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The role of ideas in political economy

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  • Vlad Tarko

    (George Mason University)

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.

Suggested Citation

  • Vlad Tarko, 2015. "The role of ideas in political economy," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 28(1), pages 17-39, March.
    • Handle: RePEc:kap:revaec:v:28:y:2015:i:1:d:10.1007_s11138-013-0246-4
    DOI: 10.1007/s11138-013-0246-4
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    Cited by:

    1. Darcy W E Allen, 2020. "When Entrepreneurs Meet:The Collective Governance of New Ideas," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number q0269, December.
    2. Vlad Tarko & Ryan Safner, 2022. "International regulatory diversity over 50 years: political entrepreneurship within fiscal constraints," Public Choice, Springer, vol. 193(1), pages 79-108, October.
    3. William F. Shughart & Diana W. Thomas & Michael D. Thomas, 2020. "Institutional Change and the Importance of Understanding Shared Mental Models," Kyklos, Wiley Blackwell, vol. 73(3), pages 371-391, August.

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