Misjudging the character of the welfare state: Hayek, generality, and the knowledge problem

CHRISTOPHER S. MARTIN & NIKOLAI G. WENZEL

THE REVIEW OF AUSTRIAN ECONOMICS

Abstract: What are the limits of collective action? As James Buchanan famously worried, is it possible to empower the productive state without lapsing into the predatory state? This paper uses insights from F.A. Hayek to address problems of public goods and the role of the state. Hayek convincingly argued that no central planner has sufficient knowledge to run an economy. Yet Hayek also allowed for state provision of some goods beyond the prevention of coercion. The question, then, is whether Hayek’s safeguards offer a satisfactory response to Buchanan’s worry. This paper contends that Hayek violated his own conditions for permissible government activity. Nevertheless, he offers a serious research agenda for limiting state abuses.

Bowling for Fascism: Social Capital and the Rise of the Nazi Party

SHANKER SATYANATH

JOURNAL OF POLITICAL ECONOMY

Abstract: Using newly collected data on association density in 229 towns and cities in interwar Germany, we show that denser social networks were associated with faster entry into the Nazi Party. The effect is large: one standard deviation higher association density is associated with at least 15 percent faster Nazi Party entry. Party membership, in turn, predicts electoral success. Social networks thus aided the rise of the Nazis that destroyed Germany’s first democracy. The effects of social capital depended on the political context: in federal states with more stable governments, higher association density was not correlated with faster Nazi Party entry.

A Previously Unpublished Correspondence between Adam Smith and Joseph Nicolas de Windischgratz

MENUDO, J.M., RIEUCAU, N.

HISTORY OF POLITICAL ECONOMY

Abstract: This article transcripts and comments on two letters by Adam Smith, and two letters by his correspondent Joseph Nicolas de Windischgrätz. These letters belong to a rather rich and lengthy exchange—which would end at the beginning of 1788—composed of at least sixteen pieces. As with the rest of the correspondence between them, the letters published here refer to the prize proposed by Windischgrätz in 1784–85. The Programme of this prize was looking for general formulas that would normalize all types of property transfer. Adam Smith replied that the great diversity of human customs did not lend itself to such formulas. In spite of his reluctance Smith eventually agreed to help Windischgrätz, but the prize had no winner.

Nationhood and Constitutionalism in the Ditch Republic: An Examination of Grotius’ Antiquity of the Batavian Republic

ALEXANDER-DAVEY, E.

HISTORY OF POLITICAL THOUGHT, Volume 38, Number 1

Abstract: The emphasis in contemporary democratic theory and in the history of political thought on the ‘natural rights’ theory of popular sovereignty of Locke, precursors of which are found in the work of Hugo Grotius and others, obscures an important relationship between constitutional self-government and nationalism. Through an examination of the early political writings of Grotius, especially his Antiquity of the Batavian Republic, this essay shows how a national consciousness forged out of memories of native traditions of self-government, and stories of heroic ancestors who successfully defended those traditions against usurpers and tyrants, gives concrete substance to otherwise inchoate theories of constitutional self-government.

Property and the Creation of Value

DAN MOLLER

ECONOMICS & PHILOSOPHY, Volume 33, Issue 1

Abstract: Following Locke, philosophical discussion of private property has tended to focus on the acquisition of natural resources as central. In this paper I first pursue the idea that the resource paradigm doesn’t apply to most developed economies, and show how this creates problems for many accounts of property. My second ambition is to draw a normative conclusion by showing that redistribution of wealth generated in the context of services is more difficult to justify compared with the natural resource paradigm philosophers have often focused on.

Does International Commercial Arbitration Promote Foreign Direct Investment?

ANDREW MYBURGH & JORDI PANIAGUA

THE JOURNAL OF LAW AND ECONOMICS, Volume 59, Number 3

Abstract: This paper explores the role that international commercial arbitration plays in facilitating foreign direct investment (FDI). International commercial arbitration is a system of private commercial law that enables firms to more effectively enforce contracts by allowing them to avoid inefficiencies that arise from domestic courts. As a result, access to international arbitration should foster FDI. To explain the effect of international arbitration on FDI, this paper develops a model to explain the use and effect of resolving international disputes through arbitration. The predictions of the model are tested empirically in a gravity framework. The results of this analysis suggest that access to arbitration leads to an increase in FDI flows. This increase largely occurs through a change in the volume of investment, with a much smaller effect on the number of investment projects. The effect of arbitration is greater for countries with weaker institutions and for larger projects.

1688 and all that: property rights, the Glorious Revolution and the rise of British capitalism

GEOFFREY M. HODGSON

JOURNAL OF INSTITUTIONAL ECONOMICS, Volume 13, Issue 1

Abstract: In a seminal 1989 article, Douglass North and Barry Weingast argued that by making the monarch more answerable to Parliament, the Glorious Revolution of 1688 helped to secure property rights in England and stimulate the rise of capitalism. Similarly, Daron Acemoglu, Simon Johnson, and James Robinson later wrote that in the English Middle Ages there was a ‘lack of property rights for landowners, merchants and proto-industrialists’ and the ‘strengthening’ of property rights in the late 17th century ‘spurred a process of financial and commercial expansion’. There are several problems with these arguments. Property rights in England were relatively secure from the 13th century. A major developmental problem was not the security of rights but their feudal nature, including widespread ‘entails’ and ‘strict settlements’. 1688 had no obvious direct effect on property rights. Given these criticisms, what changes promoted the rise of capitalism? A more plausible answer is found by addressing the post-1688 Financial and Administrative Revolutions, which were pressured by the enhanced needs of war and Britain’s expanding global role. Guided by a more powerful Parliament, this new financial system stimulated reforms to landed property rights, the growth of collateralizable property and saleable debt, and thus enabled the Industrial Revolution.