Monday, December 2, 2013

Shughart & Thomas on the Euvoluntary Spectrum

Shughart, William F. and Thomas, Diana Weinert, "What Did Economists Do? Euvoluntary, Voluntary, and Coercive Institutions for Collective Action" (November 21, 2013). Available at SSRN

Taking James Buchanan’s 1963 presidential address to the Southern Economic Association as our point of departure, we summarize some of the contributions to the literatures of economics and political science that responded over the next 50 years to his challenge to concentrate on “exchange” rather than on “choice,” thereby placing the theory of markets rather than the theory of resource allocation at center stage. We specifically expand upon his example of swamp draining as a collective action problem, in response to which the swamp’s neighbors likely will find it their individual self-interests to delegate decisions about swamp-clearing to the “community as a collective unit,” operating under clearly specified “rules for making choices, and these decisions coercively enforced once they are made.” Consideration of actual solutions to the challenges of managing common pool resources or of providing collectively consumed goods shows that alternatives exist to top-down rule enforcement by a community or state exercising its police powers. Governance does not require a government, and we do not see coercion if the penalties for violating rules emerge from the bottom up, are freely agreed to ahead of time and exit from the collective unit is possible.
 ATSRTWT, but let me share a favorite quote: "Spoiler alert! We conclude that individuals can and often do subject themselves to coercion voluntarily by agreeing to rules ahead of time that bind their behavior and raise the chances that collective action will achieve its aims. But we do not conclude that all such institutional arrangements are “coercive” in the ordinary meaning of that term."

There's a bit of difference between the way the authors use the term "euvoluntary" and the way we commonly use it here. In the paper, a euvoluntary institution requires no post-constitutional coercive enforcement.

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Do you have suggestions on where we could find more examples of this phenomenon?