Anarchy, Philanthropy, and the Provision of Public Goods in a Free Society

Abstract

The provision of public goods is often used to justify the state. Since many highly-valued goods such as education, national defense, roads, etc., possess some public characteristics (i.e. non-rivalry and non-excludability), standard theory predicts such goods will be underprovided by private markets. The state is typically seen as the remedy to this problem. In contrast to this typical view, this paper analyzes the private provision of public and quasi-public goods in a free society. In particular, we examine philanthropy as an avenue through which such goods are already produced and may be provided in a society without a central government. We use Buchanan’s (1965) theory of clubs and Leeson’s (2011) discussion of clubs and “constitutional effectiveness” as a springboard to analyze how philanthropic giving and the provision of goods with public qualities under anarchy might work.

Keywords: Anarchy, Philanthropy, Public Goods, Club

JEL Classification: D64, D70, D71, H40