Is an Independent Nonprofit Sector Prone to Failure? An Austrian School Analysis of the Salamon Paradigm and the Lohmann Challenge

Conversations on Philanthropy, Vol. 1, pp. 1-40

40 Pages Posted: 19 Jan 2010

See all articles by David L Prychitko

David L Prychitko

Northern Michigan University - Department of Economics

Peter J. Boettke

George Mason University - Department of Economics; Mercatus Center at George Mason University

Date Written: 2004

Abstract

Nonprofit organizations have traditionally been considered a meaningful substitute for the services provided by the bureaucratic welfare state (Berger, Neuhaus, and Novak, 1996), a vibrant but largely overlooked “independent sector” characterized by a spontaneous ordering of associations that are founded neither on the state’s compulsory power nor the search for private monetary profit (Cournelle, 1965). Lester Salamon’s body of work - which is extensive - suggests otherwise.1 Salamon argues that the U.S. has a long, established history of efficient institutional linkages between the nonprofit sector, which he calls the “voluntary sector,” and the state. Rather than a substitute, Salamon sees nonprofits in an effective “partnership” with the state, a viable form of “third party” governance. He argues that the independent sector is in fact not so independent. On its own it is prone to failure.

JEL Classification: B53

Suggested Citation

Prychitko, David L. and Boettke, Peter J., Is an Independent Nonprofit Sector Prone to Failure? An Austrian School Analysis of the Salamon Paradigm and the Lohmann Challenge (2004). Conversations on Philanthropy, Vol. 1, pp. 1-40, Available at SSRN: https://ssrn.com/abstract=1538370

David L. Prychitko

Northern Michigan University - Department of Economics ( email )

Department of Economics
Northern Michigan University
Marquette, MI 49855
United States

Peter J. Boettke (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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