Elements of the General Theory of the Mixed Economy Defects

Alexander Rubinstein

Public administration issues, 2017, issue 1, 71-102

Abstract: The article presents a new view of mixed economy failures and their classifi cation in context of researching the nature and evolution of paternalism - one of the elements of the "patronized goods" theory. "Behavioral failures" add up to standard failures such as monopolies, information asymmetry externals etc. According to the theory this kind of the mixed economy failure is caused by irrational acts of individuals who choose the kind of behavior which matching the "paters" preferences does not maximize their wellbeing. The analysis of "paternalism" is based on the approach mentioned above that made it possible to leave the habitual for this category "paternal care" of the state about its citizens and offer a more generalized interpretation of the notion. The article points to a special kind of defects of the mixed economy-"paternalistic failure" and analyzes the mechanisms of forming state paternalistic directives that cause the failure. Theoretical and applied aspects of the concept of consociational democracy are considered in the article. The concept provides for process liberalization of making political and economic decisions on the basis of developing civil society institutions and citizens activity, aimed at reducing risks of "state failures" and wellbeing losses.

Keywords: patronized goods; merit goods; market failures; paternalism; State activity; State failures; consociationalism; institutions of civil society (search for similar items in EconPapers)
Date: 2017
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