The role of ideas in political economy

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


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 languageEnglish (US)
Pages (from-to)17-39
Number of pages23
JournalReview of Austrian Economics
Issue number1
StatePublished - Mar 2013
Externally publishedYes


  • Cultural evolution
  • Development economics
  • Evolutionary contractarianism
  • Group selection
  • Informal institutions
  • Political entrepreneurship
  • Robust political economy
  • Social entrepreneurship

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)


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