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, Privatization
Creation-Date: 1989
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