Coercion is as normal a part of life as is exchange; what matters is not its presence or magnitude but rather its structure and form. Violence can take the form of predation; it then results in mere redistribution. But violence can be rendered socially productive; it can be employed to defend property rights, thereby strengthening the incentives to engage in productive activity. To explore how violence can be rendered a source of increased welfare, we develop a model of a stateless society and then introduce a specialist in violence. Using the model and case materials, we explore the conditions under which the specialist will utilize her coercive capabilities not to engage in predation but rather to strengthen the incentives to engage in productive effort.
Gravity–based cross–sectional evidence indicates that currency unions and currency boards stimulate trade; cross–sectional evidence indicates that trade stimulates income. This paper estimates the effect that common–currency regimes have, via trade, on income per capita. We use economic and geographic data for over 200 countries to quantify the implications of common currencies for trade and income, pursuing a two–stage approach. Our estimates at the first stage suggest that belonging to a currency union more than triples trade with the other members of the zone. Moreover, there is no evidence of trade–diversion. Thus currency unions raise overall trade. Currency boards have similar effects. Our estimates at the second stage suggest that every one percent increase in trade (relative to GDP) raises income per capita by at least one third of a percent over twenty years. We combine the two estimates to quantify the effect of common currencies on output. Our results support the hypothesis that the beneficial effects of such regimes on economic performance come through the promotion of trade, rather than through a commitment to non–inflationary monetary policy, or other macroeconomic influences.
To discern the public and private motivations behind the establishment and continuance of the Bank of England, we analyze the timing of legislation that renewed the Bank’s charter. The Bank’s original 1694 charter specified a life of only eleven years; at the end of that time, the government could exercise an option to repay its loan to the Bank and dissolve the charter. In fact, the government did not exercise the option, and the Bank’s charter was periodically renewed. We argue that the rechartering process reflected the needs of the government to respond to unforeseen contingencies. The government initiated new charters when budgetary circumstances–shaped largely by wars–required new loans, and when the monopoly value of the Bank’s charter rose. The Bank gained from renegotiating its contract with the government when it faced new and unforeseen competition.
In this paper I argue that there is a significant isomorphism between a host country?s political system and newcomers? participation. During the "first wave" of mass migration to North America from 1880 to 1920 some immigrants brought radical new ideas, significantly influencing worker and socialist movements. The influence of "second wave" immigrants appears more subtle, a careful jockeying for space within existing political structures. I suggest that political institutions exert a selection effect on potential immigrant community leaders both before and after migration. These selection processes reinforce prevailing political discourses and ways of participating.
This paper explores the impact of political economy factors on exchange rate policy in Latin America. It studies the determinants of the choice of exchange rate regime in Latin America, placing special emphasis on political, institutional and interest group explanations. The presumption is that differences in institutional and political settings, as well as differences in economic structure, can have an effect on the choice of regime and, more generally, on exchange rate policy. In addition to these structural elements, the paper examines whether such political events as elections and changes in government affect the pattern of nominal and real exchange rates.
(Revised version of "Politics and Exchange Rates: A Cross-Country Approach for Latin America")
The poor favor redistribution and the rich oppose it, but that is not all. Social mobility may make some of today's poor into tomorrow's rich and since redistributive policies do not change often, individual preferences for redistribution should depend on the extent and the nature of social mobility. We estimate the determinants of preferences for redistribution using individual level data from the US, and we find that individual support for redistribution is negatively affected by social mobility. Furthermore, the impact of mobility on attitudes towards redistribution is affected by individual perceptions of fairness in the mobility process. People who believe that the American society offers equal opportunities to all are more averse to redistribution in the face of increased mobility. On the other hand, those who see the social rat race as a biased process do not see social mobility as an alternative to redistributive policies.
The concept of legitimacy has fascinated me for many years. Again and again, particularly over the course of the 1960s, I felt that the concepts of legitimacy and illegitimacy provided the organizing principles that helped explain various phenomena with which I was concerned.
This paper considers policies of the industrialized countries, as they pertain to crises in emerging markets. These fall into three areas: (1) their own macroeconomic policies, which determine the global financial environment; (2) their role in responding to crises when they occur, particularly through rescue packages, which have three components —reforms in debtor countries, public funds from creditor countries, and private sector involvement; and (3) efforts to reform the international financial architecture, with the aim of lessening the frequency and severity of future crises. A recurrent theme is the tension between mitigating crises that occur, and the moral hazard that such efforts create in the longer term. In addition to reviewing these three areas of policy, we consider the institutions through which the more powerful countries exercise their influence. We conclude with a discussion of the debate over the sins of the International Monetary Fund, and proposals for reform.
