ABSTRACT

As George Stigler (1975: pp. 112-13) observed (see Section 1.1), neither of the following two views of the state provides a logically coherent basis on which economists can make responsible policy recommendations. The first view of the state, which reflects a ‘cynicism’ that has been generated by ‘historical reality,’ emphasizes ‘the imperfectibility of the political system, of its susceptibility to the wellplaced minority, of its tardiness in adopting new technologies, of the bureaus that are forgotten islands of indolence, of the carelessness (or worse) of the public’s rights by eminent politicians in advancing their private fortunes.’ The alternative view is based on ‘unreasoning optimism’ and sees the state as ‘dictated by the necessities of optimal economic organization: an institution of noble goals and irresistible means.’ Stigler’s points about views of the state as a whole also apply to individual economic policies.