The State as a Firm: Economic Forces in Political Development PDF
Preview The State as a Firm: Economic Forces in Political Development
THE STATE AS A FIRM STUDIES IN PUBLIC CHOICE Gordon Tullock, Editor Virginia Polytechnic Institute and State University Other volumes in the series: Buchanan, J., Wagner, R. E., Fiscal Responsibility in Constitutional Democracy, 1978, Number I McKenzie, R. E.; The Political Economy of the Educational Process, 1979, Number 2 This series, STUDIES IN PUBLIC CHOICE, like the journal Public Choice, is devoted to an important aspect of the interaction between the disciplines of economics and political science; it uses economic methods of analysis on matters which are traditionally political. These publications are attempting to further the growth of knowl edge in this intersection of the social sciences. THE STATE AS A FIRM Economic Forces in Political Development RICHARD D. AUSTER University of Arizona MORRIS SILVER The City Col/ege of the City University, New York GMartinus Wijhoff Publishing Boston/The Hague/London Distributors for North America: Martinus Nijhoff Publishing K1uwer Boston, Inc. 160 Old Derby Street Hingham, Massachusetts 02043 Distributors outside North America: K1uwer Academic Publishers Group Distribution Centre P.O. Box 322 3300 AH Dordrecht, The Netherlands Library of Congress Cataloging in Publication Data Auster, Richard D The State as a firm. (Studies in public choice; v. 3) Bibliography: p. Includes index. 1. State, The-Economic aspects. I. Silver, Morris, joint author. II. Title. III. Series. JA77.A94 320.1 79-11950 ISBN-13: 978-94-011-7629-3 e-ISBN-13: 978-94-011-7627-9 DOl: 10.1007/978-94-011-7627-9 Copyright © 1979 by Martinus Nijhoff Publishing, Boston Softcover reprint of the hardcover 1st edition 1979 No part of this book may be reproduced in any form by print, photoprint, microfilm or any other means, without written permission from the publisher. To Morris' wife Sondra for her patience and encourage ment and to our parents for wisdom and compassion PREFACE We seem to be witnessing the rebirth of the concept of an integrated social science, a complete theory of human action and interaction in all its ramifica tions and complications. What we call society is simply the totality of human exchange. Economics is a theory of human exchange of certain types. Although the qualities of what is being exchanged as well as the conditions of exchange may vary, economic theory has recently broadened its scope sufficiently to begin to be general enough to handle these problems as well. In the present work we attempt to see what insights are revealed by the application of economic categories to political history. We feel there are many. At this point Silver stops.! Auster continues. A quick spin around the "policy" block in the new model so to speak, hence Chapter 8. For the rest, however, this is truly a joint work. The authors' names appear in alphabetical order. After 12 years of professional asso ciation, claims to precedence in origination could too clearly be self-deception. ! Silver is even more pessimistic than Auster, in particular about which types of reforms will be accepted. With the rise to affluence of most members of our society the mass itself has become concerned with political reform as almost a new form of entertainment. Unfor tunately, they have no idea how to improve matters. In a sense, then, Auster hopes they will learn from the reforms suggested in this book while Silver sees that as unlikely. vii viii PREFACE Our early work was on the theory of the internal nature of the firm. Then we became interested in the issues raised by the existence of collective (or public) goods. Soon thereafter these two areas of interest, together with our belief that economic theory provides a basis for the understanding of all social behavior, merged to produce the research presented here. We are indebted to numerous fellow workers in the renaissance field of public choice. They have both inspired us with their own work and been generous enough to devote their time to providing us with comments on earlier drafts. We have learned much from professional interaction. In particular we would like to thank Bairey, Buchanan, Denzau, Galatin, Horn, Niskanen, McCain, Murphy, Smith, Tullock, and Thurow. We would also like to thank the various somewhat underpaid secretaries in the University of Arizona's Department of Economics and its Division of Economic and Business Research, who have put up with our typing and retyping requests. We also wish to express our gratitude to Brooke Cad- wallader whose generosity funded the opening phases of our work on this prob lem. Finally, B. Sears is to be especially thanked for her editorial efforts on behalf of whatever technical writing finesse appears. CONTENTS Preface vii Introduction Part I A MULTIDIMENSIONAL ECONOMIC THEORY OF GOVERNMENTS The State as a Service Firm, the Production of Order 5 2 Theories of the Emergence of States 15 3 The Sizes of States 27 4 The Qualities of State Activity 43 Part II THE PROBLEM OF GOVERNMENT 5 The Monopoly State 55 ix x CONTENTS 6 Democracy, the Corporate State 69 7 Democracy as a Consumer Good 89 8 Experimental Remedies: Some Preposterous Proposals 96 Appendixes I Entrepreneurship, Profit, and Limits on Firm Size 111 II Political Revolution and Repression: An Economic Approach 116 III The GPITPC and Institutional Entropy 127 List of References 135 Notes 150 Indexes 174 THE STATE AS A FIRM
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