The Economics of Constraining Leviathan


While everyone is busy making sense of the election, I figured I would stop on by ye olde blog and talk about something completely unrelated...

A question I have thought a lot about lately is how can institutions evolve or be designed as to constrain Leviathan. For those of you who forgot your Hobbes, remember, Leviathan is the all-powerful government which people empower so that we can stop killing each other in a state of nature.

But how do we constrain Leviathan once we have given it power?

Some economists might view that question as outside of their purview (it isn't taught in "core" economics courses). I do not. This is at the core of economics, a field all about understanding constrains and the trade-offs that constraints impose.

In fact, going back to at least the work of James Buchanan this question has been seriously addressed within the technical economic literature. Buchanan argued that these questions are exactly what economists should tackle. As he wrote when starting The Thomas Jefferson Center in 1958:

The Thomas Jefferson Center strives to carry on the honorable tradition of ‘political economy’ – the study of what makes for a ‘good society.’  Political economists stress the technical economic principles that one must understand in order to assess alternative arrangements for promoting peaceful cooperation and productive specialization among free men.

One aspect of promoting peaceful cooperation requires a taming of Leviathan, a taming of the overpowerful staes. And that aspect of study seems especially relevant today.

But political economists need not start from scratch. Economists have built up a technical framework to answer these questions, much of it done by Buchanan and his colleagues.  For an overview of Buchanan's work on this topic, see Dennis Mueller (gated or ungated WP). From Buchanan directly, I'd also recommend (all free online thanks to Liberty Fund)

Outside of Buchanan's work, I'd suggest Mueller on Constitutional Democracy, Boettke and Palagashvili, and Weingast on Market Preserving Federalism (HT: Scott King). Some of these deal directly with how to constrain Leviathan. Others look more broadly at how the rules governing state action affects outcomes. All important questions that economics can help address.

So I urge my fellow economists to "strive to carry on the honorable tradition," especially as it relates to understanding which institutions will allow us to constrain Leviathan. If you have further recommendations, let me know in the comments. It is a noble topic for us to study.

Or we could keep looking for those illusive optimal tax policies to tell a "social planner."