Trade, Power, and Political Economy: Reason vs. Ideology in Edward Stringham’s Private Governance

RICHARD WAGNER

THE REVIEW OF AUSTRIAN ECONOMICS

Abstract: In Private Governance: Creating Order in Economic and Social Life, Edward Stringham explains that private ordering is sufficient to secure full exploitation of gains from trade within a society. After describing the logic of Stringham’s claim on behalf of private ordering, the remainder of this essay examines an enigma that Stringham’s argument entails: private ordering is sufficient for social coordination and yet public ordering is ubiquitous. The exploitation of gains from trade might offer a useful ideology, but this provides but an incomplete basis for a theory of society. In this respect, societies are rife with antagonism and envy, though these often manifest themselves ideologically as claims about justice and fairness. Politics goes where the money is; private ordering reveals targets that public ordering subsequently exploits. The challenge for political economy is to integrate the autonomy of economizing action with the autonomy of political action, for these dual autonomies provide the crucible out of which emerges the material of political economy. Stringham has deepened our appreciation of what private governance can accomplish, but much unfinished analytical work confronts theorists of political economy.

Private Governance and the three biases of political philosophy

JASON BRENNAN

THE REVIEW OF AUSTRIAN ECONOMICS

Abstract: Private Governance shows that philosophers, political and legal theorists, and social scientists mistakenly believe in legal centralism, the view that order in the world depends upon and is made possible by state law. In fact, most governance not only happens to be private, but must be private. This paper extends Edward Stringham’s argument by claiming that philosophers tend to suffer from three biases. Diffidence bias means they are overly pessimistic about people’s willingness and ability to cooperate without state enforcement. Statism bias means the overestimate the degree to which cooperation is secured by the state. Guarantee bias means they overestimate the value and need for legal guarantees.

Adam Smith, Prophet of Law and Economics

PAUL G. MAHONEY

THE JOURNAL OF LEGAL STUDIES, Volume 46, Number 1

Abstract: Law and economics scholars do not normally identify Adam Smith as an important figure in the field. However, his Lectures on Jurisprudence contain a wealth of insights and analytical techniques that law and economics scholars of the late 20th century would repeat. This paper argues for Smith’s place in law and economics, identifying some of his most important arguments and emphasizing their contributions to legal theory. It also argues that economic arguments play a central role in Smith’s theory of justice. Indeed, Smith’s jurisprudence provides an important bridge between his moral and economic theories.

The time inconsistency of long constitutions: Evidence from the world

GEORGE TSEBELIS

EUROPEAN JOURNAL OF POLITICAL RESEARCH

Abstract: This article analyses the mechanisms establishing time consistency of constitutions. It explains why shorter and more locked constitutions are more likely to be time consistent (change less) and that long constitutions are more time inconsistent (change more, despite locking). Empirical evidence from all of the democratic countries in the world indicates that the length and locking of constitutions are not independent criteria, and that their combination leads to less time consistency. To address this inter-relationship, a measure of time inconsistency (a combination of locking and amendment rate) is developed and it is demonstrated that it is connected with the length of constitutions. The article shows how time inconsistency is incompatible with theories of ‘constitutional amendment culture’ not only at the theoretical level, but also empirically. Finally, the article proves that the empirical finding that the length of constitutions is related to lower per capita income and higher corruption are not only in agreement with time inconsistency arguments, but this also extends beyond OECD countries to all democracies.

 

Over-incarceration and disenfranchisement

MURAT C. MUNGAN

PUBLIC CHOICE

Abstract: This article presents a model wherein law enforcers propose sentences to maximize their likelihood of reelection, and shows that elections typically generate over-incarceration, i.e., longer than optimal sentences. It then studies the effects of disenfranchisement laws, which prohibit convicted felons from voting. The removal of ex-convicts from the pool of eligible voters reduces the pressure politicians may otherwise face to protect the interests of this group, and thereby causes the political process to push the sentences for criminal offenses upwards. Therefore, disenfranchisement further widens the gap between the optimal sentence and the equilibrium sentence, and thereby exacerbates the problem of over-incarceration. Moreover, this result is valid even when voter turnout is negatively correlated with people’s criminal tendencies, i.e., when criminals vote less frequently than non-criminals.

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.

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.