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The scope of authority of the political elite tends to expand because those in authority seek more power, and the masses often perceive problems and demand that those in power do something to address those problems. The demands of the masses are supported by the academic concept of market failure, which legitimizes the expansion of the elite’s scope of authority. Despite theories of market failure that are used to justify government action, most government programs do not correspond with the problems identified by economic theory. Interventions in response to the demands for government action often create additional unforeseen problems, which leads to more demands for government action. The result is that the scope of authority of the ruling class tends to continually expand as the political elite identify problems and the masses demand that the elite address those problems.
The incorporation of technology, and more recently AI [Artificial Intelligence], into our everyday lives has been progressing at an unprecedented pace. Siri, Alexa, Cortana and various other digital assistants and chatbots populate our everyday interactions for most service-related matters. Acknowledging that technology, work, and social relations are deeply entangled with each other, this paper combines a literature review of anthropomorphisation of AI and emerging technology with a focus on gender and work, and empirical examples drawn from real-world applications and chatbots in the service industry in India, to critically analyse the gendering of technology. We unpack the tendency to ascribe a feminine identity to assistive technology and argue that gendering of emergent assistive technology is performative and relational. It materialises through particularistic manifestations drawing from the sociocultural context. Furthermore, this gendering of technology is co-constituted by the sexual division of labour and gendered norms of work.
Prior to the Enlightenment, citizens viewed themselves as subjects of their governments, obligated to obey the mandates of the ruling class. Enlightenment thinkers argued that governments should serve their citizens, rather than citizens being servants of their governments. This had a constraining effect on the abuse of authority, but also led to a romantic notion of democratic governments being accountable to their citizens and acting in their interests, legitimizing the exercise of authority by the ruling class. This chapter discusses the historical evolution of democratic institutions to show how they emerged as a result of negotiations in a political marketplace. One advantage of democratic institutions is that the exercise of authority tends to rest with the positions people hold rather than with those people themselves. This mechanism for peacefully replacing those in authority constrains their ability to abuse their power.
While elites cooperate with each other, transacting in the political marketplace for their mutual benefit, they also compete with each other in other ways. They often have different policy agendas, but more significantly, they compete with each other for power. Those lower on the hierarchy of power work to displace those above them, and a division of power within government leads them to try to increase their scope of power, often by infringing on the power of other members of the elite. A system of checks and balances helps control the abuse of power by those who have it. The masses have little power, and the powerless cannot constrain the powerful even if the powerless far outnumber the powerful. The most effective way to constrain the abuse of power by the ruling class is to maintain institutions that facilitate competition among elites.
Market institutions, including institutions in the political marketplace, are created to facilitate the ability of individuals to exchange for their mutual benefit. This chapter begins with an analysis of markets for goods and services, with the idea that those same principles of market exchange carry over into political markets. A general equilibrium framework is used to depict the outcome of exchange under the assumption that there are no transaction costs to impede mutually advantageous exchanges. That model is institution-free, so the chapter continues to analyze what institutions would be necessary to produce that general equilibrium outcome in an environment in which there are transaction costs. The chapter notes that institutions have three economic functions: lowering transaction costs, enforcing rights and contracts, and redistribution. The chapter analyzes those first two functions, deferring a discussion of redistribution until Chapter 8.
Institutions that lower transaction costs are effective only to the extent that they are enforced. Effective enforcement requires that the enforcers are able to display a capacity to use force sufficient to make people perceive that noncompliance would be futile. Institutions of authority, based on the threat of force to be used against those who do not comply, are controlled by the political elite. Once the ruling class has this authority, they can use their power to extend their scope of authority to other activities, such as producing goods and services and redistributing income and wealth. Because institutions of authority are a necessary foundation for an orderly society, there is no effective way for the masses to escape from being subject to them.
The primary motivation of members of the ruling class is the quest for power. Power, which enables people to accomplish other goals, is also a desired end in itself. Those who have the greatest desire for power will self-select into activities that allow them to exercise power over others. Participants in the political marketplace will be most successful if they are open to negotiating any offer from other participants, which implies that principled politicians will be at a disadvantage to those who are less principled. In their quest for power, the ruling class seeks stability to prevent challengers from displacing them. Creative destruction, in markets for goods and services and in the political marketplace, works against the elite, so there is a tendency for the economic and political elite to work together to prevent that creative destruction. Unchecked, this tendency can displace progress with stagnation.
Detecting multiple structural breaks at unknown dates is a central challenge in time-series econometrics. Step-indicator saturation (SIS) addresses this challenge during model selection, and we develop its asymptotic theory for tuning parameter choice. We study its frequency gauge—the false detection rate—and show it is consistent and asymptotically normal. Simulations suggest that a smaller gauge minimizes bias in post-selection regression estimates. For the small gauge situation, we develop a complementary Poisson theory. We compare the local power of SIS to detect shifts with that of Andrews’ break test. We find that SIS excels when breaks are near the sample end or closely spaced. An application to U.K. labor productivity reveals a growth slowdown after the 2008 financial crisis.
