Does liberty matter for economics? To address this question, I distinguish among three different types of liberty: Adam Smith’s, the neoclassical, and the so-called “classical liberal.” They differ in that the neoclassical and the classical liberal perspectives presume the existence, typically without noting it, of the four conditions that comprise the foundation of liberty, namely, secure property rights, enforcement of contracts, absence of government predation, and security. In contrast, Adam Smith sought to explain these foundations. In this article—an extraliterary review of one of the central themes of —I draw the implications of Smith’s approach, and I explain why neoclassical economics—which takes the foundations of liberty as given—is unable to understand the work of Smith on this topic and, hence, on economic development. I also show that the neoclassical and the classical liberal approaches rest on a foundation of magic: they both presume the foundational conditions just noted but fail to explain how they arise. Put simply, the neoclassical approach has no explanation for the origin of liberty or of the mechanisms that sustain it. If markets require the four conditions of the foundation of liberty, then a complete explanation of the origin and development of markets must include an explanation of how these conditions come to hold. The Smithian economic perspective is especially important for today’s developing countries, most of which, at best, struggle to create the four foundational assumptions of liberty.
This study assesses how perceptions about the quality of legal institutions affect entrepreneurial activity across US states. We employ survey data from the US Chamber of Commerce’s Institute for Legal Reform regarding both the overall perceived institutional quality within a state and a multitude of subcategories. With a panel data set covering 2002–08, we find that along with overall legal quality, entrepreneurial activity across states is positively correlated with better perceptions about punitive damages, summary judgment, rules of discovery and admission of scientific and technical evidence at trial. Interestingly, interacting these variables with economic freedom typically generates non-results, though this is not the case when considering only opportunity entrepreneurship. Implications are discussed.
This article investigates the implications of Baumol’s cost disease for a publicly provided good in the presence of distortionary taxation. A model is presented in which the publicly provided good experiences low labour productivity growth relative to the private good. The public sector will grow monotonically with the productivity differential between sectors and the tax rate will be pushed to the top of the Laffer curve over time. This article also finds that the desire for redistribution will be crowded out by the impact of unbalanced growth and Baumol’s cost disease.
We recently marked the 60th anniversary of the book that established the field of public choice – The Calculus of Consent by James M. Buchanan and Gordon Tullock. It was also the 30th anniversary of Elinor Ostrom et al’s ‘Covenants with and without a sword’, in which she demonstrated the capacity of individuals for self-governance without submission to an external authority. This article considers these two foundational works as a starting point from which to explore the intellectual tradition of ‘democratic optimism’ in public choice. The Buchanan/Ostrom legacy is an unshakable faith in the capacity of individuals for self-governance, a significant departure from more orthodox thinking that presumed the necessity of a social planner to oversee, coordinate and enforce collective actions. Their work also illustrates the importance of questioning the assumptions of economic models and modes of thought. Examination of antecedent assumptions is useful not only for understanding the depth and complexity of economic and political choices, but also for thinking about the history of the economics discipline, the viability of research programmes and the ‘danger of self-evident truths’.
This article explores James M. Buchanan’s contributions to urban economics and urban public finance. Buchanan never self-identified as an ‘urban economist’, so his contributions to the field have blended into his broader body of work on public finance and externalities. However, in a series of papers in the 1960s and 1970s, Buchanan developed an urban fiscal club framework for thinking about urban problems that he used to analyse cities’ tax policy and the negative externalities of congestion, crime and pollution. By drawing out those ideas and their relation to each other, we can reconstruct Buchanan as an urban economist. This reconstruction casts new light on Buchanan’s service with several academic and federal urban policy commissions, including the Committee on Urban Public Expenditures and Richard Nixon’s Task Force on Urban Affairs and Task Force on Model Cities. Buchanan’s interest in urban economics has roots in an often-ignored member of his dissertation committee, Harvey Perloff. Perloff’s joint appointment with the Chicago Planning Program brought Buchanan into contact with several urban planners and urban economists who would continue to engage him in urban policy work throughout his career.
Ageing demographics have prompted widespread pension reforms across Latin America. This has left several countries with a significant financial burden related to the transition from one system to another. In this article, we evaluate two alternative methods of financing the recent pension reform in the Dominican Republic. We build on a simple real business cycle model with perfect competition and add a fiscal block that allows us to simulate shocks to the tax rates on capital and labour, based on the present value of the pension reform cost. We find that increasing the tax rate on returns to capital would not only fill the pension deficit, but also have a significantly smaller adverse effect on the macroeconomy, when compared with an increase to the tax on labour.
