ABSTRACT

Political economy as a positive and analytic study of governance employs two basic starting points as it seeks to explain why certain societies have grown rich while others have remained relatively poor. From a political economy perspective, it is impossible to understand the emergence of analytical anarchism in the second half of the twentieth century without first placing it in its appropriate intellectual context. The political economy of governance proceeds on two levels of analysis. A “higher” level of analysis focuses on the rules of the game and is concerned with both formal and informal institutions, as well as their enforcement. Social cooperation without the state is clearly possible among small numbers of homogeneous agents with low discount rates. Among political economists working in the intellectual tradition of analytical anarchism, there are two distinct, though not mutually exclusive, approaches to illustrating how social cooperation can be facilitated without the state.