Exchange within the political marketplace, just like the marketplace for goods and services, takes place within an institutional structure that lowers transaction costs to facilitate political exchange. One difference is that whereas institutional constraints in markets for goods and services typically are enforced by a third party – government – institutional constraints in the political marketplace are enforced by those who are constrained by them. This chapter discusses a variety of political institutions, and explains why those institutions, in general, are designed to enable the political elite to maintain their power against potential challengers. Recognizing the way that political institutions are designed to protect the power of the incumbent elite, the chapter concludes that the most important dimension of political competition is the competition between elites and challengers, not competition among parties.
This article shows that exchange-traded funds (ETFs) “sample” their indexes, systematically underweighting or omitting illiquid index stocks. As a result, arbitrage activity between the ETF and its index has heterogeneous effects on underlying asset markets. Using an instrumental variables approach, we find that the trading activity of ETFs reduces liquidity and price efficiency and increases volatility and co-movement for liquid stocks but has no effect on illiquid stocks. Our results demonstrate that the effects of passive investing on asset markets depend on how passive funds replicate their target index.
Exploiting changes in countries’ competition laws, we find that competition increases firms’ propensity to use zero leverage (ZL). We test the financial-flexibility, financial-constraint, and quiet-life explanations for this result, concluding that desire for flexibility is the one most likely. The relation between competition and ZL strengthens with cash-flow volatility, which supports the flexibility motive. Adoption of ZL by firms is accompanied by increases in payouts, so it is unlikely that ZL adopters are constrained. Proxies for governance have no effect on the relation between competition and ZL, suggesting that desire for a quiet life is not the explanation either.
This article revisits the methodological foundations of Elinor Ostrom’s institutionalism by examining the role of ‘complexity’ in her work and the conceptual influence of Herbert A. Simon. While Simon was not Ostrom’s most frequently cited reference, his thought – particularly as articulated in The Sciences of the Artificial – exerted a formative and enduring influence on her analytical framework. Drawing on Ostrom’s later writings, in which she offers a retrospective account of her intellectual trajectory, we show how Simon’s systems-engineering perspective provides a coherent framework for understanding her approach to institutional complexity, despite notable differences in their respective research objects and theoretical priorities. For Ostrom, institutions evolve incrementally as ‘boundedly’ rational individuals attempt to resolve collective problems through successive modifications of rule structures within complex social systems. In contrast to top-down optimisation models, her work emphasises adaptive responses and practical problem-solving. Interpreting Ostrom’s methodology through a Simonian lens not only deepens our understanding of her contribution to institutional economics but also illustrates the value of interdisciplinary approaches informed by complexity theory for the field.
This article contributes new knowledge on the insertion of Spain into the European integration project and shows how European Investment Bank (EIB) policy, in the form of loans, helped boost the Spanish economy. EIB loans to Spain promoted both the Trans-European Networks (TENs) and the funding of enterprises. We argue that the funding of TENs encouraged the integration of Spain into the European space, whilst the funding of enterprises helped consolidate their competitive position, facilitating their expansion abroad.
This study examines the role of normative values and stakeholder commitment in the evalua-tion and implementation process of social and organizational innovations in highly regulated systems, using the example of the four-day work week in German healthcare. Based on 26 expert interviews across micro, meso, and macro levels, the study reveals how actor-specific values and institutional contexts shape judgment about ecological, economic, social, and or-ganizational performance sustainability. The findings show that commitment to innovation is not determined solely by functional considerations but emerges in a field of tension between normative aspirations. Stakeholders align themselves differently along axes such as employee vs. patient orientation or short- vs. long-term thinking, resulting in competing innovation scenarios. The study proposes a transferable framework enabling organizations to map stakeholder values, locate areas of tension, and assess the depth and direction of commitment.
This study addresses the urgent need for low-carbon energy transition (LCET) in the Global South, where vulnerability to climate change is high and most countries have ratified the Paris Agreement and Nationally Determined Contributions. It emphasizes the importance of research in supporting this transition, particularly through the lens of digital technologies. Despite its relevance, existing studies on the topic remain limited and fragmented. This study reviews the literature on digital infrastructure in LCET, identifies key gaps and ambiguities and offers insights to inform future research and policymaking in the Global South.
The economic valuation of recreational ecosystem services is challenging due to difficulties in obtaining geo-tagged information of users. The objective of this study is to validate crowdsourced and user-generated content in order to predict visitation patterns to 16 national parks in Spain. The results may serve to encourage its utilization in the study of recreational demand in other countries, particularly developing countries, where on-site visitor information may be limited or expensive to gather. The present article employs a negative binomial regression model to evaluate the validity of two sources of data: Flickr and mobile phones. The accuracy of predictions exhibited variation across the 16 parks, indicating that site-specific characteristics, such as the seasonality of visitation patterns, may be of significance. The utilization of mobile phone data for modelling visitors yielded enhanced predictive capacity, as shown by the goodness of fit of the estimated models.