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Austrian Theory and Economic Organization pp 147–174Cite as

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Eliminating the Perceived Legitimacy of the State

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Abstract

Where does the state come from and can it be instructed to act as an agent of the public? According to contractarians such as James Buchanan (1975), a constitutionally constrained state is summoned when a populace joins together and draws up guidelines for state activity. Behind a veil of uncertainty people do not know where they will end up, so they will agree to form a state that will make everyone better off. When faced with a choice of chaos without a state and order with a state, people will choose the latter (Grossman 2002; North, and Thomas 1973). Mueller (2003) describes the process of agreeing to live under a state as fundamentally similar to people joining a club. People select the rules by which they wish to be governed just as club members select the rules of their club. They select the rules for themselves and for those who will administer the state. Whether the issue is eliminating prisoners’ dilemmas or solving other collective action problems, the state is instructed to work as an agent on behalf of the public (North 1990; Olson 1965).

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Miles, C.J., Stringham, E.P. (2014). Eliminating the Perceived Legitimacy of the State. In: Austrian Theory and Economic Organization. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137368805_7

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