Institutional Competition

Institutional Competition

New Thinking in Political Economy series

Edited by Andreas Bergh and Rolf Höijer

Why is competition between institutions usually viewed in a negative light, when competition is considered positive in most other economic contexts? The contributors to this volume introduce new perspectives on this issue, analytically and empirically exploring reasons for this perception.

Chapter 5: Can Competition Between Governments Enhance Democracy?

Viktor J. Vanberg

Subjects: economics and finance, austrian economics, institutional economics


Viktor J. Vanberg INTRODUCTION Between the fears that are voiced in the popular as well as in parts of the academic debate on globalization the charge that globalization poses a threat to democracy is particularly prominent (Herman 1999; Bartelson 2004). In globalization, so it is argued, market powers come to dominate politics because democratic governments are forced to compete for internationally mobile capital in ways that hamper their ability to serve the interests of their constituencies whose well-being they are supposed to further. The purpose of this chapter is to critically examine the conjecture, implied in the above noted fears about globalization, that the kind of competition between governments that globalization induces requires democratic governments to bow to ‘market forces’ and limits their capacity to act as faithful trustees of the citizens-principals who elected them as their agents. In the sections that follow I will seek to show that contrary to this conjecture competition between governments can very well work as a disciplining force that helps to keep democratic governments in line with their principal duty, namely to advance the common interests of the citizensprincipals as whose agents they act.1 Before turning to the issue of how competition between governments may or may not interfere with their capacity to act as faithful agents of their citizens, a few comments are in order on the way in which I will use, for the purposes of this paper, the terms ‘government’ and ‘democracy’. GOVERNMENTS AS ‘TERRITORIAL ENTERPRISES’ In the most general sense,...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information