Rules and Choice in Economics

Rules and Choice in Economics

Rules and Choice in Economics

Rules and Choice in Economics

Synopsis

Rules and Choice in Economicsis concerned with how the rules and institutions which are the basis of cooperation in society can be systematically explained. Economics, with its emphasis on individual choice, seems unable to account for individuals following rules when it is not in their interest to do so. Sociology, which can explain such rule-following behavior, struggles to account for purposeful individual action. In the place of these models, Viktor J. Vanberg offers an account which cuts across traditional disciplinary boundaries. Analyzing the work of thinkers including Hayek, Rawls, Nozick and Coleman, Vanberg addresses issues such as rational choice, rule following behavior, self-interest and morality. The book pays particular attention to a comparison of Hayek's evolutionary liberalism and Buchanan's contractarian liberalism. Taken together the various parts of the volume represent a coherent theoretical argument about why institutions cohere and why theychange.

Excerpt

The problem which science has to solve here consists in the explanation of a social phenomenon, of a homogeneous way of acting on the part of the members of a community for which public motives are recognizable, but for which in the concrete case individual motives are hard to discern.

(Carl Menger 1985:152)

introduction

The crucial dependence of the character of a social and economic order on the framework of rules and institutions within which individuals act and interact has been a central theme of classical political economy, and it is a theme that has gained renewed attention in modern economics (Brennan and Buchanan 1985). One of the persistent issues in this context concerns the tension that is perceived to exist between rational, self-interested behaviour—as postulated in economics—and the viability of a moral order. While the general benefits that a moral order generates are quite obvious, it is far less obvious how rational pursuit of self-interest should induce the kind of conduct that such an order requires.

The purpose of this chapter is to discuss some of the fundamental conceptual and theoretical aspects of the ‘rational choice and moral order’ issue, an issue that, at least since Thomas Hobbes, has plagued social theorists. in fact, it is often referred to as the ‘Hobbesian problem of social order’ or simply the ‘Hobbesian problem’. in sociology, an influential theoretical programme—associated, in particular, with the names of Emile Durkheim and Talcott Parsons—is even based on the claim that the economic, individualistic-utilitarian tradition has not provided a satisfactory solution to the Hobbesian problem and, for intrinsic reasons, is unable to do so. Our purpose here is to argue the opposite; to show that and how an answer to the Hobbesian question can be provided from an individualistic, economic perspective.

The chapter is organized as follows: the second and third sections analyse the ‘rational choice and moral order’ issue in terms of the contrast between what we call constitutional interests on the one side, and action interests or compliance interests on the other. We argue that the practical solution to the . . .

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