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Hardin: Economic theories of the state

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Hardin. 1997. Economic theories of the state. In Perspectives on Public Choice: A Handbook, ed. Dennis Mueller. New York: Cambridge University Press, 21-34.

Political economy has advanced three main explanations of the state. Some explain origins of states; some explain why we maintain them; others provide a normative justification of states.

Public goods

States exist to provide public goods. By "public goods," Hardin does not mean standardized weights and measures (see "coordination" below); he means defense and other actual public goods that the market cannot provide.

The major problem with efforts to explain the origin of states in these terms (e.g. "contractarian" views of the state--a social contract) is the 'bootstrapping' problem: we cannot overcome freerider problems in the provision of public goods, so we create a state--but isn't the creation of a state also a public good? The explanation therefore breaks down.

Many public goods theories are primarily normative justifications of the state.

Coordination

Markets can provide most supposedly "public" goods if we can just overcome some coordination problems. E.g. markets can provide radio broadcasts if we can just coordinate on how to allocate frequency usage so that there won't be radio interference. So we need states to help us coordinate.

Useful as an explanation of state origins, and also as an explanation of why we maintain states. E.g. even if I oppose a particular law, I acquiesce b/c (a) the state has coercive power or (b) I want other people to acquiesce to laws that they don't like.

Extreme libertarian views argue that iterated prisoner's dilemmas can produce cooperation spontaneously. But this breaks down when societies grow larger than a small village. So we still need states.

Social evolution:

If a state happens to start producing public goods and helping us coordinate more problems, then it becomes stronger and more likely to survive. Thus, states that do not produce public benefits are selected out.