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In arguing for the need for the state, this chapter establishes factual parameters within which discussions of political obligations should be conducted. Certain theorists argue that political obligations are not necessary, that various non-state organizations could fulfil the functions commonly assigned to states. However, these theorists do not satisfactorily address questions concerning the provision of essential public goods. Through detailed analysis of numerous alternative mechanisms, libertarian, free-market solutions are found to be unable to provide all necessary public goods. Similarly, technical solutions to N-person prisoner's dilemma are unsuccessful, because of the special conditions they require. Non-state mechanisms, such as the protective associations familiar from Robert Nozick's Anarchy, State, and Utopia, are found to be unable to provide essential public goods, while the same is true of proposals based on a distinction between authority and legitimacy.

This chapter provides a detailed discussion of microeconomic concepts that serve as building blocks for the demand-side analysis developed in Part II and applied in Parts III and IV. The concepts are important to understanding the value of infrastructure and evaluating and improving resource management. Specifically, the following microeconomic concepts are discussed: public and private goods: (non)rivalry and (non)excludability; consumption goods and capital goods; externalities: incomplete and missing markets; and social goods: nonmarket goods, merit goods, social capital, and irreducibly social goods. The chapter concludes with a brief discussion of speech. While not a building block, the speech example usefully illustrates how some of the microeconomic concepts relate to one another.

Empirical studies show extraordinarily high rates of return to investments in human and environmental public goods. This chapter demonstrates empirically, however, that the majority of governments in developing countries fail to invest sufficiently in public goods such as research and development, human capital, and the management of the environment. Such underinvestment causes a major distortion that partially explains the triple curse of slow growth, large social inequities and poverty, and environmental destruction that has typified most developing countries over recent decades. The chapter examines the contribution of IMF and World Bank supported structural adjustment, such as fiscal deficit reduction, privatization of state enterprises, and trade liberalization, in the light of the above framework. Rather than analyzing how each of the reforms may affect the environment, the chapter focuses on whether structural adjustment is likely to correct the under investment in human capital and environmental capital discussed above, and whether there are specific policies within structural adjustment that are likely to particularly affect such under investment.

Economic and cultural globalization seem to have ushered in an awkward and potentially unstable period of transition for the world. Even if one supposes that free trade and unrestricted capital mobility can eventually result in global factor price equalization and international equality, the transition may take decades if not centuries. At stake are questions of how to distribute the costs incurred, and the benefits to be derived, by cooperative action to create global public goods or minimize global public bads. Questions of equity are also implicated in the origin of the global problems themselves. International negotiations are influenced by unequal economic and bargaining strengths and the diverse stages of development at which nations find themselves.

The basic argument of this chapter is that equity and distributional criteria must be at the core of a global public goods framework for international cooperation. There are several reasons behind this. First, equity and justice promote cooperative behavior, itself needed for the provision of public goods. Second, when the system is perceived to be fair and equitable, nations will participate in it willingly. Third, global equity is itself a public good that, without cooperation or coercion (i.e., in a decentralized setting), may be undersupplied. The undersupply may be because, e.g., there is no private market through which nations or individuals may meet their need to give.

Thus, the first section of this chapter sets the stage by outlining the continuing role of inequality among nations in shaping the world. The second section considers the potential instrumental value of social cohesion in public goods supply (equity for public goods). After that, the chapter considers how distributional factors affect the demand and supply of public goods. Then, it pursues the proposition (originally from Thurow, 1971) that the distribution of income is itself a public good. The final section offers conclusions. The rest of the chapter illustrates the value of equity for the production of public goods, in the distribution of public goods, and as a public good itself.

This chapter examines societal demand for infrastructure resources. It aims to identify and evaluate infrastructural resources functionally from a systems perspective and to understand better how individuals who obtain access to infrastructure resources both realize and create social value. It identifies and examines three economic criteria common to traditional infrastructure, such as transportation systems and telecommunications networks; and nontraditional infrastructure, such as the atmosphere and basic research. It develops a typology of different infrastructure (commercial, public, social, and mixed infrastructure) based on the types of systems dependent on the infrastructural resource and the distribution of productive activities it facilitates. It also discusses how both the resource set delineated by the three criteria and the subsets delineated by the typology are dependent on demand, and how resources may evolve into or out of the set or subsets. Throughout, the chapter explains how different types of demand-side market failures arise when spillovers from public or social goods are prevalent.

Describes the main kinds of school choice: public school choice, charter schools, and school vouchers. It looks at a series of arguments for school choice reforms, including Milton Friedman's original argument for vouchers, arguments based on parental rights, and arguments based on libertarianism. It examines the public goods based argument for state funding of schools (which Milton Friedman's case for vouchers assumes) and shows why it fails.

