Abstract
The genuine problem of governance is one that pays equal attention to both incentive and knowledge issues in private and public contexts. This work brings together Austrian, Public Choice and theory of the firm insights to address such problem. By taking into account incentives and knowledge, it proposes a framework that accommodates comparisons not just of kind (firm or market), but also of degree (e.g., among different types of internal organization). Moreover, although the suggested framework derives from considerations about private governance, it equally accommodates public and private settings. (89 words.)
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Notes
On both notions, see Buchanan (1980).
Boettke and Lopez (2002, p. 112) characterize the Austrian School and Public Choice as follows.
… Austrian and public choice economics often differ regarding the role of information in the polity. A common way to express this difference is with reference to the twin assumptions of benevolence and omniscience on the part of … decision-makers … Public choice economics… challenged the benevolence assumption, but left the omniscient assumption alone …On the other hand, Austrian political economy, challenges the omniscience assumption, but continues to be reluctant to relax benevolence… In simplest terms, a combined Austrian-public choice approach to political economy would relax both assumptions …
In our view, this characterization of “a combined Austrian-Public Choice approach” is coextensive with the approach of the classical political economists (and hence of Wagner too), which considers both incentives and knowledge as indissoluble. Indeed, in his colorful retrospective Wagner (2004, p. 60) tells us that in its earlier, Charlottesville years Public Choice could have been called “Postclassical Political Economy.”
A perspective that has much in common with the comparative institutional approach to scientific enterprise as recently put forth by McQuade and Butos (e.g., 2003).
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Acknowledgments
In addition to the anonymous referees, we thank the participants at the “From Vienna to Virginia” conference, Foundation for Economic Education, Irvington-on-Hudson, NY, September 18–20, 2008, for helpful comments, especially Pete Boettke, Ed Lopez, Adam Martin, Fred Sautet, and Richard Wagner. The usual disclaimer applies. Giampaolo Garzarelli is grateful for Anderson Capelli support.
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Garzarelli, G., Holian, M.J. Parchment, guns, and the problem of governance. Rev Austrian Econ 27, 71–80 (2014). https://doi.org/10.1007/s11138-013-0230-z
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DOI: https://doi.org/10.1007/s11138-013-0230-z