The political economy of conflict and appropriation

the long version

Traditional economic analysis has concentrated on production and trading as the only means by which individual agents can increase their welfare. But both the history of industrialized countries and the current experience of many developing and transition economies suggest a major alternative: the appropriation of what others have produced through coercion, rent seeking, or influence peddling. Appropriation was how nobles, bandits, and kings used to make a living. The same is true nowadays for mafia bosses, army generals, lobbyists, and corrupt officials. The essays in this volume integrate conflict and appropriation into economic analysis. In the first of two sets of essays, the actual or potential use of force is a primary determinant of aggregate outcomes. In the second set, appropriation takes subtler forms and is mediated by the political process of modern states. Collectively the essays indicate how, once appropriation is taken into account, some central properties of traditional economic analysis, as well as the presumption that they hold in reality, can break down. The contributions are part of the recent trend of reintroducing politics into economics, a trend that is having a growing impact on political science as well as on economics.