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.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 17-39 |
| Number of pages | 23 |
| Journal | Review of Austrian Economics |
| Volume | 28 |
| Issue number | 1 |
| DOIs | |
| State | Published - Mar 2013 |
| Externally published | Yes |
Keywords
- Cultural evolution
- Development economics
- Evolutionary contractarianism
- Group selection
- Informal institutions
- Political entrepreneurship
- Robust political economy
- Social entrepreneurship
ASJC Scopus subject areas
- General Economics, Econometrics and Finance