Anarchy and Development: An Application of the Theory of Second Best
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Peter T. Leeson
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 governance" is not an option. LDCs face a more sobering choice: ``predatory political governance" or no government at all. Many predatory governments do more to damage their citizens' welfare than to enhance it. In light of this, we show that conditional on failure to satisfy a key institutional condition required for ideal political governance—constrained politics—citizens' welfare is maximized by departing from the other conditions required for this form of governance: state-supplied law and courts, state-supplied police, and state-supplied public goods. Since departing from these conditions produces anarchy and fulfilling them when government is unconstrained producers predatory political governance, anarchy is a second best.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- To What Extent Should Labor and Environmental Standards Be Linked to Trade?
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- Law in Asia: The Key Role of Law as a Productive Force for Development
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- Suturing the Open Veins of Ecuador: Debt, Default and Democracy
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- The Twin Failures of the CDM: Recommendations for the "Copenhagen Protocol"
- Revisiting the Tobin Tax, in the Context of Development and the Financial Crisis
- Decentralization of Development and Nation-Building Today: Reconstructing Colombia from the Margins of Bogotá
- Theoretical Basis and Regulatory Framework for Microtrade: Combining Volunteerism with International Trade towards Poverty Elimination
