Tullock's Challenge: A Reconsideration of Constitutional Monarchy

Abstract

Tullock (2005, p. 160) notes that the perceived robust relationship between democracy and economic progress is due mostly to assumption, rather than analysis. Taking up Tullock’s challenge to consider the relationship between economic progress and other political forms, we re-assess the relationship between monarchy and economic progress. Our analysis specifically focuses on the possibility of a "monarchical" constitution creating the institutions within which, compared to democracy, a larger social surplus can be enjoyed. After summarizing the existing conversation on monarchy vs. democracy, we outline a constitutional political economy of monarchy and apply it to the European country of Liechtenstein, which has enjoyed both rapid development and non-discriminatory governance under the kind of constitution we envision. We conclude by responding to anticipated objections and proposing further avenues of inquiry on the political economy of monarchy.

Keywords: Constitutional political economy, democracy, efficiency, monarchy, Liechtenstein

JEL Classification: H1, H77, P1