Pub Date : 2023-08-28DOI: 10.1332/251569121x16902649893380
D. Hebert, Leonid Krasnozhon
We use public choice theory to examine the calculus of the Russian aggression against Ukraine. We hypothesize that Putin’s regime acts as a tinpot dictatorship, using political loyalty and repression to stay in office. During Putin’s first two-term presidency, an improvement in Russia’s economic performance increased the supply of political loyalty and resulted in a slow fall in political repression. The global financial crisis deteriorated Russians’ living standards between Putin’s second and third terms in office. The deterioration in the country’s economic performance unambiguously resulted in a fall in the supply of loyalty and increased repression. Consistent with our hypothesis, we argue that Putin’s regime pursued military conquest to increase the aggregate supply of political loyalty.
{"title":"Public choice economics of the Ukraine crisis","authors":"D. Hebert, Leonid Krasnozhon","doi":"10.1332/251569121x16902649893380","DOIUrl":"https://doi.org/10.1332/251569121x16902649893380","url":null,"abstract":"We use public choice theory to examine the calculus of the Russian aggression against Ukraine. We hypothesize that Putin’s regime acts as a tinpot dictatorship, using political loyalty and repression to stay in office. During Putin’s first two-term presidency, an improvement in Russia’s economic performance increased the supply of political loyalty and resulted in a slow fall in political repression. The global financial crisis deteriorated Russians’ living standards between Putin’s second and third terms in office. The deterioration in the country’s economic performance unambiguously resulted in a fall in the supply of loyalty and increased repression. Consistent with our hypothesis, we argue that Putin’s regime pursued military conquest to increase the aggregate supply of political loyalty.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2023-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48321387","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-31DOI: 10.1332/251569121x16872942837731
Aris Trantidis
With this article, I present a public choice perspective on Russia’s war on Ukraine. I criticise the realist view according to which Russia’s security concerns, defined by President Putin, prompted the conflict. I argue that realism offers a deficient analytic framework to the extent that it disregards the political and economic structure of Russia and, generally speaking, how the political economy of each case study shapes preferences, strategies and intra-elite relations, which feed into foreign policy formation. Russia is a government-controlled economy and society; a key property of Russia’s political economy is the dependency of key socio-economic actors and groups on the regime’s survival. This landscape pre-empts the expression of genuine feedback and dissent from society, and explains why Putin’s decision has faced very little disagreement and resistance. Given the previously close economic ties between Russia and Ukraine, this article also challenges capitalist peace theory for its blanket assertion that dense economic relations would provide a strong disincentive for countries to resort to war. Instead of talking about capitalism generically, we can discern varieties of capitalism, as they condition state–society relations differently. In Russia, the value that key socio-economic elites assign to their relationship with Putin outweighs the costs they are experiencing from the conflict and the external sanctions. Developing a public choice perspective in the study of international relations focuses on the preferences and strategies of the leadership and of domestic elite-level actors within the aggressor state, and invites attention to the power asymmetries that characterise their relationship.
{"title":"Introducing public choice in international relations: the Russian invasion of Ukraine","authors":"Aris Trantidis","doi":"10.1332/251569121x16872942837731","DOIUrl":"https://doi.org/10.1332/251569121x16872942837731","url":null,"abstract":"With this article, I present a public choice perspective on Russia’s war on Ukraine. I criticise the realist view according to which Russia’s security concerns, defined by President Putin, prompted the conflict. I argue that realism offers a deficient analytic framework to the extent that it disregards the political and economic structure of Russia and, generally speaking, how the political economy of each case study shapes preferences, strategies and intra-elite relations, which feed into foreign policy formation. Russia is a government-controlled economy and society; a key property of Russia’s political economy is the dependency of key socio-economic actors and groups on the regime’s survival. This landscape pre-empts the expression of genuine feedback and dissent from society, and explains why Putin’s decision has faced very little disagreement and resistance. Given the previously close economic ties between Russia and Ukraine, this article also challenges capitalist peace theory for its blanket assertion that dense economic relations would provide a strong disincentive for countries to resort to war. Instead of talking about capitalism generically, we can discern varieties of capitalism, as they condition state–society relations differently. In Russia, the value that key socio-economic elites assign to their relationship with Putin outweighs the costs they are experiencing from the conflict and the external sanctions. Developing a public choice perspective in the study of international relations focuses on the preferences and strategies of the leadership and of domestic elite-level actors within the aggressor state, and invites attention to the power asymmetries that characterise their relationship.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2023-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49528581","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-12DOI: 10.1332/251569121x16827529522153
G. Dempster, R. Ekelund, M. Thornton
The October Revolution in Russia is better understood in light of Gordon Tullock’s by-product theory of revolution. This approach entails a focus on private costs and benefits rather than on public goods. It is shown that in terms of economic development, fiscal stability, and income distribution, that is, public goods, conditions in late-tsarist Russia were improving, not deteriorating, as the revolution approached. We reinterpret the impact of the many political concessions that followed the earlier Russian Revolution of 1905 and conclude that they had ultimately increased, rather than decreased, the probability of revolution. Finally, we show that various forms of foreign intervention (financial, military, and philosophical) made the unlikely Lenin the ultimate victor in the outcome of the Russian Revolution.
{"title":"Understanding the timing and outcome of the Russian Revolution: a public choice approach","authors":"G. Dempster, R. Ekelund, M. Thornton","doi":"10.1332/251569121x16827529522153","DOIUrl":"https://doi.org/10.1332/251569121x16827529522153","url":null,"abstract":"The October Revolution in Russia is better understood in light of Gordon Tullock’s by-product theory of revolution. This approach entails a focus on private costs and benefits rather than on public goods. It is shown that in terms of economic development, fiscal stability, and income distribution, that is, public goods, conditions in late-tsarist Russia were improving, not deteriorating, as the revolution approached. We reinterpret the impact of the many political concessions that followed the earlier Russian Revolution of 1905 and conclude that they had ultimately increased, rather than decreased, the probability of revolution. Finally, we show that various forms of foreign intervention (financial, military, and philosophical) made the unlikely Lenin the ultimate victor in the outcome of the Russian Revolution.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2023-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41501291","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-07DOI: 10.1332/251569121x16830188499713
Vincent Geloso, Marcus Shera
Buchanan and Wagner pointed to an asymmetry in the political rewards of deficits and surpluses, with the former being preferable to the latter. They assigned the rise of this asymmetry to the popularization of Keynesian ideas. We test both claims by relying on the historical reputation surveys of US presidents since 1948. Historical reputations have long been something presidents have cared about, and they constitute a reliable way to assess whether their reputations suffer or gain from having run deficits. We find evidence that the size of deficits tends to be associated with greater presidential scores and that this effect is stronger in more recent surveys, when Keynesian ideas were more popular.
{"title":"Presidents in deficit: are there historical rewards to deficits?","authors":"Vincent Geloso, Marcus Shera","doi":"10.1332/251569121x16830188499713","DOIUrl":"https://doi.org/10.1332/251569121x16830188499713","url":null,"abstract":"Buchanan and Wagner pointed to an asymmetry in the political rewards of deficits and surpluses, with the former being preferable to the latter. They assigned the rise of this asymmetry to the popularization of Keynesian ideas. We test both claims by relying on the historical reputation surveys of US presidents since 1948. Historical reputations have long been something presidents have cared about, and they constitute a reliable way to assess whether their reputations suffer or gain from having run deficits. We find evidence that the size of deficits tends to be associated with greater presidential scores and that this effect is stronger in more recent surveys, when Keynesian ideas were more popular.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135363576","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-24DOI: 10.1332/251569121x16817386486785
Oumarou Zallé
Addressing growth challenges in developing countries requires mobilising domestic resources in the face of declining external financing. This paper explores the effects of financial inclusion on tax efforts in sub-Saharan Africa, conditioned by institutional quality. To do this, a finite mixture model that takes into account the potential presence of unobserved heterogeneity was estimated based on a sample taken from 43 countries over the 1996 -2019 period. Tax effort scores were constructed using several stochastic frontier models. The results show that the impact of financial inclusion on tax efforts differs across country groups. For example, financial inclusion stimulates tax effort in sub-Saharan Africa in 93.8 per cent of cases and inhibits tax effort in only 6.2 per cent of cases. These results are robust to several sensitivity tests. This paper highlights the need for countries in sub-Saharan Africa to improve access to financial systems by increasing mobile banking coverage and accessibility and reducing financial services costs. These countries should also look to capitalise on the benefits of financial inclusion by protecting political rights and fighting corruption.
{"title":"Financial inclusion and tax effort in sub-Saharan Africa: the role of institutional quality","authors":"Oumarou Zallé","doi":"10.1332/251569121x16817386486785","DOIUrl":"https://doi.org/10.1332/251569121x16817386486785","url":null,"abstract":"Addressing growth challenges in developing countries requires mobilising domestic resources in the face of declining external financing. This paper explores the effects of financial inclusion on tax efforts in sub-Saharan Africa, conditioned by institutional quality. To do this, a finite mixture model that takes into account the potential presence of unobserved heterogeneity was estimated based on a sample taken from 43 countries over the 1996 -2019 period. Tax effort scores were constructed using several stochastic frontier models. The results show that the impact of financial inclusion on tax efforts differs across country groups. For example, financial inclusion stimulates tax effort in sub-Saharan Africa in 93.8 per cent of cases and inhibits tax effort in only 6.2 per cent of cases. These results are robust to several sensitivity tests. This paper highlights the need for countries in sub-Saharan Africa to improve access to financial systems by increasing mobile banking coverage and accessibility and reducing financial services costs. These countries should also look to capitalise on the benefits of financial inclusion by protecting political rights and fighting corruption.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2023-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46832772","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-04DOI: 10.1332/251569121x16801683769931
I. Bischoff, Aleksandra Wimberger
We link the literature on social media adoption among local governments to the literature on local public finance. We argue that the demand for social media adoption is higher the more citizens knowingly contribute to the local budget through local salient taxes. We test this hypothesis using panel data on municipalities in the German state of Hesse and their adoption of Facebook between 2009 and 2019. We show that social media adoption among local governments in Germany is driven by citizens’ demand for transparency, accountability and political participation. This demand increases the more citizens knowingly contribute to the local budget through salient local taxes. This article shows that exploring the link between issues of local public finance and political communication via social media can deepen our understanding of local public affairs.
{"title":"Local land taxes and social media adoption in local governments: evidence from the German state of Hesse","authors":"I. Bischoff, Aleksandra Wimberger","doi":"10.1332/251569121x16801683769931","DOIUrl":"https://doi.org/10.1332/251569121x16801683769931","url":null,"abstract":"We link the literature on social media adoption among local governments to the literature on local public finance. We argue that the demand for social media adoption is higher the more citizens knowingly contribute to the local budget through local salient taxes. We test this hypothesis using panel data on municipalities in the German state of Hesse and their adoption of Facebook between 2009 and 2019. We show that social media adoption among local governments in Germany is driven by citizens’ demand for transparency, accountability and political participation. This demand increases the more citizens knowingly contribute to the local budget through salient local taxes. This article shows that exploring the link between issues of local public finance and political communication via social media can deepen our understanding of local public affairs.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41692544","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-17DOI: 10.1332/251569121x16795569226712
Yahya Alshamy, Christopher J. Coyne, Nathan P. Goodman, Garrett Wood
Contrary to predictions by many experts, Ukraine’s military has been resilient in the face of the Russian government’s invasion. Drawing on the logic of polycentric defense, this article helps explain how Ukraine has remained resistant against a conventionally more powerful adversary. We argue that polycentric defense in Ukraine has four benefits that aid counteroffensive efforts against invasion. First, polycentric defense facilitates the use of local and context-specific knowledge. Second, it permits competition, experimentation, and flexibility. Third, it reduces single-point failure vulnerabilities. Fourth, it encourages a wide variety of individuals to join the armed forces and contribute to the war effort. We present evidence of the benefits of polycentric defense in the context of the ongoing war in Ukraine.
{"title":"Polycentric defense, Ukraine style: explaining Ukrainian resilience against invasion","authors":"Yahya Alshamy, Christopher J. Coyne, Nathan P. Goodman, Garrett Wood","doi":"10.1332/251569121x16795569226712","DOIUrl":"https://doi.org/10.1332/251569121x16795569226712","url":null,"abstract":"Contrary to predictions by many experts, Ukraine’s military has been resilient in the face of the Russian government’s invasion. Drawing on the logic of polycentric defense, this article helps explain how Ukraine has remained resistant against a conventionally more powerful adversary. We argue that polycentric defense in Ukraine has four benefits that aid counteroffensive efforts against invasion. First, polycentric defense facilitates the use of local and context-specific knowledge. Second, it permits competition, experimentation, and flexibility. Third, it reduces single-point failure vulnerabilities. Fourth, it encourages a wide variety of individuals to join the armed forces and contribute to the war effort. We present evidence of the benefits of polycentric defense in the context of the ongoing war in Ukraine.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136021710","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.1332/251569121x16717078287437
Daniel Kuehn
This article explores James M. Buchanan’s contributions to urban economics and urban public finance. Buchanan never self-identified as an ‘urban economist’, so his contributions to the field have blended into his broader body of work on public finance and externalities. However, in a series of papers in the 1960s and 1970s, Buchanan developed an urban fiscal club framework for thinking about urban problems that he used to analyse cities’ tax policy and the negative externalities of congestion, crime and pollution. By drawing out those ideas and their relation to each other, we can reconstruct Buchanan as an urban economist. This reconstruction casts new light on Buchanan’s service with several academic and federal urban policy commissions, including the Committee on Urban Public Expenditures and Richard Nixon’s Task Force on Urban Affairs and Task Force on Model Cities. Buchanan’s interest in urban economics has roots in an often-ignored member of his dissertation committee, Harvey Perloff. Perloff’s joint appointment with the Chicago Planning Program brought Buchanan into contact with several urban planners and urban economists who would continue to engage him in urban policy work throughout his career.
{"title":"James M. Buchanan as an urban economist","authors":"Daniel Kuehn","doi":"10.1332/251569121x16717078287437","DOIUrl":"https://doi.org/10.1332/251569121x16717078287437","url":null,"abstract":"This article explores James M. Buchanan’s contributions to urban economics and urban public finance. Buchanan never self-identified as an ‘urban economist’, so his contributions to the field have blended into his broader body of work on public finance and externalities. However, in a series of papers in the 1960s and 1970s, Buchanan developed an urban fiscal club framework for thinking about urban problems that he used to analyse cities’ tax policy and the negative externalities of congestion, crime and pollution. By drawing out those ideas and their relation to each other, we can reconstruct Buchanan as an urban economist. This reconstruction casts new light on Buchanan’s service with several academic and federal urban policy commissions, including the Committee on Urban Public Expenditures and Richard Nixon’s Task Force on Urban Affairs and Task Force on Model Cities. Buchanan’s interest in urban economics has roots in an often-ignored member of his dissertation committee, Harvey Perloff. Perloff’s joint appointment with the Chicago Planning Program brought Buchanan into contact with several urban planners and urban economists who would continue to engage him in urban policy work throughout his career.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136121333","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Efforts supporting domestic revenue mobilisation in developing countries are often designed and evaluated based on empirical indicators, such as ratios of revenue to gross domestic product, which capture differences in achieved outcomes across countries. This article studies a complementary approach that also takes into account differences in countries’ fundamental economic structures associated with different capacities to raise revenue, which are not captured by simple ratios of revenue to gross domestic product. Non-parametric data envelopment analysis is applied to estimate domestic revenue potential in a panel of 118 low- and middle-income countries from 2008 to 2019. This approach provides a data-driven measure of how efficient each country is in raising domestic revenue given its national economic conditions. The results indicate that countries’ relative efficiencies do not exhibit the same strongly positive correlation with income levels as typically observed for ratios of revenue to gross domestic product. Instead, countries with low efficiency are spread across all income groups and geographical regions. This suggests that looking solely at ratios of revenue to gross domestic product might be misleading for drawing policy and normative conclusions about how much more revenue a country should aim to raise. Finally, panel regression analysis is used to investigate the extent to which international support is targeted at countries with larger untapped revenue potential.
{"title":"Measuring untapped revenue potential in developing countries: cross-country frontier and panel data analysis","authors":"Željko Bogetić, Dominik Naeher, Raghavan Narayanan","doi":"10.1332/251569121x16613592544147","DOIUrl":"https://doi.org/10.1332/251569121x16613592544147","url":null,"abstract":"Efforts supporting domestic revenue mobilisation in developing countries are often designed and evaluated based on empirical indicators, such as ratios of revenue to gross domestic product, which capture differences in achieved outcomes across countries. This article studies a complementary approach that also takes into account differences in countries’ fundamental economic structures associated with different capacities to raise revenue, which are not captured by simple ratios of revenue to gross domestic product. Non-parametric data envelopment analysis is applied to estimate domestic revenue potential in a panel of 118 low- and middle-income countries from 2008 to 2019. This approach provides a data-driven measure of how efficient each country is in raising domestic revenue given its national economic conditions. The results indicate that countries’ relative efficiencies do not exhibit the same strongly positive correlation with income levels as typically observed for ratios of revenue to gross domestic product. Instead, countries with low efficiency are spread across all income groups and geographical regions. This suggests that looking solely at ratios of revenue to gross domestic product might be misleading for drawing policy and normative conclusions about how much more revenue a country should aim to raise. Finally, panel regression analysis is used to investigate the extent to which international support is targeted at countries with larger untapped revenue potential.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135945655","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-03-29DOI: 10.1332/251569121x16571976613141
Barry R. Weingast
Does liberty matter for economics? To address this question, I distinguish among three different types of liberty: Adam Smith’s, the neoclassical, and the so-called “classical liberal.” They differ in that the neoclassical and the classical liberal perspectives presume the existence, typically without noting it, of the four conditions that comprise the foundation of liberty, namely, secure property rights, enforcement of contracts, absence of government predation, and security. In contrast, Adam Smith sought to explain these foundations. In this article—an extraliterary review of one of the central themes of Acemoglu and Robinson (2019)—I draw the implications of Smith’s approach, and I explain why neoclassical economics—which takes the foundations of liberty as given—is unable to understand the work of Smith on this topic and, hence, on economic development. I also show that the neoclassical and the classical liberal approaches rest on a foundation of magic: they both presume the foundational conditions just noted but fail to explain how they arise. Put simply, the neoclassical approach has no explanation for the origin of liberty or of the mechanisms that sustain it. If markets require the four conditions of the foundation of liberty, then a complete explanation of the origin and development of markets must include an explanation of how these conditions come to hold. The Smithian economic perspective is especially important for today’s developing countries, most of which, at best, struggle to create the four foundational assumptions of liberty.
{"title":"Liberty and the neoclassical fallacy","authors":"Barry R. Weingast","doi":"10.1332/251569121x16571976613141","DOIUrl":"https://doi.org/10.1332/251569121x16571976613141","url":null,"abstract":"Does liberty matter for economics? To address this question, I distinguish among three different types of liberty: Adam Smith’s, the neoclassical, and the so-called “classical liberal.” They differ in that the neoclassical and the classical liberal perspectives presume the existence, typically without noting it, of the four conditions that comprise the foundation of liberty, namely, secure property rights, enforcement of contracts, absence of government predation, and security. In contrast, Adam Smith sought to explain these foundations. In this article—an extraliterary review of one of the central themes of Acemoglu and Robinson (2019)—I draw the implications of Smith’s approach, and I explain why neoclassical economics—which takes the foundations of liberty as given—is unable to understand the work of Smith on this topic and, hence, on economic development. I also show that the neoclassical and the classical liberal approaches rest on a foundation of magic: they both presume the foundational conditions just noted but fail to explain how they arise. Put simply, the neoclassical approach has no explanation for the origin of liberty or of the mechanisms that sustain it. If markets require the four conditions of the foundation of liberty, then a complete explanation of the origin and development of markets must include an explanation of how these conditions come to hold. The Smithian economic perspective is especially important for today’s developing countries, most of which, at best, struggle to create the four foundational assumptions of liberty.","PeriodicalId":53126,"journal":{"name":"Journal of Public Finance and Public Choice","volume":null,"pages":null},"PeriodicalIF":0.3,"publicationDate":"2023-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45578774","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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