Volume 16, Issue 1

The aim of this paper is to contribute to the development of a theory of economic freedom. In this endeavor, we build our framework on the Hayekian notion of freedom (Hayek, 1960) because it explicitly embodies the obvious link between freedom and the state: freedom is an absence of state coercion except for that which enforces abstract, general rules known beforehand. We derive two propositions from this Hayekian thesis and elaborate on them, leading to a categorization of government actions from the viewpoint of economic freedom in which the criterion against which coercive governmental actions must be evaluated is the rule of law, meaning a government’s reliance on general, abstract rules. As an implication, our framework allows us to argue for the imperative differentiation between “efficiency” and “economic freedom” as two separate criteria against which government actions can and must be evaluated. We also show that our framework may help explain the process through which economic freedom enhances growth.

Beauty pageants are ubiquitous around the world, and their importance in many cultures is indisputable. This paper empirically examines those factors that contribute to beauty pageant success in a cross-national setting. Our analysis pays particular attention to the role of market liberalism, i.e., economic freedom, in the process. The results indicate that nations with higher economic freedom scores are underrepresented among Miss Universe semifinalists after controlling for other relevant determinants.

The Austrian School's conventional theory of the firm is based on an attempt to synthesize Coase's concept of the firm as a centrally planned hierarchy with the Austrian theory of entrepreneurship and monetary calculation. This paper is a critique of that program as well as an attempt to outline the alternative theory of the firm, one based on the synthesis of the contractual agency theory of the firm (Alchian-Demsetz, Jensen-Meckling) with the same Austrian arguments about entrepreneurship and calculation. The firm in this paper is defined as a nexus of various markets for goods as well as for labor and managerial services rather than as a hierarchy or “organization.” Both the neoclassical and Austrian critiques of the latter concept are utilized to prove that a clear distinction between the market and the firm cannot be established. That distinction is based on the misunderstanding of the firm's dynamics as exclusively tied to the managing/transaction costs ratio as well as on the mischaracterization of inter-firm relations as commanding ones (Demsetz-Alchian, Jensen, Meckling, Fama, Cheung). On the other hand, the central planning view of the firm is equally at odds with the key Mises's argument that rational economic planning is impossible in the absence of market prices (Mises, 1990). If this is so, the firm, as understood in a Coasian paradigm, would not have any reason to exist, or any reason to contribute positively to economic efficiency, because it would simply represent a centrally planned “island of incalculability” in a wider market setting (Rothbard, 2004). Since the firm is a nexus of various markets, its operation is contrary to the Coaseian assumptions led by the price signals. Only insofar as the internal firm's operation is driven by the price signals can the firm be efficient.

Le terme de catallaxie a été forgé par F. Hayek pour exprimer l’ordre spontané du marché. Hayek a créé ce terme à partir du mot catallactique, ressorti peu avant de l’oubli par L. Mises, mot venu du verbe grec signifiant « échanger », pour éviter les ambigüités du mot « économie ». Ce papier a pour objet de rechercher la généalogie du terme « catallactique », depuis Richard Whately, qui a été le premier auteur, en 1831, à vouloir rebaptiser « l’économie politique » en « catallactique ». Ce terme était connu et utilisé tout au long du XIX° siècle et on le trouve encore au début du XX° siècle dans divers manuels. L’utilisation de ce terme par Mises, puis Hayek, est donc la reprise d’une tradition remontant à Richard Whately. C’est l’occasion aussi de se pencher sur la vie de Richard Whately, professeur d’économie politique à Oxford jusqu’en 1831, puis archevêque anglican de Dublin. Il a notamment joué un grand rôle dans l’enseignement de cette discipline, en créant 4 000 cours d’économie politique. Un personnage intéressant, un peu trop ignoré aujourd’hui, qui a joué un rôle non négligeable dans la pensée économique.

The '70s of the 19th century have always held a special attraction point for specialists in the history of thought. For economic theory, these are the years of the Great Crossroads when economic theory was at critical breaking point, after which several powerful theoretical streams emerged that were to determine later on the overall course of the evolution of economics. The book written by the French economist and philosopher Gilles Campagnolo (Criticisms of Political Economy, Menger, Austrian School of Economics and the German Historical School, Routledge, New York, 2009, pp. 416) is an attempt to find out exactly what happened in the years of the Great Crossroads. It offers not only historical reading, but also theoretical interpretation to explaining the evolution, mutual influence and intermingling of the above individual schools of thought in the economic science. The present paper is a review essay on Campagnolo’s new book.