Learning through institutional competition

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The boundaries of the state

The paper is organized as follows: in part 2, I give a short account of Humboldt's boundaries of the state that relates to many present-day challenges to classical liberalism: his blunt rejection of any solicitude of the state for the positive welfare of the citizen which also covers education, religion and any kind of moral paternalism. In part 3, I refer to the new economic literature on the optimal size and number of nations in order to discuss whether small states are more likely to be (nearly) minimal states. This literature tends to disregard Humboldt's arguments in favour of exposing the individual to varieties of situations that he can choose and from which he can learn to self-develop. Therefore, in part 4, I argue that the evolutionary merits of this exposure can be illustrated by regarding institutional competition as a Hayekian discovery procedure. In part 5, I look at the partial removal of borders within the European Union and, using some intuitions from club theory, I argue that, in terms of the size of European government, integration has become in most areas too deep whereas in terms of the size of membership in the Union the EU has grown too big in some areas and too small in others. I conclude with a plea for more decentralization and competition amongst jurisdictions as a way to lead, as if by an invisible hand, to at least somewhat more limited states. My qualified claim is thus: more, and more open, boundaries between states lead to more limited governments. --

The Communicative Character of Capitalistic Competition: A Hayekian response to the Habermasian challenge

"Ideal speech situations", "domination-free discourse" or "deliberative communities" describe political ideals proudly cherished by many sociologists. The sometimes explicit, sometimes implicit, motivation is to mobilise political discourse as an instrument to tame or transform the capitalistic "system" according to alleged needs of "society". Most economists and defenders of capitalistic competition, in return, don?t care about communicative communities. The individual market actor is assumed or demanded to be free to choose among given alternatives satisfying given preferences subject to given constraints. Why, then, should homo oeconomicus argue (van Aaken 2003)? There is no "communicative action" among the individuals that populate economic textbooks, there is only "commutative action". Only a few, mostly "Austrian", economists realised that the exchange of goods and services within the spontaneous order of "catallaxy" involves an exchange of knowledge, ideas, opinions, expectations, and arguments – that markets are indeed communicative networks (e.g. Hayek 1946/48; Lavoie, ed. 1991; Horwitz 1992). In fact, and this will be my major claim, market competition is more "deliberative" than politics in the sense that more information about available social problem solutions and their comparative performance, about people's preferences, ideas and expectations is spontaneously created, disseminated and tested. This very idea is anathema for followers of Habermasian discourse ethics. The intellectual thrust and political clout of their vindication of deliberative politics critically seems to depend on a mostly tacit assumption that markets fail to address social needs and regulate social conflicts. Political discourse therefore ?steps in to fill the functional gaps when other mechanisms of social integration are overburdened? (Habermas 1996: 318). I will claim that the argument should be very much the other way around: politics and public deliberations are overburdened mechanisms – unable to deal with an increasingly complex and dynamic society. Moreover, the requisites of ideal speech communities are so enormous that functional gaps are inevitable. Partly, these gaps can be closed if market competition steps in. Partly, reorganisations of the political system are needed. Hence, I am not arguing that Habermas is wrong by stressing the need for open discourse in order to reach informed agreement among citizens who seek to realise mutual gains from joint commitment by contributing to common (public) goods and submitting to common rules of conduct (s.a. Vanberg 2003). I am challenging his neglect of capitalistic competition as a communicative device and his disdain for the classical liberal conception of bounded democracy that respects individual property rights (e.g. Habermas 1975; 1998). --

Capitalistic Competition as a Communicative Community - Why Politics Is Less “Deliberative” than Markets

Discourse theorists such as Habermas tend to disregard the communicative character and discoursive power of market processes and at the same time overrate the ability of political deliberation to discover and implement social problem solutions. Mainstream economists have little to contribute to this debate since they regard both economic and political “markets” as simple instruments for the aggregation of given preferences. Hayek and other “Austrian” market process theorists, however, provide a rich theory that highlights the role of competition as a process of discovery, persuasion, experimentation and opinion formation. I use this analytical framework in order to show first that real market processes in many respects correspond to most ambitious claims of ideal deliberation such as “domination-free discourse” or “the unforced force of the better argument”. Next, I confront the deliberative ideal with predicaments of real political discourse, stressing opportunity costs (rational ignorance, shortage of attention, decision costs), asymmetric incompetence and the interventionist bias of political deliberation, and problems of “cheap talk” (preference falsification, opinion cascades, enclave deliberation). In order to make political discourse most effective within the limits described above, I argue in favour of privatisation, decentralisation and constitutionalisation as policy conclusions. I end with a summary comparison of economic and political competition as means to discover and disseminate local knowledge in society.discourse theory; market process theory; deliberative democracy; preference falsification; opinion formation; interventionism

A European social model of state-market relations: the ethics of competition from a neo-liberal perspective

In this paper I portray "neo-liberalism" in its original conceptual meaning as opposed to the generic term of depreciation as which it is commonly used. I identify fair competition and the denial of all privilege as the major concerns of original neo-liberals. Ethical merit for competition might, at first sight, be based on only two principles: individual natural rights (equal liberty) and socially desirable outcomes ("unintended altruism"). It was the neo-liberal idea to put fairness-norms or universally applicable rules of just behaviour between an unqualified "input-based" ethics and an unqualified "output-based" ethical consequentialism. The enforcement of such rules is a major obligation of the state. Today, the European Union assumes the role of "guardian" of competition. In a certain, but limited sense, neoliberalism, correctly understood, can be argued to be the one founding "European Social Model". However, beyond the realm of common, universalisable interests, competition amongst social-political models seems a preferable option for Europe. --Neo-liberalism,Ordo-liberalism,European Social Models,Ethics of Competition

Analysis of the Effects of Impurities in Silicon

A solar cell fabrication and analysis program was conducted to determine the effects on the resultant solar cell efficiency of impurities intentionally incorporated into silicon. The program employed flight quality technologies and quality assurance to assure that variations in cell performance were due to the impurities incorporated in the silicon. The initial verification runs have resulted in an average AM0 cell efficiency of 12.8% at 25 C

Globalisability of Universalisability? How to apply the Generality Principle and Constitutionalism internationally

Our aim is to address some elementary aspects of the innate trade-off between both classical liberal requirements for an adequate order of rules: (a) effectiveness in the sense of the rules' congruence with a given order of (economic) actions and (b) legitimacy in the sense of the rules? congruence with the given social-cultural conditions of (political) consent. In the following part 2, we review Hayek's own account of the requirements of a liberal international order of rules, finding several arguments that help to further illustrate the above-mentioned trade-off. But we will hardly find Hayek relate his legal and political philosophy of "universalisability" to assessments of international governance. Therefore, we have to go back to Hayek's accounts of universalisable rules of just conduct in part 3 in order to prepare our account of such rules' globalisability. In part 4 we address the generality norm as a constitutional principle for the governance structure of an international order. Both general, proscriptive rules and specific, prescriptive regulations of the international order are contrasted in part 5, as we find them today both on the level of WTO and of EU rules and regulations. Part 6 offers a summary conclusion of our empirical and normative-theoretical observations. We cannot endeavour here to discuss all major elements of existing international law or of an ideal global "constitution of liberty". In fact, we will only occasionally be more explicit about material contents of the rules of the game. This is not only because such a task would be beyond the scope of a single paper. It is also because we like to focus our attention on formal principles that should, in our view, inform any (re-) construction of international governance. --

Evaluation of renewable energy policies in an integrated economic-energy-environment model

This paper evaluates socio-economic impacts of alternative renewable energy policies in Poland. Applying a general equilibrium bioenergy model we perform simulations of alternative policy instruments. The obtained numerical results allow us to assess and compare welfare and distributional impacts of alternative policies. Our empirical findings advocate that the bioenergy sector in Europe would benefit most from an integrated economic-energy-environment approach to policy making.GEM-E3 Forestry Renewable energy.

Strategies of Flexible Integration and Enlargement of the European Union: a Club-theoretical and Constitutional Economics Perspective

Our paper proceeds as follows: As a point of departure, part two highlights the heterogeneity among EU member states following the recent enlargement, while part three reviews three main alternative conceptions of flexible integration as they were discussed in political circles. Part four applies Buchanan's and Tullock's Calculus of Consent (1962) to the tension between deepening and widening the EU. Part five introduces basic elements of the economic theory of clubs, analyzes the notion of the EU as a club and examines flexible integration in a club-theoretical framework. Part six considers several alternative integration models in view of the conclusions of both club theory and constitutional economics, while part seven focuses more specifically on a club-of-clubs approach that we tend to favour as an ideal-type model for a European Union of the future. Part eight evaluates the relative weaknesses and strengths of flexible integration according to the club-of-clubs approach and part nine advocates some further institutional recommendations before part ten concludes. --