Rationality, Political Economy, and Fiscal Responsibility: Wrestling with Tragedy on the Fiscal Commons

39 Pages Posted: 30 Jun 2011

See all articles by Richard E. Wagner

Richard E. Wagner

George Mason University - Department of Economics; George Mason University - Mercatus Center

Date Written: June 29, 2011

Abstract

The continuing budget deficits and accumulating public debt that commonly plagues western democracies reflects a clash between two rationalities regarding human governance: one of private property and its conventions and one of common property and its procedural framework. The clashing of these rationalities creates forms of societal tectonics that play out through budgeting. Democratic budgeting creates a form of fiscal commons whose governance is subject to the tragic outcomes depicted by Garret Hardin (1968). To be sure, tragedy can be avoided as Elinor Ostrom (1990) explains, but only to the extent that the fiscal commons is governed in a manner consonant with Antonio De Viti de Marco's (1936) model of the cooperative state. While the tragedy of the commons that results from this tectonic clash is an inherent feature of democratic political economy, that tragedy can nonetheless be limited through reestablishing the conventions and institutions of a constitution of liberty.

Keywords: fiscal commons, institutional public finance, Antonio De Viti de Marco, cooperative vs. monopolistic states, polycentric vs. monocentric polities, state as intermediary, scale-free modeling

JEL Classification: B4, D7, E6, H6

Suggested Citation

Wagner, Richard E., Rationality, Political Economy, and Fiscal Responsibility: Wrestling with Tragedy on the Fiscal Commons (June 29, 2011). GMU Working Paper in Economics No. 11-28, Available at SSRN: https://ssrn.com/abstract=1875200 or http://dx.doi.org/10.2139/ssrn.1875200

Richard E. Wagner (Contact Author)

George Mason University - Department of Economics ( email )

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HOME PAGE: http://mason.gmu.edu/~rwagner/

George Mason University - Mercatus Center ( email )

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HOME PAGE: http://ppe.mercatus.org/scholars/richard-wagner

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