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Foundational explorations for a normative theory of political economy

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  • Edward McClennen

Abstract

I set out an individualistic and pragmatic choice framework for a normative theory of political economy, and argue that, given pluralism with respect to individual ends, a consensus on any political or economic institution presupposes that it is perceived to serve as a public means to private ends. Concerning the crucial question of the distribution of the benefits that political and economic cooperation can make possible, I argue that the various models typically employed—those pertaining to competitive market interaction, decision making under uncertainty, bargaining theory, and social choice theory—fail to provide for a stable consensus, i.e., one that is resistant to non-compliance and renegotiation. Since, however, such instabilities are mutually disadvantageous, these approaches fail to establish how rational individuals can capture all the gains that cooperation makes possible. Appealing to a modified version of the social-psychological construction that Rawls introduces in chapter 8 ofA Theory of Justice I argue that stability is a function of a perceived sense of mutual concern. I conclude by arguing that Rawls own egalitarian/efficiency principle gives natural expression to such a concern, and thus can serve as the object of a stable consensus. Copyright George Mason University 1990

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  • Edward McClennen, 1990. "Foundational explorations for a normative theory of political economy," Constitutional Political Economy, Springer, vol. 1(1), pages 67-99, December.
  • Handle: RePEc:kap:copoec:v:1:y:1990:i:1:p:67-99
    DOI: 10.1007/BF02393034
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    References listed on IDEAS

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    1. Sen, Amartya K, 1977. "On Weights and Measures: Informational Constraints in Social Welfare Analysis," Econometrica, Econometric Society, vol. 45(7), pages 1539-1572, October.
    2. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    3. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63(4), pages 309-309.
    4. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    5. Arrow, Kenneth J, 1977. "Extended Sympathy and the Possibility of Social Choice," American Economic Review, American Economic Association, vol. 67(1), pages 219-225, February.
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    1. Edward McClennen, 1993. "Rationality, constitutions, and the ethics of rules," Constitutional Political Economy, Springer, vol. 4(2), pages 173-210, March.

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