Robust Political Economy

Pennington proposes a test instead of an ideal. Institutions should be judged by how they perform under the two conditions that actually obtain: knowledge is dispersed and incomplete, so nobody can be assumed to know what the optimal arrangement is (the Hayekian problem), and people pursue their own purposes inside government as well as outside it, so no actor can be assumed benevolent (the public-choice problem). He then runs the standard objections to classical liberalism — market failure, welfare, inequality, international development, and the communitarian and deliberative-democratic critiques — through that test, arguing in each case that the proposed remedy is less robust to ignorance and self-interest than the market process it is meant to correct.

Why it’s on the list: It sits in the curriculum’s public choice section, and it is the entry that states that section’s method most explicitly: the same sceptical standard applied to states and to markets rather than to one of them only.

Where I saw it: Brendan McCord’s Philosopher-Entrepreneur Reading List, in the section on Public Choice Theory. The full 211-entry transcription is on The Philosopher-Entrepreneur Reading List.

Connections

• Institutions — what the robustness test is applied to.
• Incentives — the public-choice half of the test.
• Government — the actor usually exempted from it.
• The Philosopher-Entrepreneur Reading List — the curriculum this came from.