The principal difficulty: Besley’s neo-Rousseavian
Michael C. Munger
Published online: 6 February 2009
Springer Science + Business Media, LLC 2009
Abstract The use of the “principal–agent” model makes an implicit assumption
about the existence of an underlying global optimum or “general will.” This
assumption is debatable, and Besley does not defend it sufficiently or even seem to
realize how strong an assumption it is. Still, it is standard in the literature, and
Besley’s book is a very strong contribution to that literature. Its two greatest
strengths are its solid microfoundations, and its use of the classical “comparative
statics” approach to analyze dynamics.
Keywords Political economy
Control of politicians
JEL codes P16
Let’s start with a trivia question. Please identify the author of the following
It is not sufficient to contrast the imperfect adjustments of unfettered enterprise
with the best adjustment that economists in their studies can imagine. For we
cannot expect that any State authority will attain, or even wholeheartedly seek,
that ideal. Such authorities are liable alike to ignorance, to sectional pressure,
and to personal corruption by private interest.
Stigler? Buchanan / Tullock? Coase? Mises? Hayek?
Look, I got it wrong, too. That’s why I’m asking. The author is A. C. Pigou
(1920; p. 296; cited in Besley 2006, p. 26).
Tim Besley’s point in quoting Pigou is to remind us that the standard “market
failure” critique rests on three shaky claims. The first is that government officials
may have goals that are inconsistent with “the best adjustment” economists discover.
Rev Austrian Econ (2009) 22:169–175
M. C. Munger (*)
Department of Political Science and Department of Economics, Duke University,
Box 90204, Durham, NC 27708, USA