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There has been no shortage of challenges to that most fundamental of all neo‐classical assumptions according to which people always act so as to maximise their utility. The most frequently heard objection has centred on the observation that acts of altruism are all around us. This incontestable fact has not led to a rejection of the self‐interest assumption but has instead resulted in the incorporation of altruistic actions into the standard utility function. While there may be legitimate doubts about the process of converting a positive statement into a tautology, this tautological sense of utility maximisation will be retained throughout this essay. Following Houthakker, in all that ensues it will be assumed that “preference is related to choice as the possible to the actual. A person prefers a to b if, when confronted with a choice between a and b, he chooses a”(l).

In his essay Against Parsimony (1985), Hirschman argued in favor of “complicating” economic theory. This paper focuses on two of the economic phenomena that, according to Hirschman, are in need of greater complexity.

The first refers to the process of preference formation: a change in tastes that is preceded by the formation of meta-preferences is in fact, for Hirschman, a change in values. These autonomous, reflective kinds of changes, as opposed to non-reflective kinds, do not take place simply in response to price changes. Contrary to the standard economic assumption, de valoribus est disputandum.

The second phenomenon refers to the existence of non-instrumental actions. Striving for truth, love, beauty, justice, and liberty has non-calculable outcomes. According to instrumental reasoning such actions are “a mystery.” Moreover they are often painful to achieve. Why then are they pursued?

According to Hirschman, changes in choice behavior implying changes in values are the expression of a conflict between meta-preferences and preferences, and this, in its turn, is the result of disappointment. If disappointment is with private consumption, social and public commitments can provide alternative values; if, vice versa, disappointment is with public action, private concerns might provide the prevailing values. In discussing these points, I shall show that there are other sources of conflict, besides disappointment, that have both a cognitive and affective dimension and whose effects on preferences might result in altered choices.

Political economy is a term in wide use and has been for centuries. Yet standard economic theory reduces politics to ethics or economics. This reduction is enabled by the presumption of closed choice data or given utility and cost functions. In this conceptual framework, the political vanishes into an activity of preference satisfaction according to a welfare function (ethics) or into trade (economics). To bring the political back to life within a theory of political economy requires that closed schemes of thought be replaced by open schemes. The ways in which individuals react to the indeterminacy of their subjective choice data, in innocuous small-scale settings as well as in situations of dramatic exception to constitutional rules, separates them into leaders and followers. Followership creates an opportunity for political enterprise at the social level (enterprise in rules) and at the subjective level (enterprise in visions of options, and hence preferences). At both levels the political comes to the fore of political economy as an answer to the “challenge of exception.” Much of our inspiration for this argument traces to the work of Friedrich Wieser, Carl Schmitt, and Vincent Ostrom.

The librarian and researcher have to be able to uncover specific articles in their areas of interest. This Bibliography is designed to help. Volume IV, like Volume III, contains features to help the reader to retrieve relevant literature from MCB University Press' considerable output. Each entry within has been indexed according to author(s) and the Fifth Edition of the SCIMP/SCAMP Thesaurus. The latter thus provides a full subject index to facilitate rapid retrieval. Each article or book is assigned its own unique number and this is used in both the subject and author index. This Volume indexes 29 journals indicating the depth, coverage and expansion of MCB's portfolio.

Albert Hirschman always distinguished himself by his unique approach in tackling economic problems, an approach that moved easily from literature and philosophy to political economy and social psychology, without ever losing sight of the real workings of social and political life.

The papers collected here stemmed from a desire to know more closely this rare economist who used the tools and features of one discipline to throw light upon those of another.

The methodological stance is the first element that emerges either explicitly or implicitly from this collection of papers: Hirschman’s suspicion of all-encompassing theories and their issue in encompassing plans – development plans in particular. His was a piecemeal approach targeting the scarcest of all factors, such as the ability to mobilize resources and to solve problems. This matched Hirschman’s own view that “petites idées,” to look at problems in the small, form the material for further observations and insights.

The second element that emerges from these papers is the richness of themes explored – from how to voice reasons for one’s disappointment and distrust to the role of countervailing passions in institutional development, from the “bias for hope” to the problem of inequality – but also the strong connections that exist among them. These connections revolve around the problem of economic change and its dynamics: how to explain it, how to promote it.

Yet, no matter which of Hirschman’s works we pick up for the first time or rediscover, we cannot avoid seeing that besides the scientist with his microscopic lenses, there is also the artist who looks at problems not for the final truth they might hide or the definite solution, but to make us aware of them, to open our eyes to curiosity and wonder. This is a difficult lesson, but not one Hirschman will let us forget.

At present no satisfactory economic theory of non‐profit organizational leadership exists. The purpose of this paper is to develop an economic theory of non‐profit leadership and apply this theory to the problem of non‐profit failure or “voluntary sector failure.”

The paper draws on the economic literature on the non‐profit sector to critically examine this approach to theorizing about non‐profit organizations (NPOs). It then considers the contribution that Lester Salamon has made to the understanding of NPOs. It is argued that the very sources of non‐profit “distinctiveness” identified by Salamon are also simultaneously associated with “voluntary sector failure.” An economic theory of non‐profit leadership is developed and it is held that appropriate leadership can reduce voluntary failure.

The major comparative advantages of NPOs make these agencies particularly prone to various forms of “voluntary failure” that present challenges not only to NPOs, but also public policy makers. This paper presents a theory of non‐profit leadership that seeks to demonstrate that appropriate forms of non‐profit leadership can overcome, or at least ameliorate, voluntary failure.

Future research could determine empirically whether leadership plays a decisive role in the performance of the non‐profit sector. This would assist in assessing the empirical validity of the presented in this paper.

The literature on non‐profit failure is incomplete without an adequate theory of non‐profit leadership. This paper develops a theory of non‐profit organizational leadership and argues that appropriate leadership can reduce the extent and severity of non‐profit failure.

The purpose of this paper is threefold: conceptually, to demonstrate that ethical behavior is rational; theoretically, to illustrate that conscience can be readily incorporated into an expected utility framework; and empirically, to investigate whether conscience is an effective and economically important deterrent to free riding.

An analogy to risk aversion demonstrates the rationality of ethical behavior. An expected utility model of tax evasion is then augmented by a conscience parameter and calibrated using recent empirical data from a transition economy.

Taxpayers in Moldova are estimated to have engaged in roughly 10‐33 percent as much tax evasion as predicted by a model of amoral preferences. The difference amounts to between $11 million and $19.6 million in government revenues annually between 1997 and 2000.

The model is calibrated with aggregate data and consequently the empirical results are approximate. Replications with disaggregated data sets would provide useful confirmation of the findings.

Economic models of individual decision‐making which assume amorality and ignore conscience vastly overestimate the level of free riding. In practice, compliance with taxation and other social regulation may be amenable to moral suasion as well as law enforcement.

Contrary to the predominant neoclassical paradigm of amoral self‐interest, this paper highlights the importance of ethical preferences in modeling and measuring economic behavior. Researchers can more accurately predict and policymakers can more effectively influence individual decision‐making by taking account of moral sentiments.

The purpose of this paper is to show the feasibility of effectual ethics on foundations of micro and macro issues of economics.

In this paper, the library research method has been used to reflect some ideas about the necessity of changing the concept of economic rationality and modifying it from some famous economists.

The entrance of ethics in economic discussions may affect them and suggests the new solutions or make considerable quantitative or qualitative changes to them.

If research is reported on in the paper this section must be completed and should include suggestions for future research and any identified limitations in the research process.

It may be possible to objectify the extended rationality presumption by revising public culture and correcting it in such a way that ethical values and norm are institutionalized in society.

This research shows that if ethical values and norms beyond economic benefits are institutionalized in a society, economic outcomes seen in economic books may be otherwise.

Comparative analysis of different effects of the two concepts of rationality – economic rationality and extended rationality – on life‐cycle hypothesis and efficiency of pollution tax shows new solutions or makes considerable quantitative or qualitative changes to them because of ethics.