The most powerful objection to political obligations based on the principle of fairness concerns alternative supply of necessary public goods. According to this line of argument, if the subject prefers not to receive particular benefits from the state, then he need not incur obligations through their provision. However, as the discussion in Ch. 2 shows, for certain essential public goods, there is no alternative to state provision. Moreover, the fact that a subject prefers that goods be provided in a different form or by a mechanism other than the state is not ordinarily sufficient to dissolve obligations that they would otherwise incur.

Examines the implications of translating the concept of public goods, originally developed in the setting of a domestic national economy, to that of global public goods set within a transnational global economy. This requires important adjustments to the concepts of ‘triangle of publicness’ (publicness of consumption, of benefits, and of decision‐making), as well as new typologies of public goods.

The failure of public good provision in developing countries implies that many environmental and natural resource allocation problems that have been solved in developed countries, such as water pollution from sewage and indoor air pollution from cooking fires, continue to loom large. Decentralization and transparency in decision making, due process, and stakeholder participation in reform are needed to address these shortfalls. Because of poverty, efficiency is crucial to minimize overall costs. This, together with the wide dispersion in the distribution of pollution between polluters, speaks in favor of the use of flexible instruments such as information and market based mechanisms. At the same time, risk aversion, poverty, and unequal distribution imply that considerable attention must be paid to the distribution of costs and to a participatory approach in policy design.

Explores how policy‐makers have addressed the need for international co‐operation on resource allocation in financing global public goods. It analyses the range of policy tools currently available, and suggests ways in which resource allocation methods could be improved in the future.

Explains the purposes underlying the structure of the four main parts of the book—to review and sharpen the analytical concepts employed; to clarify the stake‐holder interests, which comprise ‘publicness’; to examine issues affecting the efficiency of production of public goods; and to identify the ways in which the interface between national and transnational decision‐making affects the strategic management of the provision of global public goods.

With theories of political obligation based on consent now generally discredited because most people have not actually consented, certain theorists attempt to rescue consent by proposing mechanisms through which individuals could consent to government. Various mechanisms are examined, including ‘consent-or-leave’ and Michael Walzer's proposal that citizens who refuse to consent be allowed a lesser status, analogous to that of ‘resident aliens at home’. All these mechanisms confront insuperable difficulties concerning essential public goods. Because resident aliens at home will continue to receive public goods, the alternatives are that they be allowed to receive them cost-free or that they incur obligations, even though they explicitly refused to consent.

A central theme of this chapter is the role of monetary theory within the neo‐liberal account of the role of the state. For a neo‐liberal thinker such as Mises, monetary theory consists of a set of a priori truths derived from the concept of money itself. Thus, the quantity of money theory or monetarism is not one hypothesis among others within economics, but has a more profound status and basis than that. Such a monetary theory when allied to the points made in the first part of Chapter 8 along with other economic theories (such as crowding out and neo‐liberal microeconomic theories) undermine in a fundamental way Keynesian ideas. Such ideas have been central to Social Democracy and again therefore such a critique of Keynes is an attempt to undermine a basic means of arriving at social democratic ends such as social justice which have already been the subject of critical analysis. One central role for the state from a neo‐liberal view is the provision of public goods that is to say goods which rely on cooperation to produce but which cannot be partitioned so that only those who cooperate in their production can benefit (clean air would be an example). The market will not produce such goods because each individual has a strong incentive from a rational utility maximizing point of view not to contribute and they will therefore not be produced. The details of this argument are considered and analysed.

Develops two typologies of global public goods, and explains how issues of publicness relate to issues of production level and efficiency. It begins by examining the main classes of public goods from the viewpoint of how the nature of their benefits could affect the prognosis for their provision. It shows that judging provision efficiency becomes more complex when technologies of supply aggregation are taken into account. It then discusses two additional, special classes of public goods—club goods and joint products. On the basis of this analysis, the chapter suggests a few measures that could be employed in judging optimal provision, a discussion that leads to the two typologies, and is useful for supply prognoses. Finally, it searches for the Holy Grail: an empirical measure of optimality.

In the literature of public economics, defense has traditionally been held up as a pure public good in the domestic sphere. But there are problems with this formalistic approach, even more so at the international level. In contrast, peace meets the substantive (i.e., welfare) as well as formal criteria of a public good. The chapter focuses on the political and institutional aspects of peace, and the structures required at the level of the international system. Reviewing the historical record as well as the situation since the end of the Cold War, Mendez contrasts three models of international order: collective security, balance of power and hegemony. He argues that only collective security fully takes into account the public good nature of international peace, and that such a system is the most effective in the long run. International organizations such as the U.N. and regional bodies have key roles to play in such a system.