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A general constitutional possibility theorem

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Arrow's Impossibility Theorem shows that there exist no transitive social preferences in nonoligarchic societies for all possible profiles of individual preference orderings. Similarly, a generalization of Sen's Theorem of the Impossibility of a Paretian Liberal implies under the same conditions that non-Pareto-optimal outcomes may be present in the resulting cyclical preference relations. This essay changes the customary perspective. It demonstrates that, for any profile of individual preferences, we can always find a nonoligarchic assignment of rights to different subsets of society, to decide between pairs of outcomes, together with adequate decision rules, which escapes these problems. This assignment of rights can be a purely liberal one even for each profile, but not one in which everybody participates in all decisions and which uses simple or qualified-majority voting (Total Direct Democracy). The adequate purely liberal constitution, on the other hand, may imply an oligarchy if too few outcomes are present.

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I am grateful to Hans-Peter Bauer, James M. Buchanan, Friedrich Breyer, Malte Faber, and especially to two unknown referees for their helpful comments.

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Bernholz, P. A general constitutional possibility theorem. Public Choice 51, 249–265 (1986).

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