Table Of ContentTHE STATE AS A FIRM
STUDIES IN PUBLIC CHOICE
Gordon Tullock, Editor
Virginia Polytechnic Institute and State University
Other volumes in the series:
Buchanan, J., Wagner, R. E., Fiscal Responsibility in Constitutional
Democracy, 1978, Number I
McKenzie, R. E.; The Political Economy of the Educational Process,
1979, Number 2
This series, STUDIES IN PUBLIC CHOICE, like the journal Public
Choice, is devoted to an important aspect of the interaction between
the disciplines of economics and political science; it uses economic
methods of analysis on matters which are traditionally political.
These publications are attempting to further the growth of knowl
edge in this intersection of the social sciences.
THE STATE AS A FIRM
Economic Forces in Political
Development
RICHARD D. AUSTER
University of Arizona
MORRIS SILVER
The City Col/ege
of the City University, New York
GMartinus Wijhoff Publishing
Boston/The Hague/London
Distributors for North America:
Martinus Nijhoff Publishing
K1uwer Boston, Inc.
160 Old Derby Street
Hingham, Massachusetts 02043
Distributors outside North America:
K1uwer Academic Publishers Group
Distribution Centre
P.O. Box 322
3300 AH Dordrecht, The Netherlands
Library of Congress Cataloging in Publication Data
Auster, Richard D
The State as a firm.
(Studies in public choice; v. 3)
Bibliography: p.
Includes index.
1. State, The-Economic aspects. I. Silver,
Morris, joint author. II. Title. III. Series.
JA77.A94 320.1 79-11950
ISBN-13: 978-94-011-7629-3 e-ISBN-13: 978-94-011-7627-9
DOl: 10.1007/978-94-011-7627-9
Copyright © 1979 by Martinus Nijhoff Publishing, Boston
Softcover reprint of the hardcover 1st edition 1979
No part of this book may be reproduced in any form by print,
photoprint, microfilm or any other means, without written
permission from the publisher.
To Morris' wife Sondra for her patience and encourage
ment and to our parents for wisdom and compassion
PREFACE
We seem to be witnessing the rebirth of the concept of an integrated social
science, a complete theory of human action and interaction in all its ramifica
tions and complications. What we call society is simply the totality of human
exchange. Economics is a theory of human exchange of certain types. Although
the qualities of what is being exchanged as well as the conditions of exchange
may vary, economic theory has recently broadened its scope sufficiently to
begin to be general enough to handle these problems as well. In the present work
we attempt to see what insights are revealed by the application of economic
categories to political history. We feel there are many. At this point Silver stops.!
Auster continues. A quick spin around the "policy" block in the new model so
to speak, hence Chapter 8. For the rest, however, this is truly a joint work. The
authors' names appear in alphabetical order. After 12 years of professional asso
ciation, claims to precedence in origination could too clearly be self-deception.
! Silver is even more pessimistic than Auster, in particular about which types of reforms
will be accepted. With the rise to affluence of most members of our society the mass itself
has become concerned with political reform as almost a new form of entertainment. Unfor
tunately, they have no idea how to improve matters. In a sense, then, Auster hopes they will
learn from the reforms suggested in this book while Silver sees that as unlikely.
vii
viii PREFACE
Our early work was on the theory of the internal nature of the firm. Then we
became interested in the issues raised by the existence of collective (or public)
goods. Soon thereafter these two areas of interest, together with our belief that
economic theory provides a basis for the understanding of all social behavior,
merged to produce the research presented here.
We are indebted to numerous fellow workers in the renaissance field of public
choice. They have both inspired us with their own work and been generous
enough to devote their time to providing us with comments on earlier drafts. We
have learned much from professional interaction. In particular we would like to
thank Bairey, Buchanan, Denzau, Galatin, Horn, Niskanen, McCain, Murphy,
Smith, Tullock, and Thurow. We would also like to thank the various somewhat
underpaid secretaries in the University of Arizona's Department of Economics
and its Division of Economic and Business Research, who have put up with our
typing and retyping requests. We also wish to express our gratitude to Brooke Cad-
wallader whose generosity funded the opening phases of our work on this prob
lem. Finally, B. Sears is to be especially thanked for her editorial efforts on
behalf of whatever technical writing finesse appears.
CONTENTS
Preface vii
Introduction
Part I A MULTIDIMENSIONAL ECONOMIC THEORY
OF GOVERNMENTS
The State as a Service Firm, the Production of Order 5
2 Theories of the Emergence of States 15
3 The Sizes of States 27
4 The Qualities of State Activity 43
Part II THE PROBLEM OF GOVERNMENT
5 The Monopoly State 55
ix
x CONTENTS
6 Democracy, the Corporate State 69
7 Democracy as a Consumer Good 89
8 Experimental Remedies: Some Preposterous
Proposals 96
Appendixes
I Entrepreneurship, Profit, and Limits on Firm Size 111
II Political Revolution and Repression: An Economic
Approach 116
III The GPITPC and Institutional Entropy 127
List of References 135
Notes 150
Indexes 174
THE STATE AS A FIRM
