Natural persons,corporate actors,and constitutions

Extending the concept of efficiency beyond economic markets to social transactions generally, this paper asks the question whether social efficiency might not be better realized by removing the barriers to transactions between political and economic resources. With political rights (i.e. resources) held by natural persons, and economic resources held by corporate actors, such transactions could in principle replace taxation for redistribution, as a more efficient method of redistribution, intrinsic to the socio-political system. Such politico-economic transactions would supplement the primary means of distribution of the social product in an economic system, that is wages for productive labor. In the paper it is argued that this primary means of distribution is increasingly ineffective as the economy becomes increasingly interdependent. This change places an increasing burden on the “second round” of distribution through taxation, and forces consideration of a less defective and more theoretically sound means of supplementary income distribution. Paper was presented at the Organizations, Constitutions, and Liberty conference sponsored by the Liberty Fund, June 21–24, 1990 at the Sheraton Hotel in Crystal City, Virginia.