The welfare costs of rent-seeking: a methodologically individualist and subjectivist revision
Michael Makovi ()
The Journal of Philosophical Economics, 2015, vol. 9, issue 1
Gordon Tullock is acknowledged for being the first to recognize the true costs of rent-seeking as including not only the Harberger triangle but also the Tullock rectangle. This rectangle does not constitute merely a lossless transfer of wealth, but it causes a misallocation of resources as rent-seekers invest resources in lobbying. However, a close reading of Tullock’s writings shows that his arguments are formulated in a holistic fashion, speaking of what is efficient or inefficient for society. Rent-seeking is inefficient because it reduces societal welfare. But according to a methodologically individualist and subjectivist economics, such a claim is invalid. We must distinguish between positive economic fact and normative moral philosophy. We call for a reconstruction of utility and welfare economics based on methodological individualism and subjectivism with implications for the theories of monopoly and competition: practices which Neoclassical perfect-competition theory considers to be evidence of rent-seeking should instead be deemed as indications of genuine competition Political economy should be concerned with ascertaining which institutions will best enable individuals to pursue their individually subjective ends – or else economists should be explicit about their normative preferences and political philosophies.
Keywords: Tullock; rent-seeking; interest groups; efficiency; subjectivism; methodology (search for similar items in EconPapers)
JEL-codes: B41 L00 (search for similar items in EconPapers)
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bus:jphile:v:9:y:2015:i:1:n:3
Access Statistics for this article
The Journal of Philosophical Economics is currently edited by Valentin Cojanu
More articles in The Journal of Philosophical Economics from Bucharest Academy of Economic Studies, The Journal of Philosophical Economics Contact information at EDIRC.
Bibliographic data for series maintained by Valentin Cojanu ().