The Biblical Ethic of Free Market Exchange

Despite the calls of ‘Christian Socialists’ to bring market forces under the control of the state and its temporal power, the supreme text of Christianity not only supports the existence of free markets, it also prescribes their existence and operation as the normal, God-given means of social interaction. Both the Old and New Testaments of the Bible provide an ethical defense of the market itself, the division of labor, the principle of voluntary exchange, and the condemnation of force, fraud, and coercion. As the introduction of force into society and exchange is always and ever the policy of interventionists and socialists, the aim of this paper is to oppose those doctrines on the grounds of Biblical ethics. This is not to dismiss the pragmatic, historic, or epistemological failings of the interventionists. The dismantling of socialism on these grounds has been thorough and devastating as provided by the Austrian school of economics. This work provides a moral and ethical ground that not only dismisses the socialist agenda, but adds to an already robust body of work that rejects its interventions due to its inefficiencies, failed states, and its pretense of knowledge.

Percentage tax designation institutions. On Sugden’s contractarian account

Abstract“Percentage Tax Designation Institutions”, also known as “Percentage Philanthropy Laws”, are fiscal institutions through which taxpayers can freely designate a certain percentage of their income tax to organizations whose main activity is of public interest: churches, third-sector organizations, political parties, etc. A comprehensive explanation of such systems is still lacking. In The Community of Advantage, Robert Sugden provides an original theoretical account of the Italian “8 × 1000” institution as one of those forms of regulation that “would be justified as ways of expanding opportunity for mutually beneficial transactions” and, more particularly, as a liberal and “contractarian approach to the provision of public goods”. This article is an attempt to expand and deepen the understanding not only of the 8 × 1000 but also of the 5 × 1000 and 2 × 1000 institutions, by reflecting on and possibly refining Sugden’s contractarian account, at least with regard to the part that relies on and develops the voluntary exchange tradition (Wicksell, Lindahl and Buchanan). To remain faithful to two normative premises of Sugden’s approach—the opportunity criterion and the correlated freedom of choice—we must introduce some theoretical adjustments to take into due account the way in which taxpayers’ freedoms—not only freedom of choice but also autonomy—are affected by default rules and the related redistribution procedures. In addition, these institutions also go beyond the voluntary exchange tradition—insofar as they go beyond its basic assumptions: the benefit principle of taxation, taxpayers’ self-interest and the very logic of exchange—and, at the same time, they can be read as a new form of voluntary tax justice.

Instrumental support for designing mechanisms of institutional interventionism

The interaction of participants in the political-economic process cannot always be successfully described in terms of mechanisms of market coordination and is not always based on principles of a voluntary and mutually beneficial exchange that increases well-being. The fact is that economic actors are not uniform in the possession of power. Accordingly, activity for the rational use of limited resources is not based on competition between homogeneous economic entities in a spontaneous economic order, but on conflict between subjects with different power potentials in a hierarchical structure. Thus, power acts as a competitive advantage, which rational subjects tend to use for the purpose of force redistribution. One of its forms is institutional intervention — a behavioral model based on a coercive strategy through the establishment (change) of rules. The article describes the potential use of optimization and equilibrium models to describe the behavioral interventionist strategies. Optimization models characterize the interventionist behavior at the initial stage of institutional design, and equilibrium models determine possible variation in interactions between interventionists and victims during the redistribution of power. Methods for quantifying effects of institutional сhange are systematized. The proposition that violent equilibrium is not a specific distribution of mutual gains from cooperation, both with voluntary exchange and coordination level of tolerance (the maximum value of costs that the victim is willing to sacrifice) and a threshold (the lowest possible) values interventionist legitimacy, is substantiated. As guidelines for the evaluation of deviations from the equilibrium levels, we offer levels stability, efficiency, and legitimacy of institutional design.

The good moral character requirement for occupational licensing

Purpose The purpose of this study is to investigate the extent to which a character component is required for occupational licensing by state, industry and occupation. This study also investigates whether the good moral character (GMC) is defined and how GMC is defined in state statutes. Investigating the GMC requirement is important to society at large because character is a vital factor for trust and trust is an essential component to voluntary exchange and free markets. Investigating the GMC requirement is also important to the thousands of rehabilitated individuals who may be denied work in licensed occupations because of past transgressions. Design/methodology/approach The quantitative research data were collected from state licensing statutes. The number of licensed occupations within each of the 50 states that require GMC was tabulated, as well as the number of states that require GMC for licensing by industry group. In addition, an occupation that requires GMC in a high number of states was compared to an occupation that requires GMC in a low number of states within 11 industry groups. Finally, regulatory statutes were searched to determine how good moral character is defined by each of the state licensing boards for the select occupations. Findings This paper reports that the inclusion of a character component within regulatory licensing statutes varies widely by occupation and by state. The number of occupations requiring GMC ranged from 8 to 119 per state. The number of states requiring GMC ranged from 12 to 49 per industry group. Occupations within industry groups that are more frequently licensed are also more likely to require GMC than occupations that are less frequently licensed. Occupations that are more frequently licensed, however, are generally not more likely to define GMC in their regulatory statutes. Only accounting, an occupation that requires GMC in most states, also defines GMC in more states than any of the other select occupations. Research limitations/implications Only state regulatory statutes were searched for definitions of GMC. Definitions could be included in other government documents such as rules or regulations. As these additional sources were not searched, the number of states that define GMC for the select occupations cited in this study may be understated. Originality/value Prior research has included only studies of the GMC requirement relating to the licensing of attorneys and accountants. The current research explores the extent that good moral character is required for licensing across states, industries and select occupations. This research agrees with prior research that GMC, although providing an important foundation for public trust, is typically not well-defined. To counter criticism of the requirement, this paper concludes with a call for the inclusion of a GMC definition within occupational licensing statutes that is “narrowly and precisely construed, avoiding problems of both vagueness and over breadth” (AICPA and NASBA, 2018).

