Public Finance Without Taxation: Free-Riding as Institutional Artifact

Expositions of the theory of public finance mostly wrongly assume that taxation is necessary to finance public goods. Taxation isn't necessary to finance public goods because free riding is an institutional artifact of the analytical dichotomy between public and private goods, which prevents recognition of social interaction through the institutions of civil society. Free riding is also abetted through the particular institutional presumption that public goods must be provided by collective entities that operate without alienable ownership. Free riding is a product of a particular institutional arrangement and is not a universal quality of societal living together. There is a deep similarity between cities and such entities as hotels and malls which supply public goods without taxation. Center stage in the theory of public finance can alternatively be occupied by the social organization of shared consumption, with taxation relegated to side show status.