The Economics of Edwin Chadwick

The Economics of Edwin Chadwick

Incentives Matter

Robert B. Ekelund Jr and Edward O. Price III

The authors detail Sir Edwin Chadwick’s sophisticated conceptions of moral hazard, common pool problems, asymmetric information, and theory of competition, all of which differ starkly from those promulgated by Adam Smith and other classical economists. Also examined are Chadwick’s views on government versus market role in dealing with problems created by natural monopoly, and whether some or all market problems justify government regulation or alterations of property rights. The authors investigate Chadwick’s utilitarian approach to labor, business cycles, and economic growth, contrasting his modern view with those of his classical economic contemporaries.

Chapter 7: Criminal Justice Institutions, Police, and the Common Pool

Robert B. Ekelund Jr and Edward O. Price III

Subjects: economics and finance, history of economic thought, law and economics, law - academic, law and economics


INTRODUCTION Chadwick’s quest to inculcate utilitarian principles into economic policy at all levels revolved, as we have seen, around palliatives for ‘market failure.’ And indeed, Chadwick envisioned market failure everywhere. The problems of decreasing costs and natural monopoly required, in his view, nationalization and franchising of the railways to private contractors (Chapter 4). Other types of market failure – high and asymmetric information costs and negative externalities – required urban franchising of local businesses including funeral supplies and the nationalization of graveyards (Chapter 5). Yet another possible form of market failure applied to the ‘market’ for the provision of crime prevention and judicial services. These services or parts of them were riddled with what it called the common pool problem – a problem whereby the property rights to some resources are non-existent or poorly defined, so that by default, anyone may use the resource, up to some limit of course. The result in many cases is the ‘overuse’ of the resource and its total or partial destruction. Chadwick, who was concerned with crime and justice issues throughout his career, addressed a particularly modern problem in that failures with the contemporary criminal justice system are legion. Economists have sought to analyze criminal behavior (Becker 1968; Becker and Stigler 1974; Stigler 1970), economic efficiency in the law (Ehrlich 1973), and a host of matters relating to crime (drugs, gun control, and so on). A myriad of issues and problems are still in debate. While the mass of this literature has focused on crime deterrence and...

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