Money and Markets: Essays in Honor of Leland B. Yeager

236 Laurence S. Mossthat live as parasites on the general population. Marshall’s admission fuels theflames of eliminationist rhetoric and suggests that Britain’s most famous economistmay have endorsed restrictions on the free movements of peoples and races.Efficiency arguments in economics are not strong enough to defeat ethnic orrelated arguments about nationalist succession and self-determination. As anempirical matter, it may be true that territories that respect human rights andadopt a “rule of law” tend to have higher living standards for all groups. But, as therapid economic development of mainland China and other regions suggests, theredoes not seem to be any necessary correlation between rising living standards andhuman rights. 13One challenge facing economists who are interested in the welfare economics of“social cooperation” is to find a way to combine the enormous benefits of marketsand entrepreneurial experimentations with the strict protection of individualliberty and human dignity. Such a challenge might be faced by subordinatingeconomic policy to a constitutional framework centered around the notion ofhuman rights and their protections.All market systems operate within a framework of rules and laws that is constantlyalbeit slowly changing – what Warren Samuels has described as the “legaleconomicnexus” (Samuels 1989). At times these changes may reflect the evolutionof institutions and policy initiatives that prove to be durable and useful to certaingroups in a region. The lingering issue that has not been addressed in the economicliterature is how and in what ways can a constitution be devised for a stateadministration that will hold steadfast for the importance of human rights and theprotection of basic human dignities for all ethnic groups and cultures in that region.These precautions are needed to prevent the smolderings of anger, distrust, andtypification of subgroups in a region, which hasten progress towards the horrors ofeliminationist politics so characteristic of the twentieth century and now resurfacingin the twenty-first century. Any reliance on spontaneous social formations toprovide us with this framework is short-sighted and destined for disappointmentand failure. Spontaneous social formations can produce both “useful” institutionsas well as grotesque institutions.The ideals of human rights and their protections must be embodied in the basicconstitution of the administrative state so that a plethora of ethnic nations cancoexist and benefit via trade and specialization. This topic is one that I plan to takeup in a future essay. It is enough for now that I have identified the need for suchprotections, because the criteria of economic efficiency and mutual gains fromtrade is simply too aggregative to take account of systemic prejudice that is deeplyrooted in the mores and customs of a region and that provides the groundwork foreliminationist politics later on.AcknowledgmentsI wish to thank Professors Leland Yeager, Jürgen Backhaus, Mark Tomass, andRoger Koppl for reading earlier versions of this chapter and providing valuablecriticisms. They are not responsible for any errors that remain.