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 7: Federalism, Polycentric Polities and Open Societies

Richard E. Wagner

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


Up to this point in the book, a democratically constituted public square has been treated as containing a single parliamentary assembly wherein politically-sponsored intermediation occurs between political entrepreneurs and citizens. This formulation, however, does not identify the parliamentary assembly as the public square. Rather, that assembly resides within the public square, with participation within the public square, as with the market square, being open to everyone. The public square simply represents our non-solipsistic nature, which leads in various ways to interests in each other’s activities, for worse as well as for better. The parliamentary assembly is embedded within the public square but is not itself the public square.1 This formulation maps into a world of experience where people are connected with one parliamentary assembly; however, most people in democratically-organized polities experience the world through connections with multiple parliamentary assemblies. People typically face multiple units of fragmented and overlapping governments, each of which has some ability to act without direction from other governments. For instance, within the territory covered by any particular national government, a number of provincial or state governments may also exist, as may more local units of government as counties, cities and prefectures. There are also numerous governments that have been constituted for particular purposes, and yet operate independently of all other units of government. In the United States, for instance, the most significant of these other units of government are school districts. But there also exist units of government to deal with flood control, transportation planning,...

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