My colleagues’ and my work as scholar–practitioners has focused on analysis and resolution of protracted, seemingly intractable conflicts between national, ethnic, or other kinds of identity groups, best exemplified by intercommunal conflicts, such as those in Cyprus, Northern Ireland, Sri Lanka, Bosnia, and apartheid South Africa. My own most intensive and extensive experience, over the past quarter–century, has been with the Israeli–Palestinian conflict, and my analysis draws primarily on that experience.
Using the Israeli–Palestinian conflict as a case in point, this chapter examines the way in which issues of national identity can exacerbate an international or intercommunal conflict and the way in which such issues can be addressed in conflict–resolution efforts. The chapter starts out with a brief history of the Israeli–Palestinian conflict, setting the stage for the identity issues at the heart of the conflict. It then proceeds to describe the struggle over national identity between the two people, which has led them to perceive their conflict in zero–sum terms, with respect to not only territory and resources but also national identity and national existence. Next, it argues that long–term resolution of this and similar deep–rooted conflicts requires changes in the groups’ national identities, such that affirmation of one groups’ identity is no longer predicated on negation of the other’s identity. Such identity changes are possible as long as they leave the core of each group’s national identity intact. Furthermore, the chapter proceeds to argue, such changes need to be and can be "negotiated" between the two groups. One venue for negotiating identity, described in the next section, is provided by the problem–solving workshops between Israeli and Palestinian elites that my colleagues and I have convened for many years. Finally, the paper concludes with an illustration of the possibilities and limits of the negotiation of identity, based on a joint Israeli–Palestinian exploration of the problem of Palestinian refugees.
"The most important political distinction among countries concerns not their form of government but their degree of government. The differences between democracy and dictatorship are less than the differences between those countries whose politics embodies consensus, community, legitimacy, organization, effectiveness, stability, and those countries whose politics is deficient in these qualities." So begins Samuel P. Huntington's 'Political Order in Changing Societies,' one of the most widely influential and insightful books on comparative politics ever written. Its concern is normative as well as analytic. In a retrospective comment on his own writing, Huntington has noted, "I wrote [Political Order] because I thought political order was a good thing." Moreover, he added, his "purpose was to develop a general social science theory of why, how, and under what circumstances order could and could not be achieved."
The process of European monetary integration varied widely among countries and over time. This paper argues that an important explanation for the evolution of European exchange rate arrangements was the sectoral impact of their expected effects on European trade and investment. In this perspective, the principal benefit of European MI was its expected easing of cross–border trade and investment within the EU, while its principal cost was the loss of national governments' ability to use currency policy to improve the competitive position of their producers. Empirical results indeed indicate that a stronger and more stable currency was associated with variables used as proxies for private economic interests — the importance of manufactured exports to the DM zone, and improvements in net exports. This suggests a powerful impact of private–interest factors in determining national currency policies.
How are constitutional rules sustained? The general problem concerns how to structure the political game so that all the players – elected officials, the military, economic actors, and citizens – have incentives to respect the rules. In this paper, we investigate this problem in the context of how the institutions of federalism are sustained. A central design problem of federalism is how to create institutions that at once grant the central government enough authority to provide central goods and police the sub–units, but not so much that it usurps all of public authority. Using a game theoretic model of institutional choice, we show that, to survive, federal structures must be self–enforcing: the center and the states must have incentives to fulfill their obligations within the limits of federal bargains. Our model investigates the tradeoffs among the benefits from central goods provision, the ability of the center to impose penalties for non–compliance, and the costs of states to exit. We also show that federal constitutions can act as coordinating devices or focal solutions that allow the units to coordinate on trigger strategies in order to police the center. We apply our approach to a range of federations, including the United States under the Articles and the Constitution, modern China, and Russia.
Social protection does not always mean "politics against markets." In this chapter we argue, as did Polanyi (1994), that social protection rescues the market from itself by preventing market failures. More specifically, we contend that social protection aids the market by helping economic actors overcome market failures in skill formation. We show, in this chapter, that different types of social protection are complementary to different skill equilibria.
Many of the theoretical controversies in the sociology of religion have pertained to trends and patterns of religious mobility . Recently, scholars have claimed that diminishing status differences between denominations have opened denominational boundaries and led to higher rates of religious mobility. Scholars working from rational actor perspectives have generated several hypotheses. First, human capital and adaptive preference theories suggest that switching will remain infrequent, and will tend to occur between similar denominations. Second, "Strict church" perspectives argue that demanding sectarian denominations will have higher retention, and be more attractive destinations. Third, market niche perspectives argue that niche overlap will foster high rates of religious mobility. Finally, theories emphasizing normative constraints on religious choices suggest that quasi–ethnic religious groups will have a greater hold on members. In this article, Darren Sherkat examines trends and patterns of religious mobility in the U.S. between 1973 and 1998 using data from the General Social Surveys. Retention rates, distributions of original and destination affiliations, and mobility tables are compared across three periods, and four broad cohorts using log–multiplicative association models. Sherkat finds some support for hypotheses generated by status theories, and for several propositions from rational actor theories; however, the decline of denominationalism perspective is unsupported.
