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1995 | Buch

Institutional Competition: An Orientative Framework Kapitel lesen Erstes Kapitel lesen

Competition among Institutions

herausgegeben von: Lüder Gerken

Verlag: Palgrave Macmillan UK

Enthalten in: Professional Book Archive

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Inhaltsverzeichnis

Frontmatter

Institutional Competition: An Orientative Framework

1. Institutional Competition: An Orientative Framework
Abstract
In economics, it is generally agreed that competition discloses knowledge, enhances efficiency and restrains power. It is also generally accepted that one main reason for the evolution of modern states has been that certain goods, due to their non-exclusive character, are not supplied by markets — for example, legislation and social services. It seems to follow logically that the state is forced to be in a monopoly position precisely because no one else is prepared to provide these goods. Unfortunately a monopolistic setting not only lacks a device that may serve as a discovery procedure for knowledge, but it also entails the dangers of inefficient provision of goods and a concentration of power that may eventually lead to a Hobbesian Leviathan. Therefore a predicament seems inevitable.
Lüder Gerken

Basic Issues of Institutional Competition

Frontmatter
2. Competition among Institutions: Evolution within Constraints
Abstract
Competition among institutions is a wide topic with many different aspects and problems to discuss. The purpose of this paper is to outline an evolutionary approach to the process of competition among institutions. For a more thorough analysis we will draw a parallel between ordinary market competition and the subject of our interest, competition in the realm of institutions. We shall focus, in particular, on two issues. First, the role of the competitive process as a knowledge-creating process. In this respect, we will show that institutional competition leads to the creation and spreading of new institutions. Secondly, we ask what inferences, if any, can be drawn from the nature of this process of competition among institutions to the desirability of its outcomes. Here we will argue that in the same way that competition on ordinary markets has to take place under certain rules, which ensure the desirability of these competitive processes, competition among institutions also requires a framework of rules channelling the competitive processes into desirable directions. Before we begin our discussion on these issues, however, some clarifying comments are in order to narrow down what we mean by ‘evolutionary approach’ and ‘competition among institutions’.
Wolfgang Kerber, Viktor Vanberg
3. Causes of Changes in Political-Economic Regimes
Abstract
If we want to speak about the causes of changes of political-economic regimes or systems we should first try to formulate what we understand by the latter concepts. In this paper, a political-economic regime is defined by the set of relatively stable and long-lasting rules (including the legal system), rights and government organizations within and through which it operates.
Peter Bernholz
4. Legal Experiences of Competition among Institutions
Abstract
Thomas Hobbes would not have liked our topic. The very purpose of his Leviathan was to end chaos and bloodshed, which had been lasting in his country for decades, by the voluntary submission of everybody under a unified and strong state. The law as the primary emanation of the state must therefore be obeyed without exception. This implies a negative attitude towards institutional competition (Hobbes, 1668, ch. 26) 1
Christoph Engel
5. International Migration and Institutional Competition: An Application of Hayek’s Evolutionary Theory
Abstract
In the last decade, the number of migrants on the international level, especially migrants to western welfare states, has increased to unforeseen heights. The United States has experienced a level of legal immigration unseen since the beginning of the century, and the number of illegal immigrants to the US is supposed to have increased as well. Due to liberal asylum laws, asylum-seekers have flooded Western Europe, which has been exacerbated by an influx of immigrants from post-communist countries. As legal immigration is restricted, unregulated immigration takes place, to a large part, under the guise of asylum-seeking, especially in the European states. There are worries that these huge migration flows will be detrimental to western wealth, and that they will prove inefficient worldwide. Therefore, governments are trying to tighten immigration laws, especially in the field of asylum policy. They find support from economists, who propose an international migration order to control migration and to co-ordinate migration policies. Analogous to the GATT, this proposal is named GAMP, the General Agreement on Migration Policies.
It should provide rules of entry permission, rules of exit permission, rules of taxing migration, treatment of foreign labour, and other migration aspects which have to be fixed within this multilateral agreement (remittances, transfers, social rights, pension transfers etc.).1
The assumption behind the proposal is that unregulated migration is inherently inefficient. Pareto-efficiency, it is argued, would dictate a coordinated regulation of migration.2 However, policy coordination always includes the danger of governmental policy cartelization in order to escape from institutional competition. This must be considered when analyzing the GAMP proposal.
Patrick Welter
6. Competition among Legal Institutions: Implications for the Evolution of Law
Abstract
Fuller (1964, p. 106) explains that law is ‘the enterprise of subjecting human conduct to the governance of rules’; that is, law includes both rules of obligation and institutions to induce recognition of, clarify, and change those rules. The actual characteristics of rules and legal institutions depend on their purpose, however. An individual can expand wealth through productive activities, particularly when they are complemented by voluntary interactions with others, including economic interaction such as cooperative production (e.g., due to specialization and the division of labour) and trade, and legal institutions to define and support private property rights facilitate both productivity and voluntary interaction. Hayek distinguishes between the ‘order of actions’ and the ‘order of rules’ (1973, p. 98), arguing that the order of rules can emerge spontaneously, just as an order of action does. Rules and their supporting institutions evolve spontaneously because individuals discover that in their voluntary interactions the rules are co-ordinated more effectively under one system or process than under another (Benson, 1989). The relative effectiveness of rules and institutions are discovered as individuals innovate and as they observe, learn from, imitate and migrate to competitive alternatives. Some of the innovations in rules may be deliberately created by co-operating individuals facing a new situation (e.g., new contract clauses) and voluntarily adopted by others, while others evolve even more spontaneously through changes in behaviour that are observed and copied.
Bruce L. Benson
7. Competitions of Socio-Economic Institutions: In Search of the Winners
Abstract
This paper consists of three sections, each with a particular objective. The first section suggests a simple conceptual model of the role of institutions in social systems, to provide the present discussion with a clear conceptual framework, and perhaps also contribute to increasing the precision of the study of institutions in general. While the study of institutions is certainly more difficult to provide with a precise conceptual basis than quantitative studies of resource allocation, much improvement is still possible.
Pavel Pelikan

