State, Law and the Economy I (edX)

Economic concepts often give a fresh and unobvious perspective when applied to the study of how the state, law, and the economy functions and are interrelated. This course teaches students essential economic concepts in an intuitive manner relevant to the study of political economy. Part One of the course is focused on developing the essential economic concepts. These are then applied to the study of the nature of the liberal democratic state and why it has to be a limited state in contrast to a populist democratic one.

Topics include the contractual nature of the state, public versus private goods, property rights and economic externalities, the logic of collective action, social choice theory, agenda control, the art of manipulation, and the compatibility of two ideas of liberty with the democratic state.

The use of interdisciplinary materials, empirical inference, game theoretic simulation, and cross-referencing with political philosophies and well-known historical cases, provide students an opportunity to connect different perspectives and deepen their understanding of the democratic state in a free society using economic concepts.

The economic concepts developed in Part One of the course will continue to be useful in the other three parts. Part Two covers the nature of the authoritarian state and party rule, rent seeking activity and its economic consequences, and interrelationships between democracy and economic growth. Part Three covers rule of law and their legal origins, consequences of legal origins for growth, law or state as determinants of economic growth, and transition from dictatorship to democracy and their permanence. Part Four is a study of nature of politics in pre-industrial states with examples drawn from China, Europe, the Islamic world, and India. We also discuss the relevance and limitations of the economic approach to the study of law and politics.

What you'll learn

- To understand how collective decisions are made with the use of economic concepts.

- How the emergence of states in facilitating collective decisions have reduced incidences of violence and improved human welfare.

- How economic concepts can be applied to tackle problems and conflicts, for example, through well-defined property rights, use of rule-based methods, voting rules, etc.

- The application of the theory of social choice to illuminate the liberal and populist interpretation of voting and the relationship with theories of liberty and democracy.

- Learn how actual politics can be viewed as the use of heresthetics or the art of manipulation to achieve political objectives.

Syllabus

Week 1: Some Methodological Issues and Collective Choice

Lectures 1 and 2 consider some specific concerns in applying economic analysis to the study of collective action, namely, (1) the rationality assumption, (2) the use of simplifying models, and (3) the problem of the fallacy of composition in studying collective action. Then we will explore the contractual nature of the state. We consider why the sum of individual choices is not collective choice. The reasons for collective choices are to achieve allocative efficiency and redistribution.

Week 2: Pure Public Goods and Coase Theorem

Lecture 3 and 4 utilizes game theory to explain how the structure of payoffs characterizes political choices, including the provision of public goods. We then learn how market externalities can be corrected through collective action and consider the implications of the Coase theorem for public intervention.

Week 3: Violence and the Origins of the State and Wisdom of Philosophers

Lecture 5 and 6 considers how the emergence of state institutions with human civilization has reduced violence and life loss. The purpose of moral and political philosophies, from Plato and Aristotle to Locke, Rousseau, and Marx has sought to find practical or ideal political arrangements where humankind can live together in peace and flourish.

Week 4: Two Concepts of Liberty, Theory of Social Choice and the Theory of Democracy

Lectures 7 and 8 introduce two concepts of liberty: negative and positive liberty. The two interpretations of liberty are then related to liberal versus populist democracy through the application of social choice theory. We examine how when applied to voting and the design of political institutions, social choice theory provides a new perspective on the just society considered by political philosophers from Plato to Marx.

Week 5: The Art of Political Manipulation

Lecture 9 studies how heresthetics—the use of rhetoric and strategic structuring of social choice—is used to achieve a desired political outcome. The example of Abraham Lincoln in ending slavery is used as an illustration.