State-market entanglement: some implications for the theory of public finance

Abstract

This paper is concerned with the way economists conceptualize the relationship between state and market within their theories of public finance. It is customary for them to treat polity and economy as comprising separate domains of human activity. In contrast, the recently developing notion of entangled political economy treats the state-market dichotomy as an abstraction wherein political and economic organizations are deeply entangled with one another. While property and its distinction between mine and thine is a universal quality of the human species [Wilson 2020], specific and particular rights of property are always contestable through entanglement among political and commercial entities. Entanglement calls attention to the processes through which rights of action are established and challenged within an entangled system of political economy. What results from our exploration into entanglement and public finance is recognition of the high analytical potential of reviving Antonio de Viti’s [1888, 1936] initial interest in transforming the focus of public finance from the practice of public finance into a scientific theory, thereby joining public finance and public choice to form political economy.

Keywords: property rights; entangled political economy; human nature; perpetual contestation; Antonio de Viti de Marco; James M. Buchanan

JEL Classification: B41, D70, P14, P16, P48