DOCSLIB.ORG

Shirking and Sharking: a Legal Theory of the Firm

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Shirking and Sharking: a Legal Theory of the Firm Shirking and Sharking: A Legal Theory of the Firm Eric W. Ortst Introduction ................................................................................................... 266 I. Agency Law and Agency Costs ............................................................... 270 A. Legal Agency: Authority, Power, and Hierarchy in the Firm ..... 271 B. Agency Costs: Classical Shirking .................................................... 275 II. Principal C osts .......................................................................................... 278 A. Sharking Defined: Opportunism of Principals Within Firms ...... 279 B. Agency Chains: Quasi-Principals and Superior Agents ............... 280 III. Firm s and M arkets ................................................................................. 282 A. The Paradox of Methodological Individualism ............................. 283 B. Consumer Markets and Organizational Metamarkets ................. 286 IV. Economic Theories of the Firm ........................................................... 289 A .Transaction Costs ............................................................................. 289 B . C ontracts ............................................................................................ 291 C . Property .............................................................................................. 295 D . Em ploym ent ...................................................................................... 296 V. A Legal Theory of the Firm and Its Boundaries .................................. 298 A. Control: Enterprise-Organizing and the Sole Proprietor ............ 300 B. Ownership and Employment: Horizontal and Vertical Firms ..... 301 1. H orizontal O wnership ................................................................ 301 2. V ertical A uthority ....................................................................... 303 C. Property: Ownership of the Firm's Capital .................................... 306 t Associate Professor of Legal Studies, The Wharton School, University of Pennsylvania; Visiting Professor of Law, University of Leuven. For comments, I thank Stephen Bainbridge, John Boatright, David Butz, Alfred Conard, Deborah DeMott, Thomas Dunfee, Allison Feder, Merritt Fox, Eric Gauvin, Robert Hamilton, Peter Hammer, J.B. Heaton, Leo Katz, William Klein, Bruce Kogut, Naomi Lamoreaux, Kyle Logue, Ronald Mann, Daniel Raff, Tyler Robin- son, Richard Shell, Alan Strudler, Edward Swaine, Kent Syverud, Randall Thomas, William Tyson, Joseph Vining, and others who participated in discussions of earlier drafts at the Whar- ton School, the Western New England School of Law, the University of Michigan Business School, the UCLA School of Law, and the University of Michigan Law School. Later versions were presented at the University of Erlangen-Nuremberg, Department of Management, and the University of Gothenburg, School of Economics and Commercial Law. The Zicklin Center for Business Ethics Research at the Wharton School provided funding. For inspiration, I thank my wife, Janet, who loves Bleak House, and my students at Wharton and the law schools of Penn, UCLA, and Michigan. Yale Law & Policy Review Vol. 16:265, 1998 1. D ebt .............................................................................................. 307 2. E quity ........................................................................................... 308 D. Complex Firms: The Corporation .................................................. 309 E. Complex Groups: Relational Firms ................................................ 312 F. The Legal Boundaries of the Firm .................................................. 313 VI. Shirking, Sharking, and Fiduciary Duties ............................................ 315 A . Constraining Shirking ....................................................................... 315 B. Constraining Sharking ...................................................................... 317 1. Oppression of Minority Shareholders ....................................... 318 2. Excessive Executive Compensation .......................................... 320 3. Downgrading Creditors .............................................................. 323 4. Financial Reengineering ............................................................. 325 C onclusion ..................................................................................................... 