Specific Aspects of Institutional Competition

Frontmatter
8. Competition among Jurisdictions: The Idea of FOCJ
Abstract
The single European economic market has been a great success. The four freedoms relating to the movement of goods, services, labour and capital have without doubt significantly increased the welfare of the citizens within the European Union. With respect to politics, including economic policy, the picture is rather different. Essentially, one institution, the European Commission and its bureaucracy, has established itself as a monopoly government for European affairs, despite its so far limited powers. This paper argues that similar welfare improvements as in economic affairs could be reached in political affairs as well, provided the European Constitution allows for, and actively supports, competition between governments at all levels. The competition between already existing governments must be preserved but in addition a future European Constitution should foster the emergence of competitive new jurisdictions best serving individual preferences. These new governmental units are called FOCJ. The acronym relates to its four major characteristics:
  • F = functional, i.e. the new political units extend over areas defined by the tasks to be fulfilled;
  • O = overlapping, i.e. in line with the many different tasks (functions) there are many different governmental units extending over different geographical areas;
  • C = competing, i.e. individuals and/or communes may chose to what governmental unit they want to belong, and they have political rights to express their preferences directly via initiative and referenda;
  • J = jurisdictions, i.e. the units established are governmental, they have enforcement power and can, in particular, raise taxes.
Bruno S. Frey, Reiner Eichenberger
9. The European Market for Protectionism: New Competitors and New Products
Abstract
The 1990s show the danger of emerging protectionism all around the world. The most important trading nations are imposing new trade barriers or at least threatening to do so. The US Government has already reimposed Super 301 of the 1988 Omnibus Trade Act. Even the completion of the Uruguay Round on December 15, 1993 was not judged unequivocally. Whereas some observers talk about the most successful round ever completed, others are unsatisfied because the results are not stated very precisely and several goals have been missed.
Andreas Freytag
10. Liberty, Competition, and the Rise of Coercion in American Federalism
Abstract
Changing conceptions of liberty and equality in the United States have given rise in recent decades to a new, coercive phase of American federalism in which the federal government engages in unprecedented regulation of state and local governments and displacement of their sovereign powers. This coercive federalism reflects a shift in federal policy-making from places (i.e., state and local jurisdictions) to persons (i.e., individual citizens). In order to protect individual rights and provide benefits to persons, the federal government has increasingly pre-empted state and local powers and required state and local governments to implement federal policies and comply with federal rules. As a result, the federal government is occupying a more monopolistic position in the federal system. Acting more like a monopolist, the federal government has sought to suppress intergovernmental competition in the federal system and has fewer incentives to behave as a co-operative partner with state and local governments.
John Kincaid
11. Standardization: The Evolution of Institutions versus Government Intervention
Abstract
Standards of compatibility have gained considerable attention in recent economic modelling in industrial economics (for example, Gilbert (ed.), 1992) as well as in public policy (see Commission of the European Communities, 1991).1 Within large technical systems (e.g. railway systems, telecommunications systems) the complicated procedure of standard-setting has gained particular attention (e.g. Weinkopf, 1993, Genschel and Werle, 1992). Hierarchical control of standard-setting within network monopolies is considered no longer appropriate due to the recent trend towards vertical disintegration, deregulation and internationalization (for further discussion, see Knieps, 1993). As a consequence of the growing number of interfaces between decentralized subsystems, alternative external institutions, in particular committees, markets and regulatory commissions, play an increasing role within the standardization processes.
Günter Knieps
12. Transformation of the Economic System in the Russian Federation: What Role for Competition among Regional Governments?
Abstract
Even more than in other former planned economies, the successful transformation of the economic system in the Russian Federation will involve a ‘sea change’ in the running of its political and economic institutions. A short, and far from exhaustive, list includes the following measures: restructuring of government budgets at the national, regional and municipal levels; introduction of financial discipline in enterprises; reforming the financial system; privatizing the means of production. The required changes are particularly far-reaching and difficult to implement because Russia has practically no experience of market-type relations between economic agents.
Matthias Lücke
Backmatter
Metadaten
Titel
Competition among Institutions
herausgegeben von
Lüder Gerken
Copyright-Jahr
1995
Verlag
Palgrave Macmillan UK
Electronic ISBN
978-1-349-24262-7
Print ISBN
978-1-349-24264-1
DOI
https://doi.org/10.1007/978-1-349-24262-7