Public Choice School Research Articles

머레이 라스바드가 공공선택학에 던지는 함의

Public Choice School and Austrian School of Economics share some common ground but also show differences. This article collects on how Rothbard views the basic logic on Public Choice. Although some fragmented critiques by Austrians on Public Choice appeared, the comprehensive studies on them were rare. This article collected and summarized such critiques by Rothbard on Public Choice. Rothbard points out that there is the nub of the distinction between State and market. On the market, all parties gain and benefit from market actions, whereas, in State action, the gains of one group can only be at the expense of others. However, Buchanan and Tullock's concept in their book would obliterate the most vital distinction between State and market activity. Therefore, Rothbard points out that assimilating government to private actions is totally wrong, and such result indicates that there is no room of public choice theory based on Buchanan and Tullock's book. The critiques by Rothbard would be a useful ground for stimulating Public Choice Theorists to improve and/or reflect the validity of their research topics and methodology.

아마르티아 센의 파레토적 자유주의 불가능성에 대한 공공선택학파의 반론

Kenneth’s Arrow Impossibility Theorem revealed dismal prospect to democracy, Amartya Sen’s Impossibility Theorem of Paretian Libertarianism provoked deep pessimism to Libertarianism. This paper synthesize critique by Public Choice School on Sen’s theorem comprising three points. Firstly, Sen misunderstood individuals as picking ‘social states’, which he regarded as complete description of society including all individual positions on it. Actually, however, individuals just choose particular aspect. Secondly, Sen’s impossibility basically comes from externality of individual’s preference. Public Choice scholars revealed, by designing proper game model under externality, Pareto optimality comes along with libertarian choice. Thirdly, Sen’s Impossibility Theorem is just short-term equilibrium showing contradiction between Pareto principle and Libertarian principle. Buchanan proves that paradox can be resolved through mutual coordination between individuals who are under Paretian inferior equilibrium. This paper suggests some implication as follows. Firstly, Libertarianism in Sen’s sense is far from normal meaning of liberty. Without proper conceptual modification, his theorem needs to be renamed. Secondly, If Sen’s Impossibility Theorem under U-condition can never exclude some cases in which two principles can coexist, then his theorem can be renamed as “Impossibility of Sen’s Impossibility of Paretian Libertarianism”. Thirdly, Public Choice theorists properly proved Paretian Libertarianism is possible, showing Sen exaggerated the paradox. Then, as Arrow’s theorem can be interpreted as ‘Possibility’ Theorem, considering substantial stability of actual collective choice situation, Sen’s theorem also can be re-interpreted as ‘Possibility’ Theorem of Paretian Libertarianism. Two camps needs to confront each other again towards the empirical proof on it.

Understanding the paradox between tragedies of the commons and the anticommons: From a cognitive psychology perspective.

The tragedy of the commons refers to the overuse of resources which are rival in consumption but lack excludability and it also refers to rent dissipation. While the tragedy of the anticommons is a tragedy closely connected with underuse of resources that are rival in consumption and with too strong excludability. The prior studies proved that the tragedy of the commons and the tragedy of the anticommons are symmetric from the perspective of pure mathematics, especially the game theory, which was later refuted by behavioral economics experiments. According to them, the tragedy of the anticommons is severer than the tragedy of the commons. The asymmetry of the tragedy of the commons and the tragedy of the anticommons is a paradox by these different research methods. This paradox shows that there are imperfections in the completely rational economic man hypothesis set up by neoclassical economics. As a fundamental theory, the tragedy of the commons is quite influential in many disciplines, such as microeconomics, public sector economics, ecological economics, environmental economics, management, sociology, property law, and political science. And the tragedy of the anticommons theory has also opened its door of both theoretical research and practical implications since its acceptance by Nobel laureate Buchanan, the main founder of public choice school. Only when theoretical issues are thoroughly discussed and made clear enough, can people avoid misunderstanding or misusing the commons theory. Thus, it is necessary to elucidate the paradox between them. Based on Simon’s bounded rationality, Kahneman and Tversky’s prospect theory, value function, Thaler’s mental accounting, endowment effect, and other cognitive psychological tools, this study clearly shows that agents’ decision-making process is not just based on the long-believed marginal benefit and marginal cost analysis advocated by traditional neoclassical economists. Agents’ decision-making is a process in which agents selectively absorb, code the objective marginal revenue and marginal cost, and feed relevant information to their brain. Therefore, what plays a directly decisive role is not the objective marginal revenue and marginal cost per se, but the mentally perceived subjective utility of marginal revenue and marginal cost by the human brain. Followed by this research clue, the paradox between the tragedy of the commons and the tragedy of the anticommons is elucidated from the perspective of cognitive psychology.