327 INTRODUCTION Shirking and sharking, in all their many varieties, have been sown broadcast by the ill-fated cause; and even those who have contemplated its history from the outermost circle of such evil, have been insensibly tempted into a loose way of letting bad things alone to take their own bad course, and a loose be- lief that if the1 world go wrong, it was, in some off-hand manner, never meant to go right. This Article reexamines economic theories of the firm from a legal perspective. These theories are said to have "dominated" and produced a "revolution" in legal scholarship in recent years,2 particularly in the field of enterprise organization.3 In this Article, I accept the insights of this 1. CHARLES DICKENS, BLEAK Housa 21-22 (J.M. Dent & Sons 1901) (1852). 2. Jason Scott Johnston, The Influence of The Nature of the Firm on the Theory of Corpo- rate Law, 18 J. CORP. L. 213, 213 (1993); see also Stephen M. Bainbridge, ParticipatoryMan- agement Within a Theory of the Firm, 21 J. CORP. L. 657, 659 (1996) (describing the economic theories of the firm as "now the dominant paradigm in corporate law"); Aleta G. Estreicher, Beyond Agency Costs: Managing the Corporationfor the Long Term, 45 RUTGERS L. REv. 513, 515 (1993) (arguing that analysis based on agency costs "still reigns supreme in the academic literature"). For some leading examples of this genre, see Bernard S. Black, Agents Watching Agents: The Promise of Institutional Investor Voice, 39 UCLA L. REv. 811 (1992); William J. Carney, ControllingManagement Opportunism in the Market for Corporate Control: An Agency Cost Model, 1988 Wis. L. REv. 385; Frank H. Easterbrook & Daniel R. Fischel, Close Corpora- tions and Agency Costs, 38 STAN. L. REv. 271 (1986); and Saul Levmore, Monitors and Freerid- ers in Commercial and CorporateSettings, 92 YALE L.J. 49, 59-80 (1982). 3. I use the term "enterprise organization" to include legal agency, employment, partner- ships, and corporations. For a casebook written along these lines, see ALFRED F. CONARD ET AL., ENTERPRISE ORGANIZATION (4th ed. 1987). See also Eric W. Orts, The Future of Enter- prise Organization,96 MICH. L. REV. - (1998) (book review) (arguing in favor of this broad conceptual approach). The term also includes nonprofit associations. Cf. Developments in the Law-Nonprofit Corporations,105 HARV. L. REV. 1578 (1992). Although some of the analysis offered here may be applied to nonprofit organizations, the topic is left outside the scope of this Legal Theory of the Firm scholarship, but recommend a significant expansion of its theoretical premises. In contrast to most economic accounts, I argue that legal the- ory is needed for an accurate description of the business firm. In particu- lar, I contest economic theories of the firm that fail to appreciate the im- portance of legal relationships of agency authority, power, and hierarchy. My main claim is that a recovery of traditional legal principles helps to clarify some problems in economic theories of the firm. These prob- lems include omissions of both a descriptive account of how authority, power, and hierarchy are created within firms4 and a prescriptive discus- sion of how this authority, power, and hierarchy may be misused A le- gal perspective can also help to resolve the conundrum in economics of distinguishing between firms and markets.6 The legal theory of the firm and its boundaries offered here brings together elements of various eco- nomic theories within a unified framework. My analytic style is the reverse of the usual article in "law and eco- nomics." Most law-and-economics scholarship begins with a legal prob- lem and then applies economic analysis to find a solution. Instead, I begin with an economic problem-namely, conflicting theories of the firm- and use legal analysis to overcome conceptual difficulties.8 In this endeavor, some problems of conflicting terminology become apparent. Economists and lawyers often use the same terms differently. I argue for a precise use of terms such as "agency" and "contracts" that have legal origins and meanings. At the same time, any discussion of the "firm" must include an understanding of how economists have used the term given the roots of the idea in economic theory. The debate is not only semantic. A combination of legal and economic analysis opens the door for other disciplines besides economics to describe the social nature of the entities called firms.9 Article. The focus here is on the business firm. 4. See infra Parts I, II, IV. 5. See infra Part VI. 6. See infra Part III. 7. See infra Parts IV, V. 8. This methodology is consistent with a recent recommendation for a synthesis in legal scholarship to include "the microanalysis of institutions." Edward L. Rubin, The New Legal Process, the Synthesis of Discourse, and the Microanalysis of Institutions, 109 HARV. L. REV. 1393 (1996). Rubin describes a willingness to recognize the importance of noneconomic factors as characteristic of a "Post-Chicago School of Law and Economics." Id. at 1404; cf. RICHARD A. POSNER, OVERCOMING LAW 426-43 (1995)
