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Über dieses Buch

The 1997 Symposium of the Egon-Sohmen-Foundation, which gave rise to this book, took place in the United States, on the East Coast between New Y C)rk and New Haven, more precisely in Stamford (Conn.). The original choice had been a place close to Yale University, where Egon Sohmen taught economics from 1958 to 1960, subsequent to his period at MIT. But the hotel in New Haven was closed down by a new owner-to pass through a process of creative destruction. Change of ownership-on a large scale and as a transition from public to private hands-had been the topic of the preceding Egon­ Sohmen-Symposium (in Budapest in 1996) published under the head­ ing: Privatization at the End of the Century (Springer-Verlag, 1997). Yet mere change of ownership, some of us at the Foundation felt in subsequent months, was too narrow a focus to properly deal with the movement under consideration: a transition of ownership together with a general move towards a competitive market system charac­ terized by global openness, uncertainty, decentralized risk-bearing, and the increasing importance of information and innovation.



Individualism in a Social Context


Self-Interest, Communalism, Welfarism

Only a few years ago, consequent upon the collapse of that form of cpmmunalism known as Communism, the definitive triumph of liberal democracy was being widely heralded.1 Today, people are not nearly so confident that liberal values are destined to win out on the world scene. Talk abounds of impending “culture wars” and “intercivilizational conflict” (see Huntington, 1996). The traditional liberal values of freedom and individuality, it is said, are not truly universal values, as liberals have always proclaimed; not only are they strictly Western in origin (“culturally relative”), they are also, or so it is claimed, irrelevant to, and perhaps even incompatible with, the traditional values of non-Western cultures (see Madison, 1995a). This new attack on liberalism is as widespread in the West as it is in other parts of the world, most notably East Asia. In the West the attack on liberal values is associated with what has come to be known as “communitarianism,” while in the East it is advanced under the banner of “Asian values.” Let us focus on the latter for a moment.
Gary B. Madison

Communitarian Approaches to the Economy

Since the early 1980s a distinguished group of philosophers, political theorists, and sociologists has been working in a tradition of thought that has come to be called the communitarian tradition. Many of the thinkers regarded as communitarians do not call themselves communitarians. The thinkers who are most self-identified as communitarians are Etzioni (1993), Galston (1991), and Selznick (1992). Etzioni and Galston, as well as Glendon (1991) cofounded the Communitarian Network in 1991.
David M. Anderson

Rational Choice and Human Agency in Economics and Sociology: Exploring the Weber-Austrian Connection

There has been a growing interest in the past decade or so in the intersection between economics and sociology. Much of the literature on this derives from a perceived disappointment by either economists or sociologists of the methods and approach to social questions of the other. Roughly, economic sociology is motivated mainly by the economist’s perception of the lack of rigor in sociology. Social questions, it is argued, are too important to be left to poor methodological treatment. Thus, economic imperialism and rational choice sociology result.
Peter J. Boettke

The Role and Evolution of Beliefs, Habits, Moral Norms, and Institutions

It is impossible to conceive of a prosperous economic order in the absence of any institutions. Indeed, in the absence of institutions, it is impossible to conceive of any kind of order in the sense of “a state of affairs in which a multiplicity of elements of various kinds are so related to each other that we may learn from our acquaintance with some spatial or temporal part of the whole to form correct expectations concerning the rest, or at least expectations which have a good chance of proving correct” (Hayek, 1973, p. 36).
Stefan Voigt, Daniel Kiwit

The Frontiers of Markets


Privatization of Legal and Administrative Services

Law and order is frequently characterized as one of the “important examples of production of public goods,” and it is further contended that “private provision of these public goods will not occur” (Samuelson and Nordhaus, 1985, pp. 48-49).
Bruce L. Benson

Competition in the Market for Health Services and Insurance, with Special Reference to the United States

