This paper compares and contrasts two visions of political economy. These visions aren’t antagonistic, just different. The mixed economy vision associated with Ludwig von Mises and Sanford Ikeda treats politics as intervening into markets. The entangled political economy vision treats politics and markets as overlapping subsystems within a society. Entangled political economy thus descends from a theory of society and social processes. Similarly to quantum entanglement where the state of a particle cannot be described independently of that of other particles, entanglement in political economy means that rational market action cannot be defined independently of rational political action. The focal point of entangled political economy, moreover, is on individual actors and their search for gain within different action environments. Interaction among individuals across those environments generates societal tectonics, thereby adding insights from Vilfredo Pareto about social theory to those of Mises and Ikeda about interventionism.
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This is opposed to dyadic exchange, whereby the two parties to the transaction necessarily are better off due to the exchange taking place.
In this respect, Epstein (2006) pursues a research program of generating social configurations through interaction among individuals, in contrast to postulating the existence of those configurations as analytical primitives. Similarly, Aligica and Boettke (2009) explain that the analytical thrust of Elinor and Vincent Ostrom was to penetrate analytically into their material, in contrast to seeking to stand apart from that material.
Aron (1967, pp. 101–176) summarizes Pareto’s Treatise lucidly, as does Bongiorno (1930). Campbell (1986) detects four distinct versions of Pareto in Aron’s long career where he returned to Pareto off and on. McLure (2007) surveys the relation between Pareto and the Italian tradition in the theory of public finance that was a precursor to public choice.
With respect to market activity, there is clear feedback via the price mechanism that the means employed have a causal relationship with the ends attained. This is what Pareto meant in referring to market action as reflecting the logico-experimental method.
An anonymous reviewer brought up the fact that credence goods, too, may be priced. Yet the feedback mechanism for credence goods is much less direct than it is for inspection and search goods.
Total government spending as a percent of GDP accounts for more than 20 % of GDP, up from 3.4 % in 1930, and is projected to rise over the coming years (GPO 2015). Further, state and local spending ranges from a low of 14.3 % of GSP in South Dakota to a high of 26.7 % of GSP in Mississippi (Census 2012). This doesn’t even account for the burden that legislative and regulatory actions impose on the economy (Fichtner and McLaughlin 2015). Government participation in economic activity is clearly pervasive.
Contrary to Caplan (2007), the resulting outcome need not be abject ignorance. The logical and non-logical domains are not commensurable, and with this non-commensurability being a source of boundary tectonics. Similar to Brennan and Lomasky (1993), voting is an expressive act within the Paretian analytical framework, though what resonates with voter sentiments is a challenge for political entrepreneurship in non-logical realms of action.
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We are grateful to the three referees who provided valuable suggestions that helped us to see more clearly than we had originally seen just what it was we were trying to accomplish in this paper.
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Patrick, M., Wagner, R.E. From mixed economy to entangled political economy: a Paretian social-theoretic orientation. Public Choice 164, 103–116 (2015). https://doi.org/10.1007/s11127-015-0273-8
- Dynamics of intervention
- Mixed economy
- Entangled political economy
- Vilfredo Pareto
- Social theory
- Societal tectonics
- Non-logical action
- Political entrepreneurship