A Theory of Political Entrepreneurship

Matthew McCaffrey, Joseph T. Salerno
DOI: 10.4236/me.2011.24061                

Abstract

This paper adapts the entrepreneurial theory developed by Richard Cantillon, Frank Knight, and Ludwig von Mises to the theory of “political entrepreneurship.” Political entrepreneurship is an outgrowth of the theory of the market entrepreneur, and derives from extending entrepreneurial theory from the market into the political sphere of action. By applying the theory of the entrepreneur to political behavior, we provide a basis for identifying political entrepreneurs, and for separating them analytically from other government agents. The essence of political entrepreneurship is the redirection of production from the path it would have taken in an unregulated market. Nevertheless, this production does produce an income stream to political entrepreneurs which closely resembles the profit of market entrepreneurs.

Keywords

Entrepreneurship, Political Entrepreneurship, Ownership, Production, Uncertainty, Income Distribution, Profit and Loss

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Foss, Kristen, J. F. Nicolai and P. Klein, “Original and Derived Judgment: An Entrepreneurial Theory of Eco- nomic Organization,” Organization Studies, Vol. 28, No. 12, 2007, pp. 1893-1912. Hdoi:org/10.1177/0170840606076179
[2]	Foss, J. Nicolai and G. K. Peter, “Alertness, Action, and the Antecedents of Entrepreneurship,” Journal of Private Enterprise, Vol. 25, No. 2, 2010, pp. 145-164.
[3]	McCaffrey and Matthew, “Entrepreneurship, Economic Evolution, and the End of Capitalism: Reconsidering Schumpeter’s Thesis,” Quarterly Journal of Austrian Economics, Vol. 12, No. 4, 2009, pp. 3-21.
[4]	McCaffrey and Matthew, “Review of Non-market Entre- preneurship: Interdisciplinary Approaches,” Quarterly Journal of Austrian Economics, Vol. 13, No. 4, 2010, pp. 80-86.
[5]	Salerno and T. Joseph, “The Entrepreneur: Real and Imagined,” