Abstract
The institutions of government are the product of exchange. Individuals perceive opportunities to enhance their welfare by bargaining with others to agree to an institutional structure which provides a well-defined and stable set of rules under which individuals interact. The product of this agreement is a constitution, and the preceding chapters discussed why it is in the interests of individuals to participate in the bargaining process, what terms of agreement would be expected to be found in the resulting constitution, and gave a broad outline explaining how the government produced by the constitution would be expected to operate. For the most part, the analysis was positive in nature, describing how agreement takes place and what emerges from agreement, without passing judgment on the desirability of the resulting agreement. The last several chapters, however, extended the positive analysis to normative issues in an attempt to determine how individuals might identify desirable institutions and constitutional rules.
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Notes
See, for example, Murray N. Rothbard, For a New Liberty (New York: Macmillan, 1973).
Harold Demsetz, “Why Regulate Utilities?” Journal of Law & Economics 11 (1968), pp. 55–65.
Gordon Tullock, “Entry Barriers in Politics,” American Economic Review 55, No. 2 (March 1965), pp. 458–466, develops a model along the lines of Demsetz’s, which describes a process of competition for the right to be the monopoly supplier of legislation.
Harold M. Hochman and James D. Rodgers, “Pareto Optimal Redistribution,” American Economic Review 59 (September 1969), pp. 542–557, make this argument with regard to income redistribution policies.
Knut Wicksell, “A New Principle of Just Taxation” (1896), pp. 72–118
in Richard A. Musgrave and Alan T. Peacock, eds., Classics in the Theory of Public Finance. New York: St. Martin’s Press. 1967.
This might not be true if the government did not expect to be in power long. Cases like this are discussed in an insightful manner by Margaret Levi, Of Rule and Revenue (Berkeley: University of California Press, 1988).
See Randall G. Holcombe, “Barriers to Entry and Political Competition,” Journal of Theoretical Politics 3, No. 2 (April 1991), pp. 231–240, for further development of this theme.
For a further discussion along these lines, see Glenn R. Parker, “Looking Toward Reelection: Revising Assumptions About the Factors Motivating Congressional Behavior,” Public Choice 63, No. 3 (December 1989), pp. 237–252.
See also Randall G. Holcombe, “A Note on Seniority and Political Competition,” Public Choice 61, No. 3 (1989). pp. 285–288.
The perception of political exchange in this way is largely attributable to James M. Buchanan and Gordon Tullock, The Calculus of Consent (Ann Arbor: University of Michigan Press, 1962).
This statement is nothing more than an application of the Coase theorem, developed by Ronald H. Coase, “The Problem of Social Cost,” Journal of Law & Economics 3 (October 1960), pp. 1–44.
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© 1994 Randall G. Holcombe
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Holcombe, R.G. (1994). Conclusion. In: The Economic Foundations of Government. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-13230-0_13
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DOI: https://doi.org/10.1007/978-1-349-13230-0_13
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