SFB 303 Discussion Paper No. A - 228
Author: Bös, Dieter
Title: Doctrines, Compulsion, and the Economic Duties of the State
Abstract: According to Stiglitz, the main difference between the state and other economic organizations is as
follows: only state membership is universal, only the state has the power of compulsion, in particular the power
to tax.However, in the rest of his paper, in my opinion he overstates the point of state compulsion. Two hundred
years after the French Revolution this seems to be a strange position. Over many centuries revolution and
evolution have proved effective in changing state constitutions, the power to vote, the power to tax, etc. In the
long run, therefore, individuals matter more than any state compulsion. However, even if we accept
Stiglitz' non-historic view, I am not in full agreement with his view of the compulsory state. First, the extent of compulsion
varies across states. Second, state economic activities do not necessarily use the typical government authority.
This is, of course, the case for legislation and administrative activities of the governmental nature. However,
there are many administrative activities of a proprietary nature, as embedded in, for instance, public enterprises
or public purchases. Here, the state behaves like any other economic agent. It does not use its compulsory
power. Let us go one step further. Even if we exclude administrative activities of a proprietary nature, I am not in
full agreement with Stiglitz' characterization of the state as a fully compulsory organization. In the following I
shall illustrate why I believe that his position is too strong.
Keywords: Compulsory state, Economic theory, Open economy, Shodow economy, Redistribution, Public enterprise,
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