Political Economy and the Predatory State



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This dissertation studies the relationship between individuals, firms, and the state in three different contexts. In an ideal world, the state is to fill both productive and protective roles. However, all too often state institutions are used to extract wealth, protect privileged interests, and impose policies that run roughshod over the preferences of the citizens the state is ostensibly acting in the interest of. In short, the protective state can very quickly become the predatory state.Given this, one of the central questions in political economy is how the predatory aspects of the state can be constrained. To answer this question, we must have a thorough understanding of the ways in which real world predatory states, both past and present, have functioned. In addition, we also need a working knowledge of how constitutional rules can be arranged so as to prevent the state from straying into the predatory realm. To effectively craft such rules, a reconsideration of how the preferences of citizens are to be represented in the constitutional structure will be necessary. The first chapter of my dissertation is entitled “An Economic Theory of personality cults.” I provide a rational choice explanation for the existence of leader, or personality cults. Personality cults are defined as established systems of veneration that surround political leaders, and to which all members of a society are expected subscribe. All of these cults have a number of stylized features in common: the claims made by the cult are bizarre and implausible, the cult is directed at all members of society, cult rituals are to be performed in public, and deviations from the cult are quickly and harshly punished. Given these bizarre features, personality cults have attracted much attention from social scientists, but a definitive explanation for them has not been provided. I argue that personality cults allow autocrats to develop reputations for engaging in costly punishment, allowing them to maintain their power and successfully exploit their citizens. Chapter two, co-authored with Peter T. Leeson and Tate Fegley, looks at the role the predatory state plays in awarding economic privileges to certain groups over others. Indeed, recognizing and identifying such cases of rent-seeking is one of the hallmarks of public choice theory. We apply these economic insights to study the regulation of proprietary, or “quack” medicines in 19th century Victorian England. These regulations have been lauded as triumphs in public health and a victory for the public interest, but we argue that rent-seeking frameworks can better explain the attitude the state took towards proprietary medicine vendors. In effect, the state once again acted in a predatory capacity and applied regulations that harmed the sellers of proprietary medicines to the benefits of their competitors in the medical and pharmaceutical fields. This paper was published in Public Choice in 2020. Lastly, the third chapter of my dissertation uses the work of James Buchanan to study the role that experts play in democratic decision-making. This chapter was published with Peter J. Boettke in Public Choice in 2021. We explore three key elements of Buchanan’s thought. The first is the importance of “the relatively absolute absolute”, a concept learned from his mentor, Frank Knight. The second is Buchanan’s approach to “truth judgments” in politics, and their status in our political discussions. Third, we draw on Buchanan’s insights in his 1959 paper “Positive Economics, Welfare Economics, and Political Economy” to show how political economists should participate in this decision-making process—not as expert philosopher-kings, but as co-equals with their fellow citizens. Finally, we illustrate Buchanan’s system of thought in action by presenting two case studies: Virginia education policy in the wake of Brown v. Board of Education, and the 1928 Supreme Court ruling in Miller v. Schoene.