only 23 seats. The disparity between vote percentage and seats won stems from the fact that the Alliance failed to come in first in more than 23 single-member districts. That's the plurality system. Hence, the Liberal Alliance wants "proportional representation." BY contrast, the rest of the world's democracies employ proportional representation. Parliamentary seats are allocated from "multi-member districts" in proportion to votes received by each party. A party need not come in "first" for any particular district to win seats. Because of this, proportional systems tend to be multiparty democracies. Proportional representation allows more pluralism and a freer market of ideas. Why settle for a political duopoly? The "plurality" system creates what economists call a "duopoly." If our electoral system were subject to antitrust laws, it would be thrown out as restrictive and anti-competitive. Americans would not accept an economic system that allowed them to buy cars from only two companies. Nor would we like it if we could choose from among only two airlines. Competition gives options. Why, then, should we have to settle for just two options in politics? With only two largely shopworn parties from which to choose, it's no wonder such a large portion of the American electorate decides not to participate. They aren't buying what the two parties are selling. Bring real competition to our electoral system. A healthy, self-confident democracy doesn't fear reform. Why not consider adopting a modified system of proportional representation? I propose a system of proportional representation for electing House members from multi-member districts (comprising entire states or subdivisions of states). Interestingly, such a shift would not require a constitutional amendment, since the Constitution does not mandate any particular electoral system. Because the Constitution stipulates just two senators from each state, it would be hard to elect the Senate along proportional lines. This change in House elections would spare most states from the torment of congressional redistricting, especially painful for states whose congressional delegations will shrink. In addition, proportional representation would obviate the need for court-imposed creation of "minority" congressional districts - districts whose boundaries are purposefully drawn so as to guarantee the election of a minority candidate. This requirement further distorts an already Kafkaesque, partisan nature of redistricting. Proportional representation would work best if accompanied by a long-overdue increase in House members. Americans don't realize that the House in the 1920s arbitrarily capped its own membership at 435. Prior to that democracy-limiting act, the House had regularly expanded its membership after every national census. The House grew from 65 members in 1790 to its current size of 435 in 1912. On a per capita basis, the House is one of among the world's smallest legislative bodies. By comparison, the British House of Commons has 650 members, and the French National Assembly has 577 deputies. We could also make the presidential election proportional by changing the Electoral College system from "winner take all" to one that allocates Electoral College votes in proportion to the popular vote in each state. Predicted results: There would be a proliferation of parties, greater voter turnout and citizen participation, and enhanced representation of minorities and women in Congress. Changing our electoral system would be the ultimate "Declaration of Independence," and would modernize our politics.