January 13, 2023
Here are a few research ideas I’ve been mulling over recently.
To my mind, the econ profession isn’t set up for pursuing these sorts of Big Questions at the moment. If a question doesn’t immediately lend itself to clean causal inference, the cost for pre-tenure scholars is too high.
If it weren’t, here’s what I’d like to see:
1.
The paradox of 20 century growth. Explain to a Martian the basic contours of the 20 century: world war, depression, world war, cold war. Massive expansion of the welfare-warfare state. Ask him then to predict what happened to worldwide standards of living. Would he predict this and this? Doubtful. In other words, there’s empirical work to be done in showing what the most important countervailing forces were to this massive wealth destruction. There are a few, small (not unimportant, just preliminary) steps in this direction already. But there’s lots more to learn, there’s work to be done in sorting out which factors were most important, etc…
2.
How do states arise? Again, there’s been some preliminary thinking about this question. But once again, I’m wondering about empirical (in the broad sense) work. Surely there’s been more work on this since Carneiro’s landmark article. For a stark contrast, compare thinking about the “theory of the state” to thinking about the “theory of the firm.”
3.
The division of labor, generally. How did a (the?) central topic in economics fade into research-oblivion? Ludwig von Mises calls the division of labor “the fundamental social phenomenon.” And everyone knows Smith begins Wealth of Nations inside the pin factory, marveling at its division of labor. His insights were important, but arguably misplaced. It was left to Mises to develop his “law of association.” The division of labor occurs within firms, yes, but more importantly between them and even more importantly between each individual. Two important questions stand out. The first is why greater specialization sometimes takes place inside the firm and why it is sometimes contracted for in the market. For recent, Austrian-esque grappling with this question, see here and here. The second question concerns the institutional conditions necessary for ever-increasing extensions of the law of association. This research agenda is laid out here.
4.
Protecting property rights. In the absence or weakness of state protection, private parties devise a host of means for securing their property rights. I think it would be helpful to have a taxonomy of these means, and beyond that a way of explaining variation in their use. My own approach to thinking about these problems is to start with two broad buckets. On the one hand, parties may make investments in technology that raises the costs of aggressing against a right. Protection, basically. On the other hand, and more subtly, parties may reduce the gross value of their right to maximize the net value. An example of that logic here. Are there other categories I’m not thinking of? And within these two broad buckets there are surely a host of ways this plays out. Probably the lowest hanging fruit of these questions—and with big analytical payoff too.