The Public Choice Analysis of Market Failures and Government Failures

In recent years, the Public Choice School scholars argue that public policymaking has its own failures. Public Choice scholars pointed out that the people who make public decisions – politicians or bureaucrats - are in fact just as self-interested as anyone else. They are, after all, the same people; individuals do not suddenly become angels when they get a job in government. We call it ‘democracy’, but actually it is politics, and political interests to colour the whole process. People do not vote at elections out of ‘public interest’, but they vote to promote their own interests. The politicians and bureaucrats also have personal interests of their own. So the Public Choice School economists suggest that it might be better to leave the markets alone, rather than replace market failure by an even worse government failure. 
 Over the last few decades, the Public Choice School’s arguments have had a growing effect to explain real politics. In established democracies, there is more recognition of the private interests of legislators and bureaucrats, and of the need to restrain them. In addition, policies designed to restrain public decision making, inspired by the Public Choice School, are becoming more common. In this essay, I attempt to explain the Public Choice School’s main idea and various issues in a conceptual and critical way.

An Exploration of Elinor Ostrom’s Theory of Self-Governance

The theory of self-governance is a fundamental theory of collective action based on numerous empirical case studies by Elinor Ostrom, a contemporary exponent of the public choice school and public economics. Ostrom’s idea of autonomous governance is systematically and fully articulated in her book Governing the Commons: the Evolution of Institutions for Collective Action, published in 1990. It guides the development and use of public resources by tapping into the subjectivity of individual autonomy. The purpose of this paper is to explore the meaning and significance of the theory of self-governance through reading Governing the Commons: the Evolution of Institutions for Collective Action.

The Fatal Deceit of Public Policy: Can Austrian and Public Choice Economics Complement each other?

The Fatal Deceit of Public Policy: Can Austrian and Public Choice Economics Complement each other?

공공선택학파와 오스트리아학파의 지적 관계

공공선택학파와 오스트리아학파의 지적 관계

Falhas de mercado no setor aeroportuário e contraposição da visão neoclássica com a escola austríaca e escola de public choice

O objetivo do presente trabalho é analisar a questão da regulação econômica aplicada ao setor aeroportuário, conciliando visões de três correntes de pensamento econômico sobre o tema. Serão mostradas as características das falhas de mercado na perspectiva neoclássica, representativas do mainstream econômico, e os problemas de tentar regular o setor a partir da perspectiva de duas diferentes escolas de pensamento econômico, com foco na visão da Escola Austríaca de Economia. Economia e algumas percepções da Escola de Escolha Pública.

