Published online by Cambridge University Press: 22 June 2011
Government requires coercion, if only to arrest free riding. Physical coercion alone may not suffice for this purpose, however, and ideological means may be needed as well. This basic principle underlies all government. In market economies the coercive capabilities of government may be expected to be financed out of taxes ultimately levied on factor owners' money incomes, that is, on wages, profits, and rent. On the other hand, in economies where markets have not developed due to high transactions costs individuals' contributions to the provision of public goods will take the form of payments in kind and labour services. In this case, the free rider problem suggests labourers will attempt to shirk; the government, therefore, will have to compel labourers to work and, therefore, will appear to be coercing labour even though it may only be seeking to curtail shirking.
* The authors want to thank participants in the panel on Forced Labour and Labour Markets, XI Congress, International Economic History Association, Milan, September 1994, for their comments and observations. Pastore is particulary indebted to Stanley Engerman, Lynn Hollen Lees, and Michael Gonzalez for their encouragement and suggestions. Responsibility for remaining errors or omissions are the authors' alone.
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