This talk will address how configurations of power and agreement relate to basic types of collective- action problems, whose resolution, in turn, underlie a society’s prospects for development. This approach attempts to bridge the wide gap between two contrasting perspectives: the more or less “one- size fits all” perspective of “best institutions” approaches—such as prescriptions for deregulation and privatization often advocated by economists; and an “every society is unique” outlook, often suggested by anthropologists. In other words, this is an effort to develop a relatively parsimonious form of broad political economy theory. The core idea is that political settlements—roughly agreements among society’s factions to resolve disputes through informal and/or formal procedure and negotiation as opposed to violence—can be classified into broad categories (poles of relevant spectra). Moreover, this typology specifies key elements of social context that shape developmental prospects. In particular, the nature of political settlements imply a set of collective-action problems that must be addressed for political and economic development to either occur or proceed.

Discussion will open by defining a series of underlying concepts: economic and political development; first- and second-order collective-action problems; institutions, institutional systems, and social orders; political settlements, elites, and coalitions; sources of power; and punctuated equilibrium dynamics. It will then proceed to develop a two-dimensional typology of political settlements based on underlying social foundations and distributions of power. It will relate these elements to foundations of institutional systems and social orders, and then proceed to discuss ensuing CAPs and developmental prospects for each region of the typology. The conclusion will pose additional questions for analysis.


William Ferguson is the Gertrude B. Austin Professor of Economics at Grinnell College, where he has been teaching since August 1989. His recent book, Collective Action and Exchange: A Game Theoretic Approach to Contemporary Political Economy (Stanford University Press, 2013) presents his basic approach to political economy, starting with microfoundations. He is currently writing the manuscript for his second book, Collective Action, Inequality, and Development: A Political Economy Approach, which expands on the final chapter of his 2013 book.