Economic Freedom in the Early 21st Century: Government Ideology Still Matters

KAI JÄGER

KYKLOS, Volume 70, Issue 2

Abstract: Empirical studies show that government ideology has hardly influenced welfare expenditures since the 1990s, casting doubt on the general ability of national governments to design economic policies according to their programmatic appeals. This study takes a comprehensive view on policy-making by using a modified version of the Fraser Institute’s Economic Freedom of the World Index. I focus on the aspects of economic freedom that provoke party polarization and that national governments are capable of influencing. The results suggest that government ideology still matters in the early 21st century: The empirical analysis of 36 OECD or new European Union member states from 2000 to 2012 shows that left-wing governments are associated with significantly lower economic freedom. Economic freedom continues to be the guiding principle that divides left and right in economic policy-making because the left still promotes relatively higher levels of government spending and regulation.

Human capital, knowledge and economic development: evidence from the British Industrial Revolution, 1750–1930

B. ZORINA KHAN

CLIOMETRICA

Abstract: Endogenous growth models raise fundamental questions about the nature of human creativity, and the sorts of resources, skills, and knowledge inputs that shift the frontier of technology and production possibilities. Many argue that the experience of early British industrialization supports the thesis that economic advances depend on specialized scientific training, the acquisition of costly human capital, and the role of elites. This paper examines the contributions of different types of knowledge to industrialization, by assessing the backgrounds, education and inventive activity of major contributors to technological advances in Britain during the crucial period between 1750 and 1930. The results indicate that scientists, engineers or technicians were not well-represented among the cadre of important British inventors, and their contributions remained unspecialized until very late in the nineteenth century. The informal institution of apprenticeship and learning on the job provided effective means to enable productivity and innovation. For developing countries today, the implications are that costly investments in specialized human capital resources might be less important than incentives for creativity, flexibility, and the ability to make incremental adjustments that can transform existing technologies into inventions and innovations that are appropriate for prevailing domestic conditions.

The limits of liberalism: Good boundaries must be discovered

ADAM MARTIN

THE REVIEW OF AUSTRIAN ECONOMICS

Abstract: Determining good boundaries for governance jurisdictions is among the most difficult problems in political theory and political philosophy. But to whom the rules of a given jurisdiction applies is a problem that afflicts private as well as public governance. Clubs have boundaries no less than cities, states, or nations. This essay applies Hayek’s conception of competition as a discovery procedure to boundary problems, arguing that good jurisdictional boundaries are subject to a great deal of contingent variation according to particular the conditions of time and place. Philosophical speculation, therefore, cannot fully replace a trial and error process that facilitates social learning about where good boundaries fall. I outline the features of good boundaries that make them subject to such variation, then evaluate two criteria for evaluating whether existing jurisdictional boundaries are good: one that emphasizes ex ante consent to boundaries, and one that focuses on the ability of individuals to exit from jurisdictions ex post, arguing that the exit-focused approach is underappreciated.

Hume on Education

DAN O’BRIEN

PACIFIC PHILOSOPHICAL QUARTERLY

Abstract: Hume claims that education is ‘disclaimed by philosophy, as a fallacious ground of assent to any opinion’ (T 1.3.10.1) and that it is ‘never . . . recogniz’d by philosophers’ (T 1.3.9.19). He is usually taken to be referring here to indoctrination. I argue, however, that his main concern is with association and those philosophers who emphasize the epistemic dangers of the imagination. These include Locke, Hutcheson and Descartes, but not Hume himself. Hume praises education, highlighting its role in the formation of general rules, and in fostering social conditions that encourage the growth of knowledge and moral virtue.

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.