The Role of Ideas in Political Economy

34 Pages Posted: 7 Nov 2013

See all articles by Vlad Tarko

Vlad Tarko

Dickinson College - Department of Economics

Date Written: November 5, 2013

Abstract

The Austrian School of economics has gradually developed a coherent and unitary theory of social-political change melding together four elements: (1) praxeology as a universal and culture-invariant account of how a given structure of incentives generates outcomes, (2) ideas as a distinct realm from incentives and subjected to cultural evolution, (3) social and political entrepreneurs as self-interested drivers of institutional change constrained by knowledge problems, and (4) institutions understood as a complex mesh of formal rules and private governance mechanisms. The paper discusses the key elements of this theory and highlights the connections to public choice (especially the Virginia School) and new institutional economics (especially the Bloomington School). Two practical applications are explored: understanding the relative importance of intellectuals, public opinion, and rent-seeking in determining policies in advanced democracies; and the role of social entrepreneurship in development economics.

Keywords: cultural evolution, group selection, informal institutions, robust political economy, evolutionary contractarianism, development economics, social entrepreneurship, political entrepreneurship

JEL Classification: D70, D72, P16

Suggested Citation

Tarko, Vlad, The Role of Ideas in Political Economy (November 5, 2013). Review of Austrian Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2350416

Vlad Tarko (Contact Author)

Dickinson College - Department of Economics ( email )

Room 120, Althouse Hall
Carlisle, PA 17013
United States

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