INSTITUTIONAL INTERVENTIONS ON SUPRANATIONAL LEVEL: TYPOLOGY AND MECHANISMS OF REALIZATION

In conditions of global competition intensification and use of power tools to pursue economic policy it becomes necessary to substantiate possible strategies of inter-entity interaction on supranational level. Based on the hypothesis of uneven distribution of violence potential among economic entities the author described a model of power re-distribution, which shows in deliberate manipulation of rules and/or mechanisms of compulsion to their observance. The article develops the author’s concept of institutional interventions. They are considered as strategies of inter-entity interaction in global economy. Institutional intervention is a behavior model based on compulsion through fixing (changing) rules. The author identifies methodological foundations, prerequisites and theoretical frames of investigating institutional interventions as a form of involuntary exchange. The author was the first to describe the situation of forced balance characterized by the fact that further use of power potential can cause a drop in legitimacy and growth in control costs for invader, while resistance of the intervention object to established institutional order can cause a rise in disobedience costs. Apart from that the article grounded a thesis that for the forced balance it is not typical to distribute the gain of interaction like with voluntary exchange, it is typical to come to an agreement concerning the level of victim’s tolerance (maximum costs, which the victim is ready to endure) and a threshold (minimum possible) value of invader legitimacy. As landmarks for assessing the deviations from balance levels of stability and legitimacy of institutional design were proposed. A generalized mechanism for institutional intervention realization was developed.

Property and Exchange

Property is what’s exchanged in markets, and this chapter examines its nature, introduces the ideological dispute between Locke and Bentham over its origins and the implications of their views for government and individuals, and shows how and to what effect property is exchanged in explicit markets. Rights are distinguished from objects, and property is defined as rights to control specific objects for specific uses at specific times, so different people may own different property rights in a single object at the same time. For Locke, individuals have these rights naturally and create government to protect them, while Bentham argues that government creates rights and can allocate them coercively toward its proper ends. The creation of new rights to resolve disputes is considered, and movement of property rights to higher-valuing owners by voluntary exchange in perfectly favorable conditions is illustrated by a hypothetical dispute over the use of a house.

Externality

This chapter identifies the environmental conditions favorable to voluntary exchange and those susceptible to external cost imposition, and the consequences of each for efficiency. When someone takes a legally recognized right from another without consent or compensation, an external cost is imposed. Externality is theft. There’s no externality until the law gives the cost bearer a right to be free of the costs imposed, so imposing an external cost means stealing this right, or entitlement, which always creates an injustice for the law that requires a liability proceeding to force the cost imposer to compensate the owner and complete the unfinished involuntary exchange begun by the theft. But externality isn’t always inefficient, and forcing thieves to pay a compensatory liability price won’t necessarily deter the thefts. Absolute deterrence of externality would deter these thefts whether they’re efficient or not, but tort and criminal liability seek only full compensation, not absolute deterrence.

Property and Technology

In this chapter, the dependence of property rights on government’s policy choices and their vulnerability to theft are both illustrated in the theoretically rich and institutionally challenging case of intellectual goods, ideas rendered in some symbolic medium. The peculiar qualities of these goods make it especially hard for sellers to prevent thieves (“free riders”) from stealing their value and thus make voluntary exchange with willing buyers possible. This induces a continuous competition of technologies, in which free riders seek the technological means to steal the value of intellectual goods and sellers seek the means to exclude them. When free riders have the technological advantage, sellers must turn to the law to protect their ability to sell to willing buyers. The law’s response is intellectual property, discussed here as copyright, an unusual species of property having only limited duration and subject to “fair use,” legalized theft under certain circumstances.

Exchange and Efficiency

This chapter articulates the Coase Theorem, which describes how voluntary exchange works when it works perfectly, and considers its implications for both efficient and equitable allocation when conditions are perfect and when they’re not. Distinctions between utility, wealth, and value are developed in relation to the problem of distributional fairness, and transaction costs are introduced as impediments to voluntary exchange, and thus to efficient allocation in markets. Posner extends Coase’s logic to a corollary, that when transaction costs are high, efficiency can only be achieved if rights are granted initially to their highest-valuing owner, and proposes a provocative theory of the judicial role in light of the rule of law and the inevitable subjectivity of justice. This is tested in two cases: a hypothetical case where transaction costs are high, and a real one, involving rights to a significant moment in American history in which they’re low.