The golden age of mercenaries

August, 2021

Between the mid-thirteenth and mid-fifteenth centuries, Italian city-states abandoned citizen militaries for militaries composed of mercenaries: foreign soldiers for hire. So dramatic was the switch that this epoch has been called “the golden age of mercenaries,” and so treacherous did the mercenaries prove that Niccolò Machiavelli would later denounce them as “useless and dangerous.” Italian rulers knew of mercenaries’ infamous reputation when they hired them. To explain the puzzling fact that rulers hired mercenaries anyway, we develop a theory of military composition in which political circumstance constrains ruler choice. Comparative analysis of Venice and Florence provides evidence for our explanation.

Transition Economies

January, 2018

Must the rule of law spring upon us solely by accident and force, or can it also emerge as a product of political reflection and choice? As the lessons from the political and economic transition of centrally planned economies in Europe and Asia illustrate, the transitional movement requires an element of political reflection and deliberate choice, specifically the establishment a binding and credible commitment to limits on state action. In order to do so, credible commitment to the rule of law must be signaled exante by political reformers if reform efforts are to be successful, from which economic development follows expost. The historical record shows, however, that efforts to establish the rule of law in transition economies have been mixed. This chapter explains why this is the case, specifically by comparing Russia and China as case studies of transitional political economy.

Rule of Law and Economic Performance

September, 2018

This entry explores the connection between the rule of law and economic performance. First, we analyze the role of interjurisdictional competition, and how the rule of law emerged as a by-product of this competitive process, initially in Western Europe. Second, we discuss the role of intrajurisdictional competition between interest groups, which reinforced the emergence of the rule of law within states. Finally, we discuss the mechanism by which the rule of law successfully or unsuccessfully became established in Western offshoots, particularly in Africa and the Americas, affecting the long-term economic performance of these areas.

Rule of Law

September, 2018

This entry explores the role of the rule of law in a market economy. The emergence of the rule of law is a precondition of not only political and economic liberty but also economic growth and overall human progress. The presence, or lack thereof, of the rule of law determines whether human interaction will be positive-sum or negative-sum in nature. We explore first the fundamental attributes to the rule of law in relation to property rights and entrepreneurship. Second, we discuss in detail three attributes to the rule of law that generate this productive entrepreneurial process: (1) generality, (2) predictability, and (3) equality.

Visions of entrepreneurship policy

December, 2018

The purpose of this paper is to present and compare alternative theoretical frameworks for understanding entrepreneurship policy: targeted interventions to increase venture creation and/or performance. The authors contrast the Standard view of the state as a coherent entity willing and able to rectify market failures with an Individualistic view that treats policymakers as self-interested individuals with limited knowledge.

The Art and Science of Economic Explanation

April, 2020

This introduction to the special issue in honor of Professor Yoram Barzel provides an overview of his scholarship and a summary of the contributions to this special issue. Each contribution advances or elaborates upon major themes in Barzel's theoretical and applied work on property rights, transaction costs, and political economy. The contributions fall into three categories: an examination of the foundations and implications of the ‘Barzelian’ method for social scientific analysis; Barzel's economics of property rights and transaction costs to historical case studies; and advances to Barzel's theory of the state, which includes an analysis of the origins of democracy and the rule of law.

Capital, Calculation, and Coordination

March, 2019

Ludwig Lachmann’s Capital and Its Structure ([1956] 1978) is a classic in the literature in Austrian economics. It is mainly discussed in relation to the Austrian contributions to the macroeconomics debates of that time – from Hayek’s dispute with Keynes to the capital controversies of Cambridge UK and Cambridge US. Among Lachmann’s many ideas developed in that work, critical is his idea that the capital structure of an economy consists of heterogeneous capital goods that have multiple specific uses. This fact of the world makes the intertemporal coordination of economic plans a complex phenomenon and not a simple phenomenon. In the standard macroeconomic account, the coordination failure results from a distortion to the interest rate which miscommunicates to economic actors the underlying savings and consumption pattern in the economy at that time. This results in a boom/bust cycle, as the malinvestments in production projects are revealed in time and must go through a costly correction. But this discussion is simply an illustration of a much broader set of problems of relative prices as guides to productive activity in an economy and the problem of economic calculation. Our chapter explores the capital theoretic side of the socialist calculation debate and highlights the importance that an understanding of the capital-using economy consisting of production plans made up of heterogeneous goods with multiple specific uses is to the argument about the calculation problem being the lynchpin argument against the feasibility of socialist economic planning.


Public Choice and Libertarianism

February, 2019

The two volume Oxford Handbook of Public Choice provides a comprehensive overview of the Public Choice literature. Volume 1 covers rational choice models of elections, interest groups, rent seeking, and public choice contributions to normative political economy. It begins with introductory chapters on rational choice politics, the founding of public choice, and the evaluation and selection of constitutions. The chapters were all written for this handbook by scholars who are well known for their contributions to research in the areas discussed.

Rationality of the Individual and Rationality of the System: A Critical Examination of the Economic Calculation Problem Over Socialism

July, 2018

We restate Mises’ argument about the impossibility of socialist calculation through the lenses of modern developments in microeconomic theory. In so doing, we provide an alternative interpretation of the debate between Austrians and Market Socialists, which we believe should inform economists’ understanding of the market process.

Federalism and the Police

December, 2017

Policing in America has made a drastic transformation over the mid-twentieth century. Local police agencies today are more federally funded, the "dress" like the military, they police more federal initiatives, and the constitutional and fiscal boundaries between local police and the federal government have been blurred. At the same time, conflicts between communities and the police have intensified and the trust between the two has diminished. Our paper investigates the transformation of local policing in a federal system. We analyze how the decisions of policymakers and agencies at the federal level can alter the choice set and associated payoffs faced by local police departments, and how that changes the nature of local policing services. We then discuss how this framework can be used to understand the transformation of U.S. local policing in the twentieth century by illustrating this intervention and providing preliminary analysis of the breakdown of community-oriented policing. Specifically, we outline the expansions of the civil asset forfeiture program, program 1033 and related procedures, and direct federal grants and discuss the incentives of local police to pursue federal initiatives, independent of the desires of the local population that they serve. These programs soften the budget constraints of state and local police and thereby shift police attention to their new funders--the federal government. Through the changes in the financing process, the federal government can create, on the margin, more federally-focused local law enforcement agencies rather than community-focused law enforcement agencies.