What is the nature and role of competition in markets and politics? This book examines the institutional dimension of markets and the rules and institutions that condition the operation of market economies. Particular attention is paid to the the role of the state, specifically the role of governments in shaping and maintaining the economic constitution of their societies.

The article discusses some of the fundamental conceptual and theoretical aspects of rational choice and moral order. A distinction is drawn between constitutional interests and compliance interests, and it is argued that a viable moral order requires that the two interests somehow be brought into congruence. It is shown that with regard to the prospects for a spontaneous emergence of such congruence, a distinction between two kinds of moral rules which we call trust-rules and solidarity-rules is of crucial importance.

Discoverers of “market failures” as well as advocates of the general efficiency of a “true, unhampered market” sometimes seem to disregard the fundamental fact that there is no such thing as a “market as such.” What we call a market is always a system of social interaction characterized by a specific institutional framework, that is, by a set of rules defining certain restrictions on the behavior of the market participants, whether these rules are informal, enforced by private sanctions, or formal, (...) enforced by a particular agency, the “protective state,” in J. M. Buchanan's terminology. (shrink)

Normative individualism appears to be an obvious normative premise underlying a liberal conception of the desirable social order. The shortcomings of some common Interpretations of this premise are discussed and a more consistent as well as a more workable standard for assessing the ‘goodness’ of alternative socio-institutional arrangements is specified. With such an Interpretation of normative individualism, a contractrarian conception as advocated by J.M. Buchanan can be viewed as a systematic extension of classical liberalism.