Private Governance: Creating Order in Economic and Social Life

by Edward Peter Stringham

Overview

From the first stock markets of Amsterdam,London, and New York to the billions of electronic commerce transactions today, privately produced and enforced economic regulations are more common, more effective, and more promising than commonly considered.

In Private Governance, prominent economist Edward Stringham presents case studies of the various forms of private enforcement, self-governance, or self-regulation among private groups or individuals that fill a void that government enforcement cannot. Through analytical narratives the book provides a close examination of the world's first stock markets, key elements of which were unenforceable by law; the community of Celebration, Florida, and other private communities that show how public goods can be bundled with land and provided more effectively; and the millions of credit-card transactions that occur daily and are regulated by private governance. Private Governance ultimately argues that while potential problems of private governance, such as fraud, are pervasive, so are the solutions it presents, and that much of what is orderly in the economy can be attributed to private groups and individuals. With meticulous research, Stringham demonstrates that private governance is a far more common source of order than most people realize, and that private parties have incentives to devise different mechanisms for eliminating unwanted behavior.

Private Governance documents numerous examples of private order throughout history to illustrate how private governance is more resilient to internal and external pressure than is commonly believed. Stringham discusses why private governance has economic and social advantages over relying on government regulations and laws, and explores the different mechanisms that enable private governance, including sorting, reputation, assurance, and other bonding mechanisms. Challenging and rigorously-written, Private Governance will make a compelling read for those with an interest in economics, political philosophy, and the history of current Wall Street regulations.

Product Details

ISBN-13:	9780199365166
Publisher:	Oxford University Press
Publication date:	07/01/2015
Edition description:	New Edition
Pages:	296
Product dimensions:	6.00(w) x 9.30(h) x 1.10(d)

About the Author

Edward Peter Stringham is the Davis Professor of Economic Organizations and Innovation at Trinity College, Hartford, Connecticut. Stringham is president of the Society for the Development of Austrian Economics, former president of the Association of Private Enterprise Education, editor of the Journal of Private Enterprise, editor of two books, and author of more than sixty journal articles, book chapters, and policy studies. His work has been discussed on more than 100 broadcast stations, including CBS, CNBC, CNN, Fox, Headline News, NPR, and MTV.

Table of Contents

Why private governance?

1. Introduction
2. Beyond the deus ex machina theory of law
3. Rules from voluntary associations as an alternative to coercive ones: Governance as a club good

Privately governed markets in history and modern times

4. Markets without enforcement: Reciprocity and reputation mechanisms in the world's first stock market
5. The evolution of rules in exclusive clubs: From coffeehouses to the London Stock Exchange
6. Markets creating transparency: Competing listing and disclosure requirements from the Big Board in New York to the Alternative Investment Market in London
7. How technologically advanced markets can work even when fraud is "legal": Ex ante risk management by PayPal and other intermediaries
8. Bundling governance with bricks and mortar: Private policing in colleges, in California, North Carolina, and beyond
9. The most personal form of private governance: Individual self-governance
10. When third party review is "necessary": Adjudication by contract
11. Does private governance work in the most complex markets? Successful risk management on Wall Street even in the wake of the 2008 economic downturn

Lessons of private governance

12. The relationship between public and private governance: Does the state help or crowd out good governance?
13. Applying Hayek's insights about discovery and spontaneous order to governance
14. The unseen beauty that underpins markets

Editorial Reviews

"Stringham's thesis is thought provoking. He argues it well and provides a number of case studies that illustrate clearly how private governance succeeded when most people would expect it to fail."

Ethics and Culture Blog

"Stringham is to be commended for his bold and wonderfully-argued thesis, and for the research that he has done in supporting his claims. This book is a delight to read, is packed with accessible and fascinating information, is confident enough to tweak the noses of the Left and is a recommended - required - read for anyone interested in the beauty of spontaneous order, far removed from the shadow of the state."

The Quarterly Journal of Austrian Economics

"Private Governance is a masterpiece of economic, philosophical, and legal reasoning that will shake progressive ideology to its foundations, and, if read by enough young people, dispatch it to a waiting grave."

Andrew Napolitano, Fox News

"Stringham dispels state-worshipping fiction with historical fact to show how good governance has preceded Leviathan, ignores it when necessary, and can surpass it when it fails."

Peter Thiel, Entrepreneur

"If you read this book you will have to readjust what you think is possible. A masterful account that mixes history, theory, and a deep understanding of what contracts really mean."

Michael Munger, Duke University

"The dominant view in economic and political theory is that markets can only exist in the 'shadow of the state.' This superb volume challenges this contention head on."

Mark Pennington, King's College London

"Explains how private governance can work in theory and carefully details a series of real-world case studies to illustrate how it actually works. Stringham writes so well that this book should be appreciated and enjoyed by academics and non-academics alike."

Bruce Benson, Florida State University

"The theory and practice of private provision of protection, security, and adjudication has a long and distinguished history. Private Governance is an extremely important contribution to understanding this issue."

Leonard Liggio, Institute for Humane Studies

"Adam Smith brought us the 'invisible hand.' Now, Stringham brings us 'private governance.' Am I going too far in comparing Stringham to Smith? Maybe so, but it is because Smith does not deserve to be mentioned in the same sentence as Stringham. Read this book (that's an order!)."

Walter Block, Loyola University-New Orleans

"Brimming with surprises and intellectual curiosity. Stringham turns the conventional wisdom on its head, in delightful and convincing fashion."

Tom Woods, Historian

"Masterfully weaves economic analysis with little-known history and elegant storytelling to demonstrate the power of individuals to create order without law or government. Essential reading for policy-makers, academics, and anyone else with questions about the power of freedom."

Marcus Cole, Stanford University

From the Publisher