Towards a synthesis of theories of State failure

Abstract

This paper examines the three main categories of State intervention. Before approaching the analysis of intervention, I attempt to shed light on the forming of social choices and the decisions of State rulers. I show how market process and property rights solve problems pertaining to social choice, which in turn stems from the application of the majority rule in a democratic society. Along these lines I view how the State fails to regulate externalities, stabilize the economy and redistribute income. For this purpose the following research applies the theory of property rights, the theory of rational expectations and the theory of public choice respectively to each of the above problems. The conclusion points to a synthesis of these theories, offering a highly demonstrative categorical framework of critique against State intervention. The argument claims that independent non-collective institutions work better than State intervention. (JEL: P16, D72, H23)