April, 2017

Trade, Power, and Political Economy

Reason vs. Ideology in Edward Stringham's 'Private Governance'
  • Richard Wagner

    Distinguished Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics
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Find the paper online at SpringerLink.

In Private Governance: Creating Order in Economic and Social Life, Edward Stringham explains that private ordering is sufficient to secure full exploitation of gains from trade within a society. After describing the logic of Stringham’s claim on behalf of private ordering, the remainder of this essay examines an enigma that Stringham’s argument entails: private ordering is sufficient for social coordination and yet public ordering is ubiquitous. The exploitation of gains from trade might offer a useful ideology, but this provides but an incomplete basis for a theory of society. In this respect, societies are rife with antagonism and envy, though these often manifest themselves ideologically as claims about justice and fairness. Politics goes where the money is; private ordering reveals targets that public ordering subsequently exploits. The challenge for political economy is to integrate the autonomy of economizing action with the autonomy of political action, for these dual autonomies provide the crucible out of which emerges the material of political economy. Stringham has deepened our appreciation of what private governance can accomplish, but much unfinished analytical work confronts theorists of political economy.