Post Classical Political Economy and the Future Economic Research and Public Policy Peter J. Boettke Econ 881/Spring May

Philosophy, Politics and Economics Politics Economics Philosophy

Main Points Broadening of the Discipline  The disciplinary circles in the 20 th and 21 st century Institutional Design and Evolution  Endogenous rules Policy questions  Rules of the Game  State Building

What is the Austrian Contribution to Modern Political Economy? Economic Calculation  Knowledge problem  Power problem Legal Theory  framework Political Philosophy  Rights theory and consequentialism (welfare theory)

Alternative Systems Pure Unhampered Market Economy  coherent Hampered Market Economy  inconsistent Socialist Economy  impossible

Paradox of the Unhampered Market Economy Voluntary Trade is Mutually Beneficial State is required to enforce property rights Enforcement of property rights for some requires the violation of the property rights of others  Is anarchism a viable alternative?

Anarchism as a historical idea in political philosophy and political economy Utopian  William Godwin, An Enquiry Concerning Political Justice (1793) Revolutionary  Mikhail Bakunin and the First International, Analytical  Rothbard (1973) Natural rights  Nozick (1974) Invisible hand explanation  Friedman (1973) Efficiency explanations  Buchanan (1975) Social contract theory

The Positive Political Economy of Anarchism Spontaneous Order and Reputation  Benson (1989)  Greif (1989) Development Problems  Dixit (2004)  Rajan (2004) International Trade  Leeson (2004) Predation and Social Order  Olson (1993), Shleifer, et. al. (2003)  Leeson (2004) Cooperation in Anonymity  Stringham (2003)  Leeson (2004)

Theories of When Self-Governance Can Occur Sociological Approach Mainstream Economic Approach Political Approach The requirements for successful self- governance Dense social ties Small groups Homogenous agents Low discount rates Delegation Low tax rates Government encourages sharing information

Mechanisms of Exclusion and Inclusion Discipline of Repeated Dealings  Tullock (1985) Exclusion of Cheaters  Stringham (2003) Inclusion of Strangers  Leeson (2004) We get much more cooperation in larger group settings with heterogeneous agents than strict adherence to game theory might suggest. Mechanisms of signaling and the communication of reputation can take place even in large anonymous settings provided that institutions are in place which ameliorate problems with cheating, e.g., E-Bay.