An increasingly popular position holds that although markets can be important contributors to development, they can also undermine it. Evidence for capitalism's effect on development is ambiguous and mixed. We should therefore be cautious and modest advocates of markets. I call this view “two...

Foreign aid's advocates claim aid has been successful. Aid's critics claim aid has failed. We explain why both camps are correct. Aid can, and in a few cases has, increased a particular output by devoting more resources to its production. In this sense, aid has occasionally had limited success....

Could anarchy be a constrained optimum for weak and failing states? Although a limited government that protects citizens' property rights and provides public goods may be the first-best governance arrangement for economic development, among the poorest nations such “ideal political...

Is a genuine social contract mythical? I argue that pirates created genuine social contracts that established a system of constitutional democracy based on the same decision making calculus and with the same effects that Buchanan and Tullock's contractarian theory of government describes in The...

This paper has two purposes. First, I hope to give the reader a flavor for the basic contents of Kornai's book, By Force of Thought. Second, I aim to draw attention to the important and close connections between several of Kornai's major works discussed in his autobiography, as well as their...

According to conventional wisdom, state-provided contract enforcement is critical to an expansive, growing trade. This paper estimates state enforcement's impact on international trade for one hundred and fifty-seven countries over the last half a century. I find that state enforcement increases...

Property rights are a key aspect of the rules governing economic interactions, providing individuals with dependable information and incentives. Well-defined and stable property rights encourage the effective use of existing scarce resources and also provide the incentive to innovate. In this...

Two collective action problems plague successful revolution. On the one hand, would-be revolutionaries confront a quot;participation problemquot; whereby no rationally self-interested individual has an incentive to participate in rebellion. On the other hand, individuals face a quot;first-mover...

This paper investigates the economics of infamous pirate practices. Two closely related economic theories---the theory of signaling and the theory of reputation building---explain these practices. First, I examine the pirate flag, quot;Jolly Roger,quot; which pirates used to signal their...

This paper models social distance as endogenous to the choices of individuals. I show how large numbers of socially heterogeneous agents can use social distance-reducing signals to capture the gains from widespread trade. Although traditional reputation mechanisms of multilateral punishment...