A Constitutional Political Economy Perspective on International Trade

International Relations/Trade,

Funding Asymmetries in Electoral Competition: How important is a level playing field?

I investigate the idea that campaign spending limits may help to level the playing field in electoral competition between parties who have unequal access to campaign funds. The model assumes that the supporters of one party are on average wealthier than those who support a competing party. Contributions are used to finance advertisements that truthfully reveal information about the quality of candidates. Voters update their beliefs rationally based on information revealed during the campaign. Rational beliefs are shown to compensate for funding asymmetries in equilibrium. As a result, asymmetries in access to funds do not bias the electoral outcome from an ex ante perspective. A limit on campaign expenditures does not affect the relative chances of the two parties, while leading to unintended negative consequences. I conclude that the level playing field argument in support of expenditure limitations is inconsistent with the key assumptions of the analysis and offer some suggestions for future research.Elections, Campaign Finance, Parties, Campaign Contributions, Asymmetries, Voting

Liberal constitutionalism, constitutional liberalism and democracy

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Schumpeter and Mises as 'Austrian economists'

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Market and State: The Perspective of Constitutional Political Economy

The paper approaches the "market versus state" issue from the perspective of constitutional political economy, a research program that has been advanced as a principal alternative to traditional welfare economics and its perspective on the relation between market and state. Constitutional political economy looks at market and state as different kinds of social arenas in which people may realize mutual gains from voluntary exchange and cooperation. The working properties of these arenas depend on their respective constitutions, i.e. the rules of the game that define the constraints under which individuals are allowed, in either arena, to pursue their interests. It is argued that "improving" markets means to adopt and to maintain an economic constitution that enhances consumer sovereignty, and that "improvement" in the political arena means to adopt and to maintain constitutional rules that enhance citizen sovereignty. --Economics of rules,welfare economics,constitution of markets,constitution of politics

The Freiburg School: Walter Eucken and Ordoliberalism

What has become known as the Freiburg School or the Ordo-liberal School was founded in the 1930s at the University of Freiburg in Germany by economist Walter Eucken (1891-1950) and two jurists, Franz Böhm (1895-1977) and Hans Großmann-Doerth (1894-1944). Freiburg University's "Fakultät für Rechts- und Staatswissenschaften" that included law as well as economics provided a conducive framework for the combination of legal and economic perspectives that is characteristic of the Freiburg School and of the Ordo-liberal tradition. As Böhm later said in retrospect, the founders of the school were united in their common concern for the question of the constitutional foundations of a free economy and society. In the first volume (Böhm 1937) of their jointly edited publication series Ordnung der Wirtschaft, the three editors included a co-authored programmatic introduction, entitled "Our Task" (Böhm, Eucken and Großmann-Doerth 1989), in which they emphasized their opposition to the, then still influential, heritage of Gustav von Schmoller's Historical School, and to the unprincipled relativism that, in their view, this heritage had brought about in German jurisprudence and political economy. By contrast, they stated as their guiding principle that the "treatment of all practical politico-legal and politico-economic questions must be keyed to the idea of the economic constitution" (ibid.: 23), a task for which, they said, the collaboration of law and economics "is clearly essential" (ibid.: 25). --

On the Complementarity of Liberalism and Democracy

The growth of the democratic welfare state has been accompanied by significant restrictions on individual liberty, raising doubts about the sustainability of the ideals of liberalism in democratic polities. The principal claim of this paper is that, adequately understood, liberalism and democracy represent complementary ideals. The argument in support of this claim is based on a distinction between three levels at which liberalism and democracy can be compared, namely the level of their ?institutional embodiment,? the level of their principal focus, and the level of their underlying normative premise. It is argued that democracy and liberalism share the same fundamental normative premise, namely the principle of individual sovereignty, that they complement each other in their respective principal foci, namely citizen sovereignty and private autonomy, but that frictions between the two ideals have arisen at the level of their institutional implementation. It is conjectured that the threat that the democratic welfare state has posed to the ideals of liberalism must be attributed to particular institutional realizations of the ideal of democracy, not to the ideal itself. It is discussed what kinds of reforms in political institutions are needed in order for liberalism and democracy to be in harmony, not only at the level of their normative premises but also at the level of their institutional implementation. --

Austrian Economics, Evolutionary Psychology and Methodological Dualism: Subjectivism Reconsidered

The methodological individualism and subjectivism of the Austrian tradition in economics is often associated with a methodological dualism, i.e. the claim that the nature of its subject matter, namely purposeful and intentional human action, requires economics to adopt a methodology that is fundamentally different from the causal explanatory approach of the natural sciences. This paper critically examines this claim and advocates an alternative, explicitly naturalistic and empiricist outlook at human action, exemplified, in particular, by the research program of evolutionary psychology. It is argued that, within the Austrian tradition, a decidedly naturalistic approach to subjectivism can be found in F.A. Hayek's work. --Austrian economics,evolutionary psychology,methodological dualism,subjectivism

Consumer welfare, total welfare and economic freedom: on the normative foundations of competition policy

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Rational choice, preferences over actions and rule-following behavior

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