Inequality, Entanglement, and Entrepreneurship – the Role of Voluntary and Forced Investors

Abstract

In her recent book “Inequality: An Entangled Political Economy Perspective,” Mikayla Novak provides a new way to understand, and analyze, income and wealth inequality. By adopting Richard Wagner’s framework of Entangled Political Economy, Novak creates a connection between inequality – an aggregate outcome - and social interactions that generate it. Novak’s approach highlights the crucial difference between socially hurtful and socially beneficial, or neutral, forms of inequality. Subsequently, Novak’s work makes it possible to recognize the vulnerability of free societies to the emergence of socially hurtful forms of inequality, in particular, as a consequence of constitutional erosion. In analyzing the importance of regulatory constitution in preventing the emergence of socially hurtful forms of inequality, Novak recognizes the embedded public choice problems. One obstacle to counterbalancing constitutional erosion is the challenge of recognizing and anticipating which activities contribute to it. I argue that the adoption of Richard Wagner’s distinction between voluntary and forced support for new entrepreneurial ventures will help scholars recognize projects that threaten the regulatory constitution and contribute to the emergence of socially hurtful forms of inequality.

Keywords: entrepreneurship, inequality, entangled political economy

JEL Classification: D02, L26, L33