Fiscal Stability in Political Discourse: The Romanian Case

Abstract This article investigates the political resistance to fiscal stability institutions in Romanian context, as revealed in political discourse. To ascertain the a priori political predisposition against the fiscal stability framework, the theoretical findings of the public choice school of economics are utilized. Insights from the political discourse analysis body of literature are employed to the study of discourse against established fiscal stability institutions. Since the consensus arising from this literature is that politics is both acting and talking, the unit of analysis in our examination is the statement that can be classified as political discourse. After briefly analyzing the broader institutional context that provides the background for political discourse, the main storylines against fiscal stability recently emerged are reviewed. Seeking to determine the traits of the dominant political discourse against fiscal stability displayed by Romanian politicians in recent years, a quantitative assessment of the usage of these storylines is given. We find that publicly expressed disagreement with established fiscal stability institutions from the part of politicians and high-ranking bureaucrats has drastically increased over the analyzed period. The research has also revealed that the most employed storyline has been the one that belittles the significance of fiscal stability if the state uses the fiscal revenues for investing in transport infrastructure.

Rent Seeking: The Social Cost of Contestable Benefits

A major contribution of the public-choice school is the recognition by Gordon Tullock that contestable rents give rise to social losses because of unproductive resource use. Contestable rents usually are politically assigned privileges. Contestable rents can also be found outside of government decisions. We describe the example of rents in academia in different cultures. The primary empirical question regarding rent seeking concerns the magnitude of the social loss from the contesting of rents. Direct measurement is impeded by lack of data and indeed denial that rent seeking took place. Contest models provide guidance regarding social losses. We provide a generalized contest model. Social losses from rent seeking are diminished in high-income democracies because rent seeking usually takes place by groups seeking ‘public good’ benefits. Rents are also less visible in democracies, because political accountability requires that rents be assigned in indirect non-transparent ways. These restraints are not present in autocracies, where rent seeking is also facilitated by corruption and by the need to influence a smaller number of decision makers. Ideology can influence whether rent seeking is recognized to exist.

Reproducing Neoliberalism: the power of Canada’s poor

Based on the varying views of power under neoliberalism, the literature draws divergent conclusions regarding its quality as a policy approach. Neoliberal economic restructuring is generally regarded as positive by the conservative public choice school, as positive by some Weberians and negative by others, and as overwhelmingly negative by Marxians and feminists. Critics usually present restructuring as something that is happening “to” us, that is presented to us as a fait accompli, handed down by bureaucrats and elected officials influenced by international business. This view obscures the role of the average citizen in pushing restructuring forward, not only in allowing it to happen, but also in actively performing it. In response, this paper suggests a global/local intersectional dialectic that locates the expansion of neoliberalism in global and individual sites without obscuring the various oppressions generated by restructuring.

Economics of the external and the extended orders of markets and politics and their application in forestry

Forestry is not an entity. Forestry includes countless and complex types of human interactions concerning forests. Humans have found complex and nearly endlessly diverse institutional structures. Differences in the results of interactions are often caused by different institutional structures. Economic theories as explanations of human interactions are not detached from institutional structures. Their predictions are only valid in these institutional settings.In this paper, existent economic theories and models of forestry, like the Faustmann approach, the public choice school, Ostrom's “Governing the commons”, and others will be systematised according to their underlying institutional structures. In a second step, the interrelations among these approaches will be studied. From this point of view, some identification of unanalysed or less analysed areas of forestry are possible which finally allow some comments for future research in forestry economics.For solving these aims, a classification of the diverse institutional structures is necessary which will be developed stepwise. I will introduce the two independent characteristics “range of publicness in sub-constitutional contracts” and “forms of moral order”. The first characteristic is distinguished into the two institutional contractual types “politics” and “markets”, the second characteristic is distinguished into the “external” and “extended” moral order.

Kamu malları: piyasa başarısızlığı mı teorilerin başarısızlığı mı?

Public goods are generally perceived as market failure and consequently are thought to be subject to public intervention. However, when mainstream theories are closely examined, one can see that there is no consensus on the characteristics of public goods that would justify public provision, hence there are many objections to the public provision of such goods. The main thesis of this study is that the concept of public goods is inadequate to describe the publicness of goods, and corresponding theories also fail to clearly explain even what they themselves theoretically devised. To investigate this thesis, it is examined whether public goods theory has a satisfactory explanation about publicness of goods as well as optimal provision, collective decision making processes and market failure. These are comparatively studied by the views of main economic schools of thought that contribute to the theory of public goods - traditional neoclassical economics, public choice school and new institutionalist economics. Finally, the basis common to all these theories are critically evaluated.

