Political Entrepreneurs

The Economic Engine of Political Change

My Review of The Elgar Companion to Public Choice

August 25th, 2014 by Edward Lopez

11127Chris Coyne, the book review editor at Public Choice, asked me to write a review of the new Elgar Companion to Public Choice, Second Edition, edited by Michael Reksulak, Laura Razollini, and William Shughart. This book is a second edition of the first version that came out in 2003. It consists of 29 chapters

The published version of the review is gated, but below I offer a link to the pre-publication version. Here are the first few paragraphs:

 

 

 

 

 

Co-Editors Michael Reksulak, Laura Razzolini, and William Shughart have assembled a fine extension of the first Elgar Companion to Public Choice that was published in 2003 (Shughart and Razzolini 2003). Designed to be “a valuable resource for scholars, but also one to be evaluated critically as new developments in how societies are structured materialize,” (p.11), the new volume is conscious of public choice evolving as a research program and as a set of tools for analyzing human events as they occur.

The year 2003 was significant in both regards. It marked the 40th anniversary of the inaugural conference, organized by James Buchanan and Gordon Tullock in Charlottesville in April 1963, which would spawn the Public Choice Society, the journal Public Choice, and the public choice research program in general. The year 2003 was also noteworthy in the policy arena. The U. S. federal government’s brief flirtation with budget surplus had come to an abrupt end. The United States Supreme Court upheld the Copyright Term Extension Act in Eldred v. Ashcroft. Congress had the year before enacted the Bipartisan Campaign Reform Act, banning “soft money” political donations. The tussle between constitutional restraint and ordinary politics continued to unfold, sometimes in conspicuous fashion as when the city of New London, Connecticut, using its power of eminent domain, seized Susette Kelo’s home for transfer to private real estate developers. The largest bureaucracy in human history had been assembled in the Department of Homeland Security, and the second Iraqi invasion had begun with shock and awe. Meanwhile, across the Atlantic the European Union was expanding into the Baltics, the former Eastern Bloc, and the Mediterranean. These events summoned, and began to receive, analysis by public choice scholars. In short, 2003 marked a milestone in the development of public choice scholarship while current events highlighted the ongoing relevance of public choice insights to human affairs. It was, therefore, a fitting time to take stock of public choice theory, examine its achievements, and consider its prospects for continued scholarly advancement and worldly relevance.

Several publications that appeared in print at the time did just that. In 2003, James Buchanan wrote a retrospective essay detailing the origins and development of public choice economics (Buchanan 2003). Buchanan argued that public choice is best described as a research program, not as a subdiscipline of economics. He downplayed the common way of defining public choice as the intersection between economics and political science (a definition that Springer repeats on the journal’s homepage). Instead Buchanan emphasized public choice as a research program in the Lakatosian sense, one with a hard core of propositions surrounded by testable implications, and one that developed (or not) relative to alternative research programs in a manner of competitive scientific progress. In this respect, Buchanan (2003) emphasized public choice as one methodology for doing social science, one whose subject matter could, in principle, span the entire range of collective human action.

Other prominent publications at the time included the third edition of Dennis Mueller’s masterful textbook, Public Choice III (Mueller 2003), and of course the initial Companion. In reviewing the initial Companion for Public Choice, Oster (2003, p.248) emphasized the inclusion of both positive and normative analysis, describing the volume as “a comprehensive discussion of the far-reaching literature in [rational choice]” that also added “some provocation in the mix.” Also in 2003 appeared the two volume, one-million word Encyclopedia of Public Choice edited by Charles K. Rowley and Friedrich Schneider. The Encyclopedia’s Preface describes public choice as a “fruitful interchange of economics, political science and moral philosophy on the basis of an image of man as a purposive and responsible actor who pursues his own objectives as efficiently as possible” (Rowley and Schneider 2004, p.i).

Taken together, these publications convey the richness of public choice as a research program boasting multiple facets: as a social science grounded in methodological individualism and comparative institutions; as a collection of great works; as an intellectual history; as an inquiry that is at once predictive science and moral philosophy; and, yes, as bodies of specialized work in a variety of subject areas situated on the boundaries of multiple scholarly disciplines. Now, a decade later, the 2013 Companion seizes the opportunity to assess and update progress that the research program has made in the intervening decade. The 2013 Companion addresses all the facets of public choice mentioned above, and by doing so it demonstrates the continuing scholarly vitality and worldly relevance of public choice.

For the rest of the review, access it through your account at Springer or access the pre-publication PDF version 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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