Fiscal Sociology and the Theory of Public Finance

Fiscal Sociology and the Theory of Public Finance

An Exploratory Essay

New Thinking in Political Economy series

Richard E. Wagner

This book advances a social-theoretic treatment of public finance, which contrasts with the typical treatment of government as an agent of intervention into a market economy. To start, Richard Wagner construes government not as an agent but as a polycentric process of interaction, just as is a market economy. The theory of markets and the theory of public finance are thus construed as complementary components of a broader endeavor of social theorizing, with both seeking to provide insight into the emergence of generally coordinated relationships within society. The author places analytical focus on emergent processes of development rather than on states of equilibrium, and with much of that development set in motion by conflict among people and their plans.

Chapter 5: The Economic Organization of Political Enterprises

Richard E. Wagner

Subjects: economics and finance, public choice theory, public finance, politics and public policy, public choice


Political enterprises are established in the public square with legislative approval.1 To speak of legislative approval, however, is not to speak of some acting person making a choice, but rather to speak of the outcome of a polycentric process that involves a transitory set of participants whose actions are structured by parliamentary rules. While the various members of a legislative assembly typically differ in details concerning the structure of enterprises they would prefer to see operate in the public square, it is also reasonable to presume that those members are in general agreement that a robust public square is better than an anemic one. While there can be intense controversy among members of a legislative assembly over which particular enterprises to support and how fully, underlying this disagreement will reside a general desire to be part of an expanding rather than a contracting legislature. There is no genuine option to be part of a static legislature. A failure to attempt to expand is a choice to contract by losing out to competitors who are seeking to expand. Someone who wants to see the legislature do less business in general is unlikely to be attracted to seek a legislative seat in the first place, is unlikely to find investors and other supporters in the effort to seek such a seat in the second place, and thirdly, is unlikely to be successful within the legislature even if elected to it. All enterprises entail team production. The effectiveness of any...

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