Political and Economic Institutional Emergence
32 Pages Posted: 17 Nov 2020 Last revised: 18 Aug 2023
Date Written: August 18, 2023
Abstract
Defining rules politically poses the general question of which aspects of social ordering are tractable to public institutional resolution. But not all institutional creation is governed by the same set of emergent dynamics: self-interest subject to market discipline is quite different from self-interest subject to political discipline. Because of the structural way in which changes to political rules result in distributional consequences compared to the political status quo, their emergence is fundamentally governed by the dynamics of political self-interest. In contrast, while the public definition of economic institutions is also governed by political self-interest, emergent economic dynamics can redefine this political self-interest in socially beneficial ways. Through the analysis of the adoption of the Australian ballot and the general corporate form in the 19th Century US, I argue that the emergent dynamics governing public economic institutional change make it a process more tractable to constructivist influence. This is because dynamic economic forces (which operate through mutually beneficial exchange) can disrupt political economic equilibria. In contrast, constructivist political change is necessarily competitive, which makes such change less intrinsically related to longer-term benefits to social ordering.
Keywords: Economic History, Institutional Economics, Complexity Economics, Private and Public Ordering, Economic Institutions, Political Institutions, Political Economy, Public Choice
JEL Classification: B5, H1, K1, N0, O1, P1
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