This paper explores some of the reasons why capitalism experiences periodic crises of legitimacy, and asks whether Richard Epstein's “simple rules” heuristic can help. The current legitimacy problem is exacerbated by the fact that we are also in a low growth situation. This means that some...

Mutually supporting methodologies are necessary for building a convincing case establishing a particular effect. Strengths and weaknesses of four empirical methods are discussed. Econometric methods quantify the relative importance of different factors and may assess the time frame over which...

We explore how different processes of constitution formation involve tradeoffs between exclusion, stability, and commitment, as institutional arrangements are devised for managing cooperation, competition, and conflicts among independent decision-making centers. We build upon John Searle's...

Classic public choice skepticism about the regulatory state, based on theories of rent-seeking, rent extraction and regulatory capture, is based on the unrealistic, and usually unstated, assumption of a monopolist regulator. In practice, the regulatory state is polycentric, involving numerous...

This chapter discusses the relevance of Tocqueville's insights about the importance of civil society, as a foundation for democracy and as a counter-force to both government and market power, in the context of the challenges and opportunities created by the internet. What role does civil society...

The Austrian theory of entrepreneurship emphasizes the importance of epistemic heterogeneity and the unlistability of the set of all possibilities. A similar concern with what has been called “the art of choosing the space of possibilities” is an important part of Bayesian model selection....

We contribute to the post-crisis literature on macroeconomic stability by arguing that polycentric banking systems can better achieve stability than monocentric systems. Building on the theories of E. Ostrom, we engage the literature on free banking systems to show that these systems met the...

The Tiebout competition model is often criticized for its unrealistic assumptions. We develop an imperfect Tiebout competition model in which households have no information about other jurisdictions (moving decisions are blind), and local jurisdictions operate as revenue-maximizing Leviathans....

Does the classical liberal emphasis on freedom of association provide an intellectual cover for bigotry? We formulate this suspicion in economic terms by using James Buchanan's economic approach to ethics, according to which moral values can be understood as preferences about other people's...

We develop a theory of financial stability based on insights from the literature on polycentric governance and institutional resilience. We contend that top-down regulatory approaches to achieving financial stability will prove ineffective, due to various knowledge and incentive problems. In...