Content moderation is key to platform operations. Given the largely outsourced character of content moderation work and the dynamic character of social media platforms, technology firms have to address the accompanying high degrees of uncertainty and labour indeterminacy. Central to their managerial strategies is the use of automated technology that allows them to organise work by incorporating the social media user activities within the production processes, and control workers for ensuring the accuracy of content moderation decisions. The labour process analysis is informed by two workshops with ten participants at a Berlin-based IT-services firm providing content moderation services to a lead firm based in the USA. The research design combines together the design thinking method and the focus group interview method to examine the worker–machine interaction. The research findings indicate that technical control results in continuous standardising of content moderation work through routinisation of tasks and codification of time. Its combination with bureaucratic control through the supply-side managerial functions aims to ensure the quality service delivery and points to the continued significance of human supervision. Correspondingly, there are two main contributions of our study: first, regarding the governance in content moderation value chains and second, regarding the worker experiences of technical-driven control. On account of the limited resistance observed in the labour process, we conclude that instead of seeing it as the totalisation of technical control, our findings point towards the structural conditions in Germany that restrict migrant workers’ agency.
Much is known about how labour platforms use ‘algorithmic management’ to implement rules which govern labour by matching workers (or service providers) with clients (or users). But little is known about whether and how platform workers engage with these rules by manipulating them to their own advantage, and how this accounts for wider ‘regime dynamics’ across (and within) different types of platforms (for example, on-location and online). Based on a comparative analysis of two food delivery (Deliveroo and Takeaway) and two freelancing (Upwork and Jellow) platforms in Belgium, we discuss the rules platforms use to govern labour and examine what role workers have in shaping a ‘space’ of control over the conduct of their work. Drawing on labour process theory, we argue that this space is shaped by the way in which platforms shift risks onto workers by rules governing access to work through rewards, penalties as well as labour deployment reflecting various contractual statuses. Hence, we explain how workers also shape such spaces by organising consent around these rules, pointing to a ‘social space’ for food delivery workers and a ‘market space’ for self-employed freelancers. These spaces refer to different regime types, that is, ‘pay-based control’ and ‘time-based control’ for food delivery, and ‘customer-based control’ and ‘task-based control’ for online freelancers. These types are shaped by the control and consent dynamics within labour platforms, reflecting the platforms’ labour governance strategies and workers’ attempts to ensure control over these strategies within the distinctive political institutional realm.
An expanded use of agency workers has followed a series of economic shocks in the UK since the 2008 financial crisis. Agency workers, unlike permanent workers, comprise a wide range of workers without regular, secure and long-term employment relations. In this article we examine the inherently contradictory employment relationship embodied by agency workers, namely employers’ wish to stabilise and make the workforce more predictable by bringing in agency workers under insecure and unstable employment terms. Based on a significant single case study of a distribution centre, the study compares two agency work regimes: one with systematic screening and employment of pre-formed workers, and the other with strong normative control over fragmented under-formed workers. The study details management strategies aimed to improve workforce stability in the more fragmented agency worker regime by bringing an employment intermediatory on-site, building coherency between the permanent and agency workers, and restraining the supervisor’s power of dismissal. These findings problematise framing agency employment based on an assumption of continuous and selective inflow of migrant workers. Rather, contrasting agency worker regimes demonstrates contested employment relations between an increasingly diverse group of agency workers and an employer seeking to instigate predictability and coherency in agency employment.
This article aims at developing a conceptual framework of the migrant labour regime (MLR) to better understand the agency of migrants in the semiconductor industry and illustrates this by the example of Filipino migrant workers in the Taiwanese semiconductor industry. Based on semi-structured interviews with key persons in the semiconductor industry, the study demonstrates the different roles of actors and connections within the global production network (GPN). With regard to the theoretical contribution, this article develops a conceptual framework of the MLR and addresses three central actors in multi-scalar networks, that is, state, firms, and LMI. The framework proposed in this article offers more analytical clarity to the primary empirical contribution. Therefore, the article identifies three key factors of dynamics in GPNs. First, it emphasises the importance of the state and firms in shaping the MLR. Regulatory institutions at the national level hinder upward mobility of migrant workers and long-term employment relationships because working contracts do not allow employees to change job tasks or employers freely. Second, the coordination between contract manufacturers and lead firms in the GPN leads to a transformation of the workplace, for example, intensification and increased flexibility. Third, LMIs play a role in facilitating and mediating migrant labour in the transnational labour market.