Load more

Recommended publications
  • Freedom, Democracy and Economic Welfare
    copyright The Fraser Institute copyright The Fraser Institute LORD BAUER RAMON DIAZ MILTON FRIEDMAN RAYMOND D GASTIL TIBOR R MACHAN DOUGLASS NORTH SVETOZAR PEJOVICH ALVIN RABUSHKA INGEMAR STAHL LINDSAY M WRIGHT PROCEEDINGS OF AN INTERNATIONAL EDITED BY MICHAEL A WALKER SYMPOSIUM copyright The Fraser Institute Proceedings of an International Symposium on Economic, Political, and Civil Freedom, held October 5-8, 1986 in Napa Valley, California. This event is part of the programme of Liberty Fund Inc., under the direction of its President, Dr W. W. Hill. This Symposium was managed by The Fraser Institute and organized by its Director, Dr. Michael A. Walker. Canadian Cataloguing in Publication Data Main entry under title: Freedom, democracy and economic welfare Symposium held Oct 5-8, 1986 in Napa Valley, Calif. Includes bibliographical references. ISBN 0-88975-116-1 1.Capitalism – Congresses. 2. Liberty – Congresses. 3. Economics – Political aspects – Congresses. 4. Economics – Philosophy – Congresses. I. Walker, Michael 1945 – II.Fraser Institute (Vancouver, BC.) HB501.F74 1988 330.12’2 C88-091102-6 Copyright 1988 by the Fraser Institute. All rights reserved. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical arti- cles and reviews. Printed in Canada copyright The Fraser Institute CONTENTS Participants / vii Preface, Michael A. Walker / ix PART ONE POLITICAL, ECONOMIC AND CIVIL FREEDOMS: A CONCEPTUAL, HISTORICAL AND STATISTICAL OVERVIEW 1 INSTITUTIONS, ECONOMIC GROWTH AND FREEDOM: AN HISTORICAL INTRODUCTION, Douglass C. North / 3 Discussion / 26 2 CAPITALISM AND FREEDOM, Milton Friedman / 47 Discussion / 59 3 THE STATE OF THE WORLD POLITICAL AND ECONOMIC FREEDOM, Raymond D.
    [Show full text]
  • How Far Is Vienna from Chicago? an Essay on the Methodology of Two Schools of Dogmatic Liberalism
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Paqué, Karl-Heinz Working Paper — Digitized Version How far is Vienna from Chicago? An essay on the methodology of two schools of dogmatic liberalism Kiel Working Paper, No. 209 Provided in Cooperation with: Kiel Institute for the World Economy (IfW) Suggested Citation: Paqué, Karl-Heinz (1984) : How far is Vienna from Chicago? An essay on the methodology of two schools of dogmatic liberalism, Kiel Working Paper, No. 209, Kiel Institute of World Economics (IfW), Kiel This Version is available at: http://hdl.handle.net/10419/46781 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Kieler Arbeitspapiere Kiel Working Papers Working Paper No.
    [Show full text]
  • Uncertainty, Evolution, and Behavioral Economic Theory
    UNCERTAINTY, EVOLUTION, AND BEHAVIORAL ECONOMIC THEORY Geoffrey A. Manne, International Center for Law & Economics Todd J. Zywicki, George Mason University School of Law Journal of Law, Economics & Policy, Forthcoming 2014 George Mason University Law and Economics Research Paper Series 14-04 Uncertainty, Evolution, and Behavioral Economic Theory Geoffrey A. Manne Executive Director, International Center for Law & Economics Todd J. Zywicki George Mason University Foundation Professor of Law George Mason University School of Law Abstract: Armen Alchian was one of the great economists of the twentieth century, and his 1950 paper, Uncertainty, Evolution, and Economic Theory, one of the most important contributions to the economic literature. Anticipating modern behavioral economics, Alchian explains that firms most decidedly do not – cannot – actually operate as rational profit maximizers. Nevertheless, economists can make useful predictions even in a world of uncertainty and incomplete information because market environments “adopt” those firms that best fit their environments, permitting them to be modeled as if they behave rationally. This insight has important and under-appreciated implications for the debate today over the usefulness of behavioral economics. Alchian’s explanation of the role of market forces in shaping outcomes poses a serious challenge to behavioralists’ claims. While Alchian’s (and our) conclusions are born out of the same realization that uncertainty pervades economic decision making that preoccupies the behavioralists, his work suggests a very different conclusion: The evolutionary pressures identified by Alchian may have led to seemingly inefficient firms and other institutions that, in actuality, constrain the effects of bias by market participants. In other words, the very “defects” of profitable firms — from conservatism to excessive bureaucracy to agency costs — may actually support their relative efficiency and effectiveness, even if they appear problematic, costly or inefficient.
    [Show full text]
  • The Theory of the Firm and the Theory of the International Economic Organization: Toward Comparative Institutional Analysis Joel P
    Northwestern Journal of International Law & Business Volume 17 Issue 1 Winter Winter 1997 The Theory of the Firm and the Theory of the International Economic Organization: Toward Comparative Institutional Analysis Joel P. Trachtman Follow this and additional works at: http://scholarlycommons.law.northwestern.edu/njilb Part of the International Trade Commons Recommended Citation Joel P. Trachtman, The Theory of the Firm and the Theory of the International Economic Organization: Toward Comparative Institutional Analysis, 17 Nw. J. Int'l L. & Bus. 470 (1996-1997) This Symposium is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Northwestern Journal of International Law & Business by an authorized administrator of Northwestern University School of Law Scholarly Commons. The Theory of the Firm and the Theory of the International Economic Organization: Toward Comparative Institutional Analysis Joel P. Trachtman* Without a theory they had nothing to pass on except a mass of descriptive material waiting for a theory, or a fire. 1 While the kind of close comparative institutional analysis which Coase called for in The Nature of the Firm was once completely outside the universe of mainstream econo- mists, and remains still a foreign, if potentially productive enterrise for many, close com- parative analysis of institutions is home turf for law professors. Hierarchical arrangements are being examined by economic theorists studying the or- ganization of firms, but for less cosmic purposes than would be served3 by political and economic organization of the production of international public goods. I. INTRODUCrION: THE PROBLEM Debates regarding the competences and governance of interna- tional economic organizations such as the World Trade Organization * Associate Professor of International Law, The Fletcher School of Law and Diplomacy, Tufts University.
    [Show full text]
  • Portfolio Diversification, Market Power, and the Theory of the Firm
    Working Paper WP-1170-E March, 2017 PORTFOLIO DIVERSIFICATION, MARKET POWER, AND THE THEORY OF THE FIRM José Azar IESE Business School – University of Navarra Av. Pearson, 21 – 08034 Barcelona, Spain. Phone: (+34) 93 253 42 00 Fax: (+34) 93 253 43 43 Camino del Cerro del Águila, 3 (Ctra. de Castilla, km 5,180) – 28023 Madrid, Spain. Phone: (+34) 91 357 08 09 Fax: (+34) 91 357 29 13 Copyright © 2017 IESE Business School. IESE Business School-University of Navarra - 1 The Public-Private Sector Research Center is a Research Center based at IESE Business School. Its mission is to develop research that analyzes the relationships between the private and public sectors primarily in the following areas: regulation and competition, innovation, regional economy and industrial politics and health economics. Research results are disseminated through publications, conferences and colloquia. These activities are aimed to foster cooperation between the private sector and public administrations, as well as the exchange of ideas and initiatives. The sponsors of the Public-Private Sector Research Center are the following: Ajuntament de Barcelona Departament d’ Economia i Coneixement de la Generalitat de Catalunya Departament d’ Empresa i Ocupació de la Generalitat de Catalunya Diputació de Barcelona EVERIS Fundació AGBAR Institut Català de les Empreses Culturals (ICEC) PricewaterhouseCoopers Sanofi The contents of this publication reflect the conclusions and findings of the individual authors and not the opinions of the Center's sponsors. IESE Business School-University of Navarra Portfolio Diversification, Market Power, and the Theory of the Firm José Azar∗ January 30, 2017 Abstract This paper develops a model of firm behavior in the context of oligopoly and port- folio diversification by shareholders.
    [Show full text]
  • Encyclopedia of Law & Economics
    5610 THE THEORY OF THE FIRM Nicolai J. Foss Department of Industrial Economics and Strategy Copenhagen Business School Henrik Lando Department of Finance Copenhagen Business School Steen Thomsen Institute of International Business Aarhus Business School © Copyright 1999 Nicolai J. Foss, Henrik Lando, and Steen Thomsen Abstract This chapter is a survey of modern theories of the firm. We categorize these as belonging either to the principal-agent or the incomplete contracting approach. In the former category fall, for example, the Alchian and Demsetz moral hazard in teams theory as well as Holmstrøm and Milgrom’s theory of the firm as an incentive system. Belonging to the incomplete contracting branch are theories that stress the importance of the employment relationship (for example, Coase and Simon) as an adaptation mechanism, theories that stress the importance of ownership of assets for affecting incentives when contracts must be renegotiated (Williamson, Grossman and Hart, Hart and Moore), and some recent work on implicit contracts (Baker, Gibbons and Murphy). We argue that these different perspectives on the firm should be viewed as complementary rather than as mutually exclusive and that a synthesis seems to be emerging. JEL classification: K22, L22 Keywords: Principal-Agent Problems, Incomplete Contracts, Moral Hazard, Employment Relationship, Firm Ownership, Renegotiation 1. Introduction: The Emergence of the Theory of the Firm Along with households, firms have for a long time been a crucial part of the explanatory set-up of economics. For example, in basic price theory, firms are part of the apparatus that helps us trace out the effect on endogenous variables of changes in exogenous variables.
    [Show full text]
  • The Theory of the Firm, the Theory of Competition and the Transnational Corporation Janis Kapler University of Massachusetts Boston, [email protected]
    University of Massachusetts Boston ScholarWorks at UMass Boston Economics Faculty Publication Series Economics 1-1-2006 The Theory of the Firm, the Theory of Competition and the Transnational Corporation Janis Kapler University of Massachusetts Boston, [email protected] Follow this and additional works at: http://scholarworks.umb.edu/econ_faculty_pubs Part of the Labor Economics Commons Recommended Citation Kapler, Janis, "The Theory of the Firm, the Theory of Competition and the Transnational Corporation" (2006). Economics Faculty Publication Series. Paper 7. http://scholarworks.umb.edu/econ_faculty_pubs/7 This Occasional Paper is brought to you for free and open access by the Economics at ScholarWorks at UMass Boston. It has been accepted for inclusion in Economics Faculty Publication Series by an authorized administrator of ScholarWorks at UMass Boston. For more information, please contact [email protected]. 1 THE THEORY OF THE FIRM, THE THEORY OF COMPETITION, AND THE TRANSNATIONAL CORPORATION Working paper, 9/06 J. K. Kapler, Associate Professor University of Massachusetts at Boston Department of Economics 100 Morrissey Boulevard Boston, MA 02125-3393 (phone) 617-287-6955 (fax) 617-287-6976 [email protected] 2 ABSTRACT The Theory of the Firm, The Theory of Competition, and The Transnational Corporation (TNC) JEL F23 Coase’s 1937 paper on “The Nature of the Firm” formed the basis of the transaction-cost and internalization theories of transnational enterprises in the 1970s-1990s. These emphasized the problem of firms transferring intangible assets across national borders. Newer theories of the firm adopt resource- based Penrosian, knowledge-based, capabilities and evolutionary perspectives, yet most continue to explain the international firm as a function of transaction-cost economizing.
    [Show full text]
  • Opportunism in Corporate Management
    Folia Oeconomica Acta Universitatis Lodziensis ISSN 0208-6018 e-ISSN 2353-7663 www.czasopisma.uni.lodz.pl/foe/ 6(345) 2019 DOI: http://dx.doi.org/10.18778/0208-6018.345.04 Stanisław Rudolf WSB University in Gdańsk, Institute of Management and Finance, Department of Management [email protected] Opportunism in Corporate Management Abstract: A growing interest in the phenomenon of economic opportunism can be mainly explained by new institutional economics (NIE). It has changed the limitation of that phenomenon into the main method of increasing the efficiency of business entities. Opportunistic attitudes and behaviour can be particularly observed in a business entity. A tendency towards opportunism should be considered both while entering contracts and while developing a strategy for a company. The article is aimed at presenting the essence of opportunism and at defining its place in new institutional economics. It is also aimed at identifying opportunistic attitudes in corporate operation and at indicating the ways to limit such attitudes. While analysing the role of opportunism in corporate management, the main focus shall be set on op‑ portunistic interdependencies in corporate governance. Opportunistic attitudes may be presented not only by the management board of a company but also by its other stakeholders. They may use incompleteness of agreements that have been entered into or asymmetry of information in order to increase their gain at the expense of others. The article provides a more detailed analysis of op‑ portunistic attitudes presented by employee organisations in highly developed countries as well as in post‑communist countries, where opportunism is manifested in demanding attitudes or in pro‑ tection of monopolist positions.
    [Show full text]
  • Towards a Political Theory of the Firm
    NBER WORKING PAPER SERIES TOWARDS A POLITICAL THEORY OF THE FIRM Luigi Zingales Working Paper 23593 http://www.nber.org/papers/w23593 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 July 2017 I thank Mark Gertler, Gordon Hanson, Enrico Moretti, Tim Taylor for very useful comments and Steve Haber for educating me on the multiple ways in which Google lobbies. Financial support from the Stigler Center and from the George Rinder Research fund at the University of Chicago is gratefully acknowledged. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2017 by Luigi Zingales. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Towards a Political Theory of the Firm Luigi Zingales NBER Working Paper No. 23593 July 2017 JEL No. G3 ABSTRACT Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a “Medici vicious circle,” where money is used to get political power and political power is used to make money.
    [Show full text]
  • Fallacies in the Interpretation of the Externality Problem
    FALLACIES IN THE ECONOMIC DOCTRINE OF EXTERNALITIES Harold Demsetz, Professor Emeritus, UCLA (This draft: 7/19/2010; First draft: 9/29/2009) This essay refutes contemporary doctrine toward externalities and offers a different view, one that is much narrower in application, of what we now call the externality problem. Discussion of externalities has continued for almost 100 years. I do not trace the details of this long history but, instead, focus on the two major turning points that shape current doctrine. These are The Economics of Welfare (1920) by A. C. Pigou and ‘The Problem of Social Cost’ (1960) by R. H. Coase. Contemporary doctrine seems to have settled into a state of quiet toleration of the different views offered by these two works, at least as compared to the heated debates during the years that followed immediately on the appearance of Coase’s paper. The present essay is intended to disrupt this quietude, for I am convinced that Pigou, Coase, and, more generally, the economics profession view this problem wrongly. The present essay contains three parts, a prefatory note intended to clear away potential confusions, a refutation of Pigou’s and Coase’s views, and a suggested alternative to these.1 I. Prefatory note. The 18th century debate between mercantilists and Scottish philosophers came to an important juncture in 1776 with publication of Adam Smith’s inquiry into The Wealth of Nations. Smith’s contributions to the emerging new discipline of economics were multifaceted and far reaching, but the contribution most relevant to this debate was his argued claim that a competitive, private ownership economy in which persons acted freely to improve their own interests could, and would, serve public interests.
    [Show full text]
  • Egalitarian Liberalism and Economic Freedom
    University of Pennsylvania ScholarlyCommons Publicly Accessible Penn Dissertations 2019 Egalitarian Liberalism And Economic Freedom Pierce Randall University of Pennsylvania Follow this and additional works at: https://repository.upenn.edu/edissertations Part of the Philosophy Commons Recommended Citation Randall, Pierce, "Egalitarian Liberalism And Economic Freedom" (2019). Publicly Accessible Penn Dissertations. 3680. https://repository.upenn.edu/edissertations/3680 This paper is posted at ScholarlyCommons. https://repository.upenn.edu/edissertations/3680 For more information, please contact [email protected]. Egalitarian Liberalism And Economic Freedom Abstract This dissertation considers three major challenges to egalitarian liberal institutions made by classical liber- als: that egalitarian liberal institutions involve too much coercive interference with individual economic decisions, that free markets tend to do better at rewarding people on the basis of their economic choices, and that only by recognizing full liberal rights of ownership can a society best promote a stable property regime consistent with our pre-political conventions of ownership. Each of these objections fails, but they point to an underlying concern that egalitarian liberal institutions fail to adequately protect economic freedom. The dissertation then develops and defends a conception of economic freedom that is reflected in egalitar- ian liberal institutions. Economic freedom depends on the quality and availability of options individuals have in markets,
    [Show full text]
  • Can Government Think?
    Can Government Think? Climate change, fi nancial crises, and other issues of global scale no longer concern only the developed world. The binding power of globalization has placed these challenges at the doorstep of almost every country, testing the evolutionary capacity of monolithic governance systems burdened by institutional legacy and administrative stagnation. This book locates the concept of adaptive governance, used primarily in environmental management, within the context of economic policy. Introducing fl exible economic opportunism, it argues that a particular style of institutional and administrative versatility enables innovative, evidence- based policy development. This book mines institutional economics, public administration, and research theory and practice for complementary elements that can inform an emerging governance paradigm based on fl exible economic opportunism. Through an eclectic suite of cases from the developing and developed worlds, including Asia and North America, this book reveals how patterns of institutional and adminis- trative change impact the effi cacy of public policy. Flexibility may be this century’s most critical dimension of global competitiveness, and systems confi gured to quickly and comprehensively capture economic opportunities will win the mar- ketplace of development ideas. This book advances that discussion. Kris Hartley is a Singapore-based researcher and consultant focusing on eco- nomic development, public policy, and urbanization. With a decade of public and private sector experience, he has consulted on a variety of topics, including earth- quake recovery, fi nancial regulation, infrastructure asset management, and nuclear energy policy. Working on solutions with high economic and social impact, Kris is currently conducting research about urban revitalization and water resource management in Singapore and Hong Kong, provincial governance and economic competitiveness in Vietnam, and industrial estate development in Thailand.
    [Show full text]