Exploring the Metropolitan Trap: The Case of Montreal

AbstractThis article analyses the normative dimension of metropolitan governance in the case of Montreal. According to the main schools of thought (the reform school, the public choice school, new regionalism and the rescaling approach), there is an ideal scale at which to achieve specific goals such as equality, efficiency, democracy and economic competitiveness. These ideologically oriented conceptions of metropolitan governance are assumed by actors and used as symbolic resources to build their own strategies, i.e. to support or contest institutional reforms — what we call the metropolitan trap. The case of Montreal, which underwent two successive institutional reforms between 2000 and 2006, provides empirical evidence for this idea. Our analysis reveals that the Government of Quebec and local elected councils of Greater Montreal are trapped by these normative conceptions, especially the old regionalisms. However, scalar strategies do not compete equally, as the institutional context legitimates specific approaches to metropolitan governance.RésuméCet article analyse la dimension normative de la gouvernance métropolitaine dans le cas de Montréal. Les principales écoles théoriques (de la réforme, des choix publics, du nouveau régionalisme et du redimensionnement) estiment qu'il existe un échelon idéal pour la réussite d'objectifs particuliers, tels que l'égalité, l'efficacité, la démocratie et la compétitivitééconomique. Orientées idéologiquement, ces conceptions de la gouvernance métropolitaine servent de ressources symboliques aux acteurs qui les adoptent afin de bâtir leurs propres stratégies, pour ou contre les réformes institutionnelles, d'où ce qui est appelé ici le ‘piège métropolitain’. À cet égard, Montréal, qui a connu deux réformes institutionnelles successives entre 2000 et 2006, apporte des éléments empiriques. L'analyse révèle que le gouvernement du Québec et les conseils d'élus locaux qui administrent le Grand Montréal sont piégés par ces conceptions normatives, notamment par les anciens régionalismes. Par ailleurs, les stratégies d'échelle ne rivalisent pas sur un pied d'égalité puisque le contexte institutionnel ne légitime que certaines approches de gouvernance métropolitaine.

Wicksell and the Scandinavian and public choice traditions

PurposeWicksell's contributions to welfare economics are viewed as largely aligned with Pareto efficiency and James Buchanan's work in public choice. This conflicts with the Scandinavian representation of Wicksell as the forefather of the modern Swedish socialist economy. The purpose of this paper is to examine Wicksell's approach to economics, particularly his understanding of “justice” as a way to understanding the evolution of two such divergent traditions.Design/methodology/approachOriginal academic and popular press writings, as well as archival materials, are used to examine Wicksell's economic philosophy and his position on key aspects of welfare economics, including the relative importance of allocation versus distribution in policy decision making. His influence on the American public choice tradition and Swedish welfare economics is examined.FindingsBoth the public choice and Swedish welfare traditions based on Wicksell's justice represent overly simplistic interpretations and fail to explain how Wicksell could have such a significant impact on the development of two such divergent approaches to public economics.Originality/valueWicksell's strong association with Pareto efficiency and the public choice school is unfortunate because de‐emphasizes the importance Wicksell placed on distributional considerations and overly simplifies his use of the term “justice.” Similarly, the Swedish economists failed to appreciate efficiency arguments and chose instead to emphasize Wicksell's distributional concerns. This paper sheds light on where the misapprehension arose and how it can be better understood.

