The Public Economy of Metropolitan Areas by Robert L. BishReview by: Harold M. HochmanPublic Choice, Vol. 11 (Fall, 1971), pp. 116-118Published by: SpringerStable URL: http://www.jstor.org/stable/30022659 .

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116 PUBLIC CHOICE

Third, the non- profit, charity sector does not restrict its fund - raising techniques to the public - sector analogue of taxation - social pressure. It also utilizes the private - sector technique - quid pro quo "sales." For X million dollars, one may have a university library named after him; a hospital wing "sells" for less, while a plaque with one's name on a church pew has a still lower "price tag." A

recently - received request for donations offered me a "free" road atlas "in

appreciation" for a $3 "donation." (Given the tax-deductibility provision, it may actually be cheaper to "buy" the road atlas in this manner than to purchase it in a retail store!)

The Economics of Charity is a most stimulating volume. It belongs on the shelf of anyone interested in the economics of the public sector or the "third" sector. The theorizing in the Johnson study is especially well done - clear and full of insight. The Ireland work helps to illuminate the nature of the motivations to

give to charity, and to understand how the United Funds work. As is befitting contributions to a new, evolving area, these studies pose many issues but resolve few. No apologies are required for this, however, or for the fact that the studies are shortened versions of dissertations. Most of the padding has indeed been cut out, as editor Gordon Tullock states in the Foreword, and I can fully agree with him that "this form of publication [is] superior to either of the two traditional methods of handling dissertations [full dissertation publication or journal articles]." (5) I share his "hope that this example may be followed by more publishers in the future" and I would only add my hope that there will be more dissertations up to the standards of Ireland and Johnson.

Review of THE PUBLIC ECONOMY OF METROPOLITAN AREAS, by Robert L. Bish

(Markham Series in Public Policy Analysis)

Harold M. Hochman

Robert Bish, in a brief but commendable volume, has provided us with a clear distillation of the public choice approach to political economy, focusing on applications to the politics and economics of metropolitan organization and on the role of the public sector in resource allocation in metropolitan areas. In simple language, Bish explains the essential relationships, grounded on assumptions of "methodological individualism, selfinterest and individual rationality in the use of scarce resources" that form the basis for decisions on political organization (metropolitan - area - wide vs. polycentric government) and public service delivery

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REVIEWS 117

systems (in education, air pollution, and, in a different sense, income

redistribution) in the metropolitan setting.

While the appeal of this book is largely to the newcomer to the field, interested in its methodology and its policy implications, the more

experienced reader will surely find it a useful summary and teaching device.

Though it is in no sense a substitute for the basic literature in the field, it is an ample introduction. For the scholar, it supplies extensive footnote references, for areas ranging from the theories of public goods and bureaucratic behavior to government organization and resource allocation in

specific functional areas.

The author's treatment of public choice is, however, not without deficiencies, recognizable to most readers of this journal, but a bit subtle for those who are not thus blessed. Bish's acceptance of "economists' methods", as the "right" way of viewing issues of public choice, appears an ultimate vindication of Tullock's hypothesis of "economic imperialism", connoting the

apparent tendency of economists to take over any and all disciplines they encounter, in this case by bestowing their largesse on political science and

public administration.

To be a bit more specific, it is surely more difficult to give real-world content to the demand for a public good, to political and social interaction costs, to rights to pollute, etc., than an uncritical reading of Bish's

monograph might lead a sophomore to infer. Even to those of us who share Bish's view of political economy it is clear that many crucial issues are not made explicit. Consider, for example, Bish's characterization and dismissal of what he calls the "social welfare function approach" (with references to Benevolent Despots, etc.), which has all the appearances of a "straw man".

Right though Bish may be on this score, he never really comes to grips with the basic welfare issues of just where and how the systems of rights and values on which public choice calculations ultimately depend are determined. In his defense, however, it must be said that few if any of the rest of us have ever done so either.

Its deficiencies notwithstanding, however, one must conclude that this informative book is a unique and distinctly positive contribution, with considerable heuristic value. Through his succinct and clear exposition of the basic concepts and problems on which much of the emerging public choice literature has focused, Bish has expanded its audience, so that students (and, more to the point, perhaps politicians themselves) as well as scholars can be made to understand its basic conclusions, e.g., that political competition is more consistent with efficient democracy than is the monopolistic

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118 PUBLIC CHOICE

management of public activities, justified in the name of "reform", but less capable of responding to the diversity of individuals' preference patterns that characterize

political communities.

A Review of Exit, Voice, and Loyalty: Responses to

Decline in Firms, Organizations, and States by Albert O. Hirschman

Reviewer: Joe R. Hulett, Texas A & M University

In this short volume Hirschman explores the avenues of recourse available to individuals who are affected by a "deterioration in performance" of firms and other forms of organization. Two types of action, exit and voice, are discussed, either of which is said to be able to act as an "endogenous force of recovery" by causing management to focus its attention on the deterioration. The book is devoted largely to examining the circumstances favorable to the operation of each of the two mechanisms, and the conditions under which each is likely to be effective in fostering improvement in organizational performance as reflected in product quality.

Exit is defined as individuals' option to discontinue their association with an organization when the quality of that organization's product is deteriorating. The cost of exit to the individual is seen to vary inversely with the ease of finding substitutes for the declining organization's product, and so the propensity to exit varies directly with the availability of substitutes. This, of coures, is nothing new. It is further suggested, however, that the effectiveness of exit may be inversely related to the availability of substitutes. The reasoning is that if many organizations are providing nearly identical products, the revenue loss to any one organization due to exit may be offset by the entry of new members (customers) who have exited other declining organizations.

The voice option is defined as any individual or collective attempt to change, rather than to escape from, deterioration in organizational performance. Use of the voice option is said to be most likely when the individual is "locked in" to a particular organization's product. The effectiveness of voice, on the other hand, is said to be enhanced if the individual can employ a threat of exit made viable by the existence of substitutes. Loyalty, which is viewed simply as a reluctance of individuals to resort to the exit option even though substitutes may be available, is seen as inducing the exercise of voice in situations where voice may be most effective.

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