The Concise Encyclopedia of Economics
FEATURED TOPIC

Political Behavior

Richard L. Stroup

The fact of scarcity, which exists everywhere, guarantees that people will compete for resources. Markets are one way to organize and channel this competition. Politics is another. People use both markets and politics to get resources allocated to the ends they favor. Even in a democracy, however, political activity is startlingly different from voluntary exchange in markets....

In democratic politics, rules typically give a majority coalition power over the entire society. These rules replace the rule of willing consent and voluntary exchange that exists in the marketplace. In politics, people's goals are similar to the goals they have as consumers, producers, and resource suppliers in the private sector, but people participate instead as voters, politicians, bureaucrats, and lobbyists. In the political system, as in the marketplace, people are sometimes (but not always) selfish. In all cases, they are narrow: how much they know and how much they care about other people's goals is necessarily limited.

READ MORE
ALSO OF INTEREST

Public Choice

William F. Shughart II

Industrial Revolution and the Standard of Living

Clark Nardinelli

Standards of Living and Modern Economic Growth

John V. C. Nye

Public Choice

William F. Shughart II

Immigration

George J. Borjas

Health Care

Michael A. Morrisey

Return to top
FEATURED BIOGRAPHIES

Friedrich A. Hayek

(1899-1992)

If any twentieth-century economist was a Renaissance man, it was Friedrich Hayek. He made fundamental contributions in political theory, psychology, and economics. In a field in which the relevance of ideas often is eclipsed by expansions on an initial theory, many of his contributions are so remarkable that people still read them more than fifty years after they were written. Many graduate economics students today, for example, study his articles from the 1930s and 1940s on economics and knowledge, deriving insights that some of their elders in the economics profession still do not totally understand. It would not be surprising if a substantial minority of economists still read and learn from his articles in the year 2050. In his book Commanding Heights, Daniel Yergin called Hayek the "preeminent" economist of the last half of the twentieth century....

READ MORE

James M. Buchanan

(1919-2013)

James Buchanan is the cofounder, along with Gordon Tullock, of Public Choice theory. Buchanan entered the University of Chicago's graduate economics program as a "libertarian socialist." After six weeks of taking Frank Knight's course in price theory, recalls Buchanan, he had been converted into a zealous free marketer....

READ MORE