– April 17, 2018
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When you work at AIER, brilliant people have a way of showing up in your backyard. Last weekend, we hosted the 2018 Harwood Graduate Colloquium, which focused on alternative institutions of governance. The event brought together 13 very talented graduate students, who had the opportunity to discuss both classic and new research with three of the field’s leading voices on alternative governance.

AIER President Edward Stringham was joined by two of our former summer fellows, Professor David Skarbek of Brown University and Professor Alexander Salter of Texas Tech University. Each led a discussion session centered around a few research papers, both recent and classic, and gave a lecture on their own research. With active participation from the students, they illuminated how alternative institutions of governance work and how a world in which we rely upon them more might look.

We’re used to thinking about government from the point of view of a central authority, but understanding alternative governance requires a paradigm shift even for those who favor far less power being vested in the state. In his book Private Governance, Stringham writes that even radical libertarians often assume the need for top-down enforcement of rules, substituting private entities for the government. But nonviolent, market-based mechanisms of private governance are all around us, and are often easy to miss precisely because they work so well.

Stringham’s lecture gave a detailed look at instances of private governance, especially when enforcement by courts or police is inefficient and ineffective. When building skyscrapers, for example, owners rely on many subcontractors who must deliver their services in a timely and reliable matter. If the owner seeks recourse from a delinquent contractor through courts, the project still suffers from crippling delays. The parties privately resolve this problem through a system of performance bonds that guarantee certain provisions of the contract. Stringham’s discussion section, titled “Club Governance,” offered more case studies as well as theory on how these private institutions emerge and why they can be preferable to government enforcement.

Salter lectured on the theoretical underpinnings of governments and other governance systems. He questioned the often implicit assumption that more decentralized governance is non-hierarchical, and discussed why hierarchies in alternative governments might be inevitable and desirable. His discussion session, “Bottom-Up Institutions and the Study of Polycentric Orders,” looked at research on how various governance systems emerge.

Skarbek presented his research on social order among prison inmates. One of his key findings is that smaller prisons rely on more informal reputation mechanisms, whereas larger prisons often have more centralized orders in the form of gangs. His discussion session, “Justice and Defense Independent of Government,” focused on how decentralized governance can provide safety and enforcement of rules.

I also had the opportunity to lead a session on “Collective Decision Making and Its Potential for Reform.” We discussed papers proposing alternative voting systems that seek to address problems in our current system, including the lack of incentives for voters to inform themselves, and the inability to express the intensity of individual voters’ preferences.

Students came from around the United States and other countries including Argentina, Austria, Ecuador, Germany, Philippines, and Slovenia. It was an honor to participate and to take in this fruitful exchange of ideas, which was made possible by AIER Visiting Scholars Sven Schütt and Rok Novak, who have joined us for the past few months from the CEVRO Institute in Prague. Sven and Rok conceived of and helped plan the colloquium, to the great benefit of both their fellow graduate students and AIER.

During the question-and-answer session that closed the colloquium, all three professors advised the students to focus their research on specific case studies in which private governance has arisen, rather than grand, sweeping theory. It’s excellent career advice, unless we happened to have the next Ludwig von Mises in the room, but it also offered important insight on the path forward to greater liberty and less government control. A system of bottom-up governance can’t and shouldn’t be imposed from the top down. It must evolve to fit each specific problem it needs to solve. Events like the Harwood Graduate Colloquium help equip students to be the intellectual leaders that move this process along.

It was a privilege to host the colloquium’s student participants: Edwar Escalante, Roland Fritz, Paz Gomez, Alison Grant, Franco Lopez, Michael Makovi, Gordon Miller, Vincent Ramos, Adamu Shauku, Kathryn Waldron, and Gillian Wilkinson. Special thanks to Bastiat Society Director Brad DeVos and Gretchen Hayn of AIER for their invaluable help to our masterminds Sven Schütt and Rok Novak.

 

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Max Gulker

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Max Gulker is an economist and writer who joined AIER in 2015. His research focuses on two main areas: policy and technology. On the policy side, Gulker looks at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker is interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy. Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.
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