A new look at the Austrian School of Economics: review and prospects

This paper looks at the Austrian School of Economics from the subjectivist perspective. It begins by reviewing the major architects in the Austrian School, Carl Menger, Ludwig von Mises, Friedrich A. Hayek, Murray N. Rothbard, Ludwig M. Lachmann and Isaac M. Kirzner. The paper then elucidates the major tenets of the Austrian School of Economics, namely methodological subjectivism and interpretative economics; entrepreneurship, knowledge and coordination problems in the market process; central planning and Austrian business cycle. It highlights the agreements with public choice school, new institutional economics, evolutionary economics, feminist economics and disagreements with the Marxist economics, Neo-Ricardian School and orthodox neoclassical paradigm. It also clarifies similarities and differences between the Chicago School and Austrian School of Economics. The paper ends with further suggestions on the Austrian subjectivist approach to economic problems by using two illustrations of recent international events, Financial Crisis in 2007 and nuclear meltdown in Japan.

Rebellions across the (Rice) Fields: Social Scientists and Indochina, 1965–1975

This essay presents how, during the Indochinese revolutionary wars of the 1960s and 1970s, the traditional image of rebels inspired by moral causes or socioeconomic grievances was superseded by an image of purely materialistic, rational insurgents. Economists studied revolutions from two different traditions: the systems analysis perspective of the RAND Corporation and the rational choice analysis from the public choice school of Virginia. We situate their views with reference to explanations offered by other social scientists, especially modernization and relative deprivation theorists, as well as Marxist scholars to show how, from 1965 to 1975, economists' approach to revolutions gained momentum among social scientists.

Beyond Bureaucracy—Public Administration as Political Integrator and Non‐Weberian Thought in Germany

The political role of public administration holds an ambiguous status in public administration theory. The dominant paradigms of the discipline offer more or less negative perspectives. Max Weber’s notion of bureaucracy conceives public administration as the apolitical tool of government, while the public choice school conceives it as the realm of individual selfishness and rent seeking at taxpayers’ expense. In this unfavorable epistemological environment, positive concepts of what makes public administration “political” can hardly flourish. However, as public authorities may organize clientele participation and consequently co‐opt stakeholders, they provide for symbolic sense making and create patterns of identity. Public administration thus works as a political integrator in its own right. Unfortunately, this subject is not prominent within contemporary scholarly research. German political integration through administration is analyzed here in order to address these and related theoretical questions.

Integrating social conflict into economic theory

The generalisation of Coasian theorem to the power relationship amounts to depicting conflict as a bargaining process between conflictual parties that are, simultaneously, both partners and adversaries. This perspective leads to different models of ‘rational conflicts’ i.e. a threat of conflict without any real clash. An alternative approach is developed by different models inspired by the Public Choice School, which build upon the logic of coercive power within the framework of a self-interested behaviour. The integration of ‘social conflicts’ in a narrowly defined individual cost/benefit theoretical framework has resulted in reducing ‘social conflict’ to real private (but not social) conflict. In other words, economic theory has considered social protesters either as potential or actual looters but rarely as a group of people struggling for a common cause. Integration of social conflict into economic theory will require: (i) abandoning the ubiquitous market model when describing conflictual relationships; (ii) accepting the logic of force or coercive power as a starting point; and (iii) expanding the idea of interest to include encompassing (including class) interest.

More Government or Less Government? Further Thoughts for Promoting the Government

:The purpose of this paper is to provide further thoughts for promoting the government after reviewing the competing insights of the right-wing public choice school economists and the left-wing institutionalists in the VeblenCommons tradition. This paper points out that big government and big business have indeed become complements to some extent. That is, they are symbiotic and one certainly cannot criticize (or try to remove) big government without checking big business at the same time, and vice versa. To counteract the power of corporate hegemony and to break the control of governments by privileged interests, this paper suggests that it is desirable to initiate institutional change in society toward the movement of more local government planning in promoting the local community. Such a society is not only practically consistent with the progress of sustainable development (under the “think globally, act locally” guideline) but also conceptually compatible with John Stuart Mill’s high-minded mental culture and John Maynard Keynes’S forward-looking vision of economic bliss.