Item

Abstract

Economist have succeeded in persuading most people that the performance of an economy improves as social constraints on self-interested rational action are removed. In this essay it is argued that, to the contrary, socially istitutionalized constraints on the rational voluntarism of interest-maximizing behavior may be economically beneficial, and that systematic recognition of this must have far-reaching implications for both economic theory and the conduct of economic policy. For standard economics, rules, and institutions are legitimate in principle only if they are confined, like contract or competition law, to ensuring the continued viability of rational voluntarism. By comparison, the notion of beneficial constraint implies that the performance of an economy may be improved by the surronding society retaining and exercising a right for itself to interfere with the choice and pursuit of individual preferences, i.e., to govern «its» economy.