The UK political system has long exemplified ?majoritarian? or ?Westminster? government, a type subsequently exported to many Commonwealth countries. The primary advantage of this system, proponents since Bagehot have argued, lie in its ability to combine accountability with effective governance. Yet under the Blair administration, this system has undergone a series of major constitutional reforms, perhaps producing the twilight of the pure Westminster model. After conceptualizing the process of constitutional reform, this paper discusses two important claims made by those who favor retaining the current electoral system for Westminster, namely that single–member districts promote strong voter–member linkages and generate greater satisfaction with the political system. Evidence testing these claims is examined from comparative data covering 19 nations, drawing on the Comparative Study of Electoral Systems. The study finds that member–voter linkages are stronger in single member than in pure multimember districts, but that combined districts such as MMP preserve these virtues. Concerning claims of greater public satisfaction under majoritarian systems, the study establishes some support for this contention, although the evidence remains limited. The conclusion considers the implications of the findings for debates about electoral reform and for the future of the Westminster political system.
We construct a set of indicators to measure the policy–making role of the European Union (European Council, Parliament, Commission, Court of Justice, etc.), in a selected number of policy domains. Our goal is to examine the division of prerogatives between European institutions and national ones, in light of the implications of normative models and in relation to the preferences of European citizens. Our data confirm that the extent and the intensity of policy–making by the EU have increased sharply over the last 30 years. Such increase has taken place at different speeds, and to different degrees, across policy domains. In recent times the areas that have expanded most are the most remote from the EEC's original mission of establishing a free market zone with common external trade policy. We conjecture that the resulting allocation may be partly inconsistent with normative criteria concerning the assignment of policies at different government levels, as laid out in the theoretical literature.
The "new economy" has become a buzzword to characterize the American economy, with positive connotations but imprecise meaning. Sometimes it is used to refer only to selected high technology sectors, specifically computers, semiconductors, software, and telecommunications. But usually the term implies significant changes in the US economy as a whole. At its most dramatic, the term suggested that the traditional business cycle has been banished, inflation and unemployment have been brought forever under control, US long–term growth rates have increased significantly, and the high–value stock market was not over–valued and indeed would continue to rise.
More modestly, it suggests that the structure of the US economy has changed fundamentally, with the implication, inter alia, that monetary and fiscal measures affect the economy differently from the way they did in the past. Finally, it suggests that US productivity growth has returned to, or at least toward, the high levels it enjoyed in earlier years, before the slowdown of the mid–1970s.
This paper will discuss the factual bases for conjecturing that the United States might indeed have a "new economy," review the controversies and evidence surrounding that claim, and suggest how the emergence of a "new economy," if indeed there is one, might affect economies elsewhere in the world, including the Asia–Pacific region.
European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre–tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.
In overlapping–generations models of public goods provision, in which the contribution decision is binary and lifetimes are finite, the set of symmetric subgame–perfect equilibria can be categorized into three types: seniority equilibria in which players contribute (effort) until a predetermined age and then shirk thereafter; dependency equilibria in which players initially shirk, then contribute for a set number of periods, then shirk for the remainder of their lives; and sabbatical equilibria in which players alternately contribute and shirk for periods of varying length before entering a final stage of shirking. In a world without discounting we establish conditions for equilibrium and demonstrate that for any dependency equilibrium there is a seniority equilibrium that Pareto–dominates it ex ante. We proceed to characterize generational preferences over alternative seniority equilibria. We explore the aggregation of these preferences by embedding the public goods provision game in a voting framework and solving for the majority–rule equilibria. In this way we can think of political processes as providing one natural framework for equilibrium selection in the original public–goods provision game.
Michèle Lamont takes us into the world inhabited by working-class men—the world as they understand it. Interviewing black and white working-class men who, because they are not college graduates, have limited access to high-paying jobs and other social benefits, she constructs a revealing portrait of how they see themselves and the rest of society.
Morality is at the center of these workers’ worlds. They find their identity and self-worth in their ability to discipline themselves and conduct responsible but caring lives. These moral standards function as an alternative to economic definitions of success, offering them a way to maintain dignity in an out-of-reach American dreamland. But these standards also enable them to draw class boundaries toward the poor and, to a lesser extent, the upper half. Workers also draw rigid racial boundaries, with white workers placing emphasis on the “disciplined self” and blacks on the “caring self.” Whites thereby often construe blacks as morally inferior because they are lazy, while blacks depict whites as domineering, uncaring, and overly disciplined.
This book also opens up a wider perspective by examining American workers in comparison with French workers, who take the poor as “part of us” and are far less critical of blacks than they are of upper-middle-class people and immigrants. By singling out different “moral offenders” in the two societies, workers reveal contrasting definitions of “cultural membership” that help us understand and challenge the forms of inequality found in both societies.