M.L. Weitzman vs J.M. Buchanan

Umberto Romani and Giovanni Tondini

International Journal of Social Economics, 2005, vol. 32, issue 1/2, 5-16

Abstract: Purpose - The aim of this article is to analyze and compare the share economy and the constitutional economy approaches. The fact that numerous world‐class multinationals have chosen to offer stock options to managers and bonus share incentives to employees denotes a realization that any improvement in the performance of an economy affected by several constraints, as is the case in the European economy, can only be achieved by assigning greater responsibility to managers and employees. Design/methodology/approach - The paper underlines the positive and negative aspects of both approaches with a critical analysis of the theories. The authors' interest in M.L. Weizman's model of the share economy stems from this basic reflection, despite the model's excessive reliance in the capacity of the state to resolve the problems at hand using ordinary legislative instruments. J.M. Buchanan's extremely interesting and indeed fundamental considerations concerning the pressures exerted on institutions by particular or individual interests are virtually overlooked. Findings - The weakness of the share economy approach can be effectively contrasted by integrating it with the constitutional economy approach. A substantial difference between Weitzman's and Buchanan's schemes stems from the reliance, exhibited by the former, on the institutions governing the contracts between individual players. Originality/value - The paper focuses on the analogies between Weitzman's and Buchanan's positions in order to set up a unifying framework for the analysis of workforce and other production inputs of the economical system.

Keywords: Economic theory; Social economics (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:03068290510575603

DOI: 10.1108/03068290510575603

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