How do markets organize the production and financing of medical care? In most countries, governments play a dominant role in both functions, so little experience is available on which to judge the performance of the markets. An exception is the United States, which has permitted markets to furnish the bulk of services to the nonelderly population. However, as economists pointed out long ago (Kessel, 1959), medical markets in the United States were never an approximation of the economic concept of a competitive market; they contained both regulatory and monopoly elements. Recently, however, some changes have occurred in the U. S. system which may have made markets more competitive. What are these changes and what are the effects, good and bad, which they have had?
Mark V. Pauly

Supplying and Financing Education: Options and Trends under Growing Fiscal Restraints

Research currently demonstrates that the supply of schooling in both developed and developing countries continues to be, on average, seriously inefficient. The problem is now accentuated by widespread fiscal constraints caused especially by government deficits. The pervasiveness of the inefficiency is usually demonstrated with figures showing growing public expenditure on schooling per head at a time when student achievement is stagnant or even in decline. This phenomenon will be taken as a point of departure in this paper, which will subsequently concentrate on trends and innovations in the finance of education that attempt to combat the inefficiencies.
Edwin G. West

Subsidization and Promotion of the Arts

The definition of “culture” in this essay is a pragmatic one. It follows the Viner adage that “economics is what economists do,” which in this case means studying cultural activities represented by the creative arts and their performance or presentation in the theater, concert hall, opera house, museum, or gallery, and even “en plein air” as heritage artifacts. In deriving satisfaction from these activities, consumers characteristically combine the artistic input with their own investment in artistic appreciation. As a consequence, consumers take seriously the judgments of cognoscenti, i.e., those involved in or particularly knowledgeable about the product, in arriving at decisions about purchase, e.g., by reading reviews, attending lectures, etc. They may gain insights from participation in amateur orchestras, play and painting groups, and as voluntary helpers in artistic ventures. Nothing in what has been said postulates some hierarchy of tastes and preferences or that more popular cultural activities are less worthy of the economists’ attention.
Alan Peacock

Normative Issues of Global Trade


A Global Competition Policy for a Global Economy

The growth of world trade since World War II and the decline in restrictions on international trade contained first in the GATT agreements, and now promulgated by the World Trade Organization (WTO), have produced what truly can be called “ a global economy.” The main targets of GATT and the WTO have been government restrictions on trade, however. As these have fallen and trade has expanded, the importance of private restrictions on trade has grown. What gain is there to a country that reduces a tariff on a product by 20%, if an export cartel promptly raises the price of the product by 20%?
Dennis C. Mueller

International Trade in “Bads”

Our assignment is to survey the literature on trade in “bads.” To do so requires three steps. A first is to define “bads,” at least for purposes of this paper. A second is then to attempt to set forth an analytical framework against which trade in “bads” can be evaluated and the optimal policy with respect to trade in “bads” can be addressed. It is important to note that it is trade policy, not overall policy, and trade policy from an international viewpoint, not from a domestic perspective, that is discussed here. The third step is to survey what is known about trade in “bads.” These tasks are tackled in that order in what follows.
Anne O. Krueger, Chonira E. Aturupane

Social Standards and Social Dumping

I have a tremendous sense of déjà vu about the current debate on the introduction of labor and environmental codes in the World Trade Organization (WTO). While the demand for linking trade policy to environmental standards is new, the similar demand concerning labor standards is a repetition of the events surrounding the Tokyo round of multilateral trade negotiations (1973–1979). In the Trade Act of 1974, the U.S. Congress—under pressure from labor unions—had included a provision requiring the president to raise the subject of “fair labor standards” in the GATT framework. This President Jimmy Carter duly did in October 1979 just before the end of the Tokyo Round negotiations. About the same time the European Commission suggested that “minimum labor standards” be included in the Lome convention, which provided for tariff preferences and technical and financial aid to a group of African, Caribbean, and Pacific countries. In 1980, as the multifiber agreement (MFA) regulating trade in textiles and clothing came up for renewal, organizations representing business and labor in textiles and clothing industries in America and Western Europe advanced proposals for a “social clause” to be inserted in the MFA.
Deepak Lal


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