Hobbes, Rawls and the Constitutional Political Economy Project

1
Hobbes, Rawls and the Constitutional Political
Economy Project

• Peter J. Boettke
• Econ 828/Fall 2004
• 15 November

2
Thomas Hobbes (1588-1679) and the Social Contract

• Leviathan (1751)
• State of nature
• Social contract with sovereign
• Authoritarian nature of good government

3
Brief Biography and Impact of Rawls

• Born February 1921, Died November 2002, age of 81
• Educated at Princeton (PhD 1950), joined Harvard
  in 1962.
• Considered by many the most influential political
  philosopher of the 20th century
• Most important book, A Theory of Justice (1971)

4
The Construction of Rawlss System

• The Original Position, veil of ignorance and the
  social contract
• Two principles of justice
• Justice trumps concerns with efficiency
  reflective equilibrium

5
The Original Position and the Veil of Ignorance
Construct

• Rawls as a rational choice theorist
• Rational choice within a world in which interests
  are either uncertain or non-existent
• The meta-ethics of the social contract
• Intended not to determine what just action is,
  but to create a framework within which actions
  can be evaluated as just or not

6
Two Principles of Justice

• Maximum Equal Liberty
• Basic structure must provide each individual with
  basic liberties, e.g., freedom of conscience,
  freedom of expression, due process, etc.
• Difference Principle
• Inequalities in wealth and social position must
  be arranged such that the least advantaged in
  society are best off (max/min)

7
Justice Trumps Efficiency

• Social goods are Liberty, opportunity, income,
  wealth, self-respect are to be distributed
  equally, unless an unequal distribution could be
  shown to benefit the least advantaged in society
  the allocation of these goods is determined by
  the basic structure of society
• Rank order such that only liberty can trump
  liberty
• Natural goods are Health, intelligence,
  imagination (creativity) --- not directly under
  the control of the basic structure of society

8
Is Rawlss System Socialism?

• Intellectual trick --- justice trumps efficiency,
  but since efficiency is not threatened the choice
  is not difficult
• Bad economics
• Incentive effects
• Informational inefficiencies
• Once the threat is recognized, then what?
• Process versus End-State distributive justice
• Is there a libertarian reading of Rawls?

9
Buchanans contributions to political economy in
The Limits of Liberty and the Reason of Rules

• Pre- and Post-Constitutional Levels of Analysis
• Rules
• Strategies
• Simple analytics of Liberty
• Incentive compatibilities, informational
  capabilities, and exchange opportunities
• Debunking the myth of the benevolent despot
• Role of homo-economicus in political economy
  modeling

10
The Role of Social Contract Theory in Buchanans
work

• Veil of Ignorance as thought experiment to get
  normative start state for unanimity standard
• Society based on agreement, not natural rights
• The Status of the Status Quo in the examination
  of any given social analysis
• Compensation Principle

11
The Argument in The Limits of Liberty

• Big Picture --- anarchy is philosophically
  desirable, but practically undesirable for at
  least two reasons (1) exploitation of the weak by
  the strong and (2) this will generate less
  aggregate output than otherwise and thus our
  lives will be nasty, brutish and short. On the
  other hand, leviathan also generates an
  equilibrium that is nasty, brutish and short.
• The project, then, is to find the right trade-off
  between anarchy and leviathan that enables us to
  maximize our liberty and prosperity

12
Anarchy and Leviathan Depiction
Econ Performance
Rules in Operation
100
0
13
The Analytical Puzzle in the Limits

• Can we empower the Protective State (police,
  courts, national defense) and the Productive
  State (public goods) without succumbing to the
  influence of the Redistributive State (interest
  group politics and rent-seeking)?

14
But if Behavioral We are Built for Leviathan,
Then Can we Construct Institutions that Give Us
Liberty?

• The Power to Tax as the intermediate step between
  The Limits of Liberty and The Reason of Rules
• Assuming a Revenue maximizing Leviathan and then
  looking at fiscal policy restrictions which will
  constrain the state to behave as if it wasnt a
  revenue maximizing Leviathan, but a wealth
  maximizing enlightened leader (institutions, not
  leaders are the cause)
• Mancur Olsons model of encompassing and narrow
  interests is vital to this exercise
• Roving versus stationary bandits

15
The Reason of Rules

• Methodological defense of the approach developed
  in The Limits of Liberty and The Power to Tax,
  see. p. 74.
• Worst Case Theorizing in Political Economy
• Different points of departure for different
  analysis
• Value freedom in analysis of alternative systems
• Robustness concerns in the construction of
  alternatives
• Time Inconsistency Issues
• The power of rules to bind, and the role that
  binding plays in achieving more than would be
  possible under discretion

16
Conclusion

• The Games of Social Organization that are
  played are determined by the rules that are in
  place and their enforcement
• Rules are social capital which can be eroded
  through either our neglect, or our disrespect
• Rules outperform Discretion
• We can constrain the natural proclivities of man
  and of government, but we can only do so through
  a constitutional design the establishes rules of
  the game which bind those proclivities and change
  the expectations of what to expect from that
  institution
• Politics By Principle, Not Interest follows on
  the heels of these works and takes the tact of
  constraining the choice set rather than
  constraining the choice rule