The Political Economy of the American West.

In this exceptionally readable analysis of the settling of the American west, the authors provide an alternative to both traditional and revisionist perspectives which rely on "triumphant frontiersmen and villainous exploiters." The approach offered focuses on "institutional constraints and the incentives they created to explain why settlers behaved as they did." Written in a positive fashion using the tools of political economy, this approach stands in contrast to normative approaches which attempt to provide answers to questions such as: Does the history of the West exemplify America's noble and entrepreneurial spirit, or were the seeds of inequality, racism and injustice which are found in our society today sown on the western frontier? Instead, this volume offers up an interpretative series of essays which generally focus on competition for ownership of resources in order to capture the associated economic rents.

Within the context of a competitive political environment, various property rights institutions in the American west are examined from an operational standpoint in the first three chapters. Anderson and Hill argue that different federal land distribution policies held implications not only for the timing of establishing property rights but also for the amount of effort devoted to the rent-seeking process. The authors argue that homesteading and squatting policies "created a commons into which squatters and homesteaders rushed to compete for rents," thereby resulting in premature establishment of property rights and a corresponding dissipation in resource rents.

Allen defends homesteading as efficient rather than wasteful where enforcement of property rights was the primary objective of land policy, i.e., where the federal claim on the land was threatened by other, especially Indian, nations. Using historical evidence from five Western states, as well as Canada and Australia, he shows how, by adjusting land policies and applying them in different intensities in different locales, the federal government used settlers as low-cost means of enforcing state ownership of the Western frontier. Although Allen concurs with Anderson and Hill on the costs associated with the federal homesteading policy, he urges caution in concluding that the policy was a "mistake" and petitions the reader to consider efficiency relative to the relevant institutional and environmental constraints. If one accepts the hypothesis that the primary objective of land policy was to secure state territorial rights, then the issue of whether or not homesteading was a perfect distribution mechanism is irrelevant. Of some concern however are the contradictions between Allen's conclusions which rely on efficient behavior on the part of government officials and those that would obtain in a model of the budget-maximizing bureaucrat - i.e., would we expect the government to employ a least-cost method of enforcement?

With respect to private incentives for developing property rights institutions, Nugent and Sanchez argue that, given the prevailing technological and environmental conditions of the American west prior to the 1880s, cooperative activities among cattlemen in general and common property rights in particular were efficient responses to the constraints they faced - rather than second-best alternatives to private property rights.

Before the advent of petroleum exploration, water might well have been dubbed the "liquid gold" of the West. Accordingly, Mayhew and Gardner explore how the power struggle between Progressive conservationists and regional redistributionists over the provision of water development to the West resulted in a synthesis of these ideals in the Reclamation Act of 1902. Simmons's description of the Columbia Basin Project as "the single best example of Progressivism in action" clearly elucidates how misguided ideology can result in mammoth bureaucracy responsive primarily to special political interests.

In another valuable contribution to the volume, "Rents from Amenity Resources: A Case Study of Yellowstone National Park," Anderson and Hill counter those who would attribute the establishment of our national park system to "a few farsighted, unselfish, and idealistic men and women" who recognized the scenic value of these areas, with the proposition that it was the ability to capture the rents from these natural wonders that resulted in railroad companies initiating many park projects.

Haddock's contribution, "Foreseeing Confiscation by the Sovereign," illustrates how rent-seeking by opportunistic government officials can dampen economic growth. The general conclusion is that economically small and immature sovereignties (regardless of apparent political stability) present unattractive climates for long-term immobile private investment. The insight provided could hold important implications for the economic development of the newly established republics, especially those of Eastern Europe. Of some concern, however, are the conclusions drawn from Haddock's critical analysis of American Indian tribal sovereignty. Namely, the implicit suggestion is that it is somehow the responsibility of the federal judiciary to determine the degree to which tribal sovereignty is recognized by the legal system - is this not somehow flying in the face of the very sovereignty which that legal system has granted? While it cannot be denied "a well-understood body of law and legal process is intangible capital of enormous value to a sovereign," any discussion which involves the imposition by one sovereign (the U.S. judiciary) of such a legal system on another sovereign (American Indian nations) would appear to be out of place in a volume so devoted to championing the unfettered and efficient evolution of property rights institutions.

In the final chapter, Brady and Noll analyze the effect that the admission of the Western states between 1850 and 1912 had on American political policy and dispel several myths associated with the political preferences of those states. Using a rational reactor model to focus on the links between economic interests and political institutions, the authors illustrate how placing emphasis on causal relationships and observable explanatory variables rather than relying on ad hoc theories can provide for a more rewarding foray into the history of the American West.

In general, the relatively pristine institutional environment in which the West was settled provides for excellent experimental ground on which to test how human responses to constraints affect the evolution of institutions which constrain such action. The applicability of the analyses contained in the volume are not limited to the American West but are also relevant for current debates over use of federal land, as well as for the public policy of developing economies. The historical detail provided is at times both vivid and intriguing. As is elucidated in this volume, one of the primary advantages of applying the property rights paradigm to the settling of the American west, in lieu of adhering to either the revisionist or traditional approaches, is the emphasis on causal relationships and testable implications. The explanations of land settlement patterns, water development, and political events which emerge are based on rational individuals reacting to their natural and manmade environment and, therefore, are easily accessible by a general audience, while the statistical analyses are basic and accompanied by clear expositions of their results.

Paula A. Gant Auburn University