Social Change Project

Dispute Resolution When Rationalities Conflict

In bringing economic analysis to bear on the settlement of legal disputes, it is commonly presumed that the parties to the dispute are governed by the principles of private property and so are residual claimants to their legal expenses. This institutional framework promotes a substantive rationality that is often conducive to the settlement of disputes without trial. In contemporary mixed economies, however, a political agency is often party to a dispute

Pope Francis' Condemnation of Capitalism Undercuts His Call to End Poverty

With Pope Francis' first visit to the United States just wrapping up, he leaves behind two contradictory positions. He touched on these contradictions in a speech to Congress last Thursday. Francis criticizes the evils of capitalism and its spirit of profit. Yet at the same time, he pushes for an end to poverty.

The Capacity for Self-Governance and Post-Disaster Resiliency

This paper examines how pre-disaster systems of self-governance aid in post-disaster community recovery. Our analysis focuses on the Mary Queen of Vietnam (MQVN) community and Gentilly, examines the effectiveness of their systems of self-governance prior to Hurricane Katrina and explores the role these systems played in promoting community recovery after the disaster.

The Costs of Conflict

Violent conflict destroys resources. It generates “destruction costs.” These costs have an important effect on individuals’ decisions to cooperate or conflict. We develop two models of conflict: one in which conflict's destruction costs are independent of individuals’ investments in “arms”—the tools of conflict—and another in which conflict's destruction costs depend on those investments. Our models demonstrate that when conflict's destruction costs are arms-dependent, conflict is more costly, making cooperation more likely.

Fearing Freedom: The Intellectual and Spiritual Challenge to Liberalism

The absence of dominion and discrimination in human relationships is a cardinal feature of a free and just society, according to James Buchanan. If classical liberals emphasized this benefit, they would help assuage the public’s fears about having to take on greater responsibilities if the welfare state were repealed.

Constitutional Craftsmanship and the Rule of Law

Is “rule of law” anything more than a fictional allusion? After all, “law” is an abstract noun, and abstract nouns can’t rule. Only people can rule. The conceptual framework of constitutional political economy invokes a central distinction between choosing rules and playing within those rules. Claims on behalf of a rule of law require a sharp distinction between the enforcement of agreed-upon rules and arbitrary changes in those rules. This paper explores whether there are constitutional arrangements under which it could reasonably be claimed that governance reflects a deep level operation of a rule of law despite the surface level recognition that it is men who rule. With the exercise of rulership being a social process and not a matter of individual action, the network pattern through which rules are enforced takes on particular significance. In particular, polycentric architectures are generally more consistent with rule of law than monocentric architectures.

Virgil Storr: Cultural Spirit Gives Rise to Economic Spirit

On Friday, Dec 16th, 2013, the American Enterprise Institute hosted a panel: "Shaping Society: The Intersection of Economics and Culture." Dr. Virgil Storr argues that every market is animated by economic spirits that affect economic outcomes, and that these spirits are cultural phenomena, giving the example of St. Bernard's Parish's recovery following Hurricane Katrina in 2005.

Taxation as a Quasi-Market Process: Explanation, Exhortation, and the Choice of Analytical Windows

This paper identifies two broad strands of fiscal theorizing which date back to the late 19th century in the persons of Knut Wicksell (1896) and Francis Edgeworth (1897). From Edgeworth descends the treatment of public finance as a branch of applied statecraft, as conveyed these days largely through notions of optimal taxation. From Wicksell descends the treatment of public finance as offering explanations for observed patterns of collective activity. These two branches are not so much antagonistic as they are non-commensurable. The explanatory branch, moreover, is underdeveloped in comparison with the hortatory branch, and this paper seeks to sketch some contours for an explanatory theory of collective activity, paying particular attention to the American fiscal context.

The Failed Appropriation of F.A. Hayek by Formalist Economics

Despite purporting to have appropriated Hayek’s thought by acknowledging the information-transmitting role of prices, mainstream economists have missed Hayek’s point. The predominant tool of formal economics—equilibrium analysis—begins by assuming the data held by actors to have been pre-reconciled, and so evades the problem to be solved. Even the more advanced tools for modeling knowledge in economic analysis, such as the economics of information, assume away either the subjectivism of knowledge and expectations (rendering the coordination of beliefs and plans a trivial matter) or the frictions and “imperfections” of reality (rendering the coordination problem indeterminate).

Payday Lending, Bank Overdraft Protection, and Fair Competition at the Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is considering new regulation of payday lending and bank overdraft protection. In this paper, the authors argue that as the CFPB considers new regulation of these products, it should be careful to regulate them similarly to preserve fair competition.

What Should Classical Liberal Political Economists Do?

In 1964 James Buchanan famously asked “What Should Economists Do?” He argued that economists should focus their intellectual attention on exchange and the institutions within which exchange takes place. This paper reflects on Buchanan’s message and looks at the development of that argument, and its implications in the wake of post-socialist political economy on the one hand, and the post-financial crisis of 2008 on the other.

Dynamics among Nations

Liberal internationalism has been the West’s foreign policy agenda since the Cold War, and the West has long occupied the top rung of a hierarchical system. In this book, Hilton Root argues that international relations, like other complex ecosystems, exists in a constantly shifting landscape, in which hierarchical structures are giving way to systems of networked interdependence, changing every facet of global interaction. Accordingly, policymakers will need a new way to understand the process of change. Root suggests that the science of complex systems offers an analytical framework to explain the unforeseen development failures, governance trends, and alliance shifts in today’s global political economy.

Legal Centralization and the Birth of the Secular State

This article investigates the relationship between the historical process of legal centralization and increased religious toleration by the state. We develop a model based on the mathematics of mixture distributions which delineates the conditions under which legal centralization raises the costs faced by states of setting a narrow standard of orthodox belief. We compare the results of the model with historical evidence drawn from two important cases in which religious diversity and state centralization collided in France: the Albigensian crusades of the thirteenth century and the rise of Protestant belief in the sixteenth century.

Game Theory and the Architecture of Social Theory

This essay is written for a symposium on Luigino Bruni’s The Genesis and Ethos of the Market. That book identifies a tradition of Neapolitan civil economy that arose in the 18th century, and which the author opposes to the more familiar tradition of Smithian political economy. The difference in traditions is located in contrasting theories of society in which markets are situated.

American Federalism: How Well Does It Support Lady Liberty?

Democratic governments can be either national or federal in form. Whether the form of democracy matters, how it matters if, indeed, it does matter, and for whom it might matter are the types of questions this paper explores. Federalism is generally described as a pro-liberty form of government. Yet it is surely reasonable to wonder how the presence of two sources of political power within the same territory can be more favorable to liberty than when there is but a single source. It turns out that the pro-liberty quality of federalism is a possible but not a necessary feature of federalism. This essay explores this two-edged quality of federalism to discern more clearly the relation between federalism and liberty.