Political Entrepreneurs

The Economic Engine of Political Change

Public Choice reviews Madmen, Intellectuals, and Academic Scribblers

May 1st, 2014 by Edward Lopez

Economist Michael D. Thomas has written a review of Madmen (gated) for Public Choice (vol. 159, pp.313–315, 2014).

Michael, Wayne and I know each other fairly well through the George Mason network. At the 2013 Public Choice Society meetings, we were all on a panel with Larry White and Peter Boettke discussing Madmen and Larry’s excellent book The Clash of Economic Ideas.

Michael’s review truly gets to the heart of what Madmen is about: incorporating ideas into public choice for the purpose of explaining political change. Following Keynes, Hayek, and Mill, we frame political change as occurring when a new idea is implemented into social institutions, replacing previous institutional arrangements and therefore overturning the status quo. Public choice is well suited to this question because it offers a framework for analyzing political entrepreneurship. Our basic thesis is that ideas on their own don’t have consequences. Only when political entrepreneurs implement the right idea under the right conditions do ideas trump status quo interests.

Michael’s review provides good context for the book and helpful summaries of each chapter. A couple of select passages:

Leighton and López’s book, Madmen, Intellectuals, and Academic Scribblers, is a motivated reading into the role political entrepreneurs play in creating policy. The book discusses three distinct levels of change: origination, establishment, and implementation of new ideas. The result of their efforts is an expansive survey edited to less than 200 pages of discussion. What is surprising, then, is that the authors cover the material and maintain a conversational tone…

[snip]

Ideas do not truly matter until they have influenced the way people interact. An idea alone will not succeed until there is a moment when it can be employed to someone’s benefit. This book ties together existing research on the political entrepreneur and provides context for a discussion.

[snip]

Each chapter of the book develops this idea of political entrepreneurship. It does this through three main contributions. Each offers a substantive reason to read and share the book. The first stage is a historical survey. The second stage gives a particular case study of how different intellectual figures (e.g., James Buchanan and Ronald Coase) were able to transform the thinking of their contemporaries as well as the next generation of policymakers. The final stage of the argument is prospective and offers insight into how the authors characterize and apply the lessons of political entrepreneurship to new areas of inquiry.

You can check out Michael’s papers here.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.

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