Dino Falaschetti - Böcker

Conventional wisdom warns that unaccountable political and business agents can enrich a few at the expense of many. But logically extending this wisdom implies that associated principals – voters, consumers, shareholders – will favor themselves over the greater good when ‘rules of the game’ instead create too much accountability. Democratic Governance and Economic Performance rigorously develops this hypothesis, and finds statistical evidence and case study illustrations that democratic institutions at various governance levels (e.g., federal, state, corporation) have facilitated opportunistic gains for electoral, consumer, and shareholder principals. To be sure, this conclusion does not dismiss the potential for democratic governance to productively reduce agency costs. Rather, it suggests that policy makers, lawyers, and managers can improve governance by weighing the agency benefits of increased accountability against the distributional costs of favoring principal stakeholders over more general economic opportunities. Carefully considering the fundamentals that give rise to this tradeoff should interest students and scholars working at the intersection of social science and the law, and can help professionals improve their own performance in policy, legal, and business settings.

Until about two hundred years ago, almost everyone faced the prospect of a life that was poor, nasty, brutish, and short, with few if any prospects for betterment. For example, in today’s money, annual average per-capita income during the first millennium was constant at about $500. And most of the next century saw little in the way of expanded opportunities. Indeed, until the early nineteenth century, annual average per-capita income was only a couple of hundred dollars higher, and the average per-capita growth rate barely increased above zero.Why have societies so consistently failed to generate high standards of living and why, even today, do so many societies live far from the frontier of the developed world’s economic possibilities?Political Economy is a new title in the Routledge Major Works series, Critical Concepts in the Social Sciences. Bringing together canonical and the best cutting-edge scholarship from economics, political science, law, and other disciplines, this four-volume collection meets the need for an authoritative reference work to address these and other fundamental questions in political economy.As serious research in and around the application of economic techniques to political issues flourishes as never before, the work assembled in the first two volumes in the collection (‘Theory: Social Choice and Elections’ and ‘Elections and Institutions’) allows users to understand the fundamental constraints that political processes impose on legal frameworks. Volume III (‘Politics, Law, and Economic Performance’) gathers the vital scholarship on important contributions to theories of economic growth and fluctuations, as well as key work on how those macroeconomic outcomes relate to politico-legal foundations. Finally, Volume IV (‘Governance’) takes a ‘micro-governance’ approach, exploring how, for example, corporate law and intra-firm politics influence the macroeconomic aggregates by which social welfare is often measured.With comprehensive introductions to each volume, newly written by the editors, which place the collected materials in its historical and intellectual context, Political Economy is destined to be valued by scholars, advanced students, and policy-makers as a vital research and reference resource.

Conventional wisdom warns that unaccountable political and business agents can enrich a few at the expense of many. But logically extending this wisdom implies that associated principals – voters, consumers, shareholders – will favor themselves over the greater good when ‘rules of the game’ instead create too much accountability. Democratic Governance and Economic Performance rigorously develops this hypothesis, and finds statistical evidence and case study illustrations that democratic institutions at various governance levels (e.g., federal, state, corporation) have facilitated opportunistic gains for electoral, consumer, and shareholder principals. To be sure, this conclusion does not dismiss the potential for democratic governance to productively reduce agency costs. Rather, it suggests that policy makers, lawyers, and managers can improve governance by weighing the agency benefits of increased accountability against the distributional costs of favoring principal stakeholders over more general economic opportunities. Carefully considering the fundamentals that give rise to this tradeoff should interest students and scholars working at the intersection of social science and the law, and can help professionals improve their own performance in policy, legal, and business settings.