Svetozar “Steve” Pejovich, one of the most dynamic and insightful theorists writing on property rights, reflects on his experience in economics. With characteristic sagacity and humor, he demonstrates the power that empirical cases can bring to bear on theoretical problems. Born in Belgrade, Pejovich is Professor Emeritus at Texas A&M University, where he taught for over twenty years, and the author of many influential articles and books including The Economics of Property Rights: Towards a Theory of Comparative Systems and Law, Informal Rules, and Economic Performance: The Case for Common Law. In the late 1970s, he was Professor and Chair of the Department of Economics at the University of Dallas, where he also served as President.

In conversation with Bill Jersey, Pejovich speaks openly about his life, which began under the tyranny of the Nazis, came into maturity subject to the despotism of the Communists, and was eventually transformed by a move to the United States. Under a government based on ideas of “life, liberty, and the pursuit of happiness,” he found a new home in Texas—an expansive land where his vision of economic freedom and cultural vitality was realized.


“Every time you think you know an answer to a problem, the time has come to be asked to be convinced once again.”


Below are some prompts for further conversation:


Early Life in the Soviet Union

1- How did ideology affect every aspect of life in the Soviet system? What most surprised you about Pejovich’s account of his personal experiences under communism?

2- How does self interest regulate the economy, according to Pejovich?

3- What does Pejovich mean when he says that every choice is a contract? How do such choices create an unpredictable and spontaneous order?


Changing the World

4- Pejovich insists that the only way you can serve society is to make money, and that how much you make is an index of how well you are serving society. To what extent do you agree with this assertion? Explain.

5- Should profit guide the “non-profit” sector as well? What might this look like in practice? (Think about Pejovich’s comments regarding the Peace Corps, which he says were it profitable, would not need to rely on taxpayer money.)


The Road to Capitalism is Bumpy

6- All communities- from neighborhoods to nations- have their “rules of the game.” When members of a given community disagree with the community’s rules, what two alternatives do they have?

7- Related, Pejovich argues that any time you change the rules, you’re going to change the game. What are the two levels of social activity in this analogy, and what questions do these suggest for economic analysis?

8- Capitalism is not an economic system, according to Pejovich? What, then, is it?


Law, Culture, and Economics

9- What is the proper function of law, according to Pejovich? How does he argue we are to bring about justice or fairness in society?

10- In what way(s) is law an evolutionary process?

11- How does Pejovich describe the effects of law and culture on the economy? What happens when there is a conflict between a nation’s rules and its customs?


The Laboratory of the American West

12- How does the example of the American West prove that you don’t need a state to decide claims and resolve disputes? What do you need?

13- How does cutting down a tree help the environment, according to Pejovich? How does thinking abour interest rates help answer this question? (Put another way, how should we determine the optimal time to cut down a tree?)

14- What does Pejovich mean when he says of wealth, “To think only of the monetary components is very primitive economics.” How does this square with his discussion of cutting down trees?


Hayek’s Road to Serfdom

15- How does Pejovich liken living under communism to being a domesticated animal? Why doesn’t Pejovich resent any of the limitations imposed on him by a capitalist ecoomy?

16- What does Pejovich mean when he says, “The government does not create wealth. It can only distribute wealth?”

17- When the conversation turns to the prospects for socialized medicine, Pejovich tells Jersey, “I cannot tell you if you are right or wrong; I can only tell you the consequences.” What are the consequences of such a propsal as Pejovich describes them?

18- What does Pejovish see as his obligation(s) as a teacher?


“If you never had the right to choose, you cannot even imagine what that means.”


Related References:

Svetozar Pejovich, Economic Analysis of Institutions and Systems

Svetozar Pejovich, Fundamentals of Economics: A Property Rights Approach

Svetozar Pejovich, The Economics of Property Rights: Toward a Theory of Comparative Systems

Svetozar Pejovich, Law, Informal Rules, and Economic Performance: The Case for Common Law

Terry Anderson and P.J. Hill, The Not-So-Wild, Wild West: Property Rights on the Frontier

F.A. Hayek, The Road to Serfdom


Entries from the Concise Encyclopedia of Economics:


Other Econlib Resources:


EconTalk Podcasts:




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