October 11, 2011

Government, Clubs, and Constitutions

  • Peter Leeson

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
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This paper analyzes “constitutional effectiveness” – the degree to which constitutions can be enforced – in the system of government vs. the system of clubs. Professor Leeson argues that clubs have residual claimants on revenues generated through constitutional compliance, operate in a highly competitive environment, and permit individuals to sort themselves according to their governance needs. These features make their constitutional contracts self-enforcing. Government lacks these features. So its constitutional contract is not. Institutional augmentations that make government more club-like, such as federalism, democracy, and limited government scope, improve government's constitutional effectiveness. But constitutional effectiveness remains superior in the system of clubs.

Find the article on Peter Leeson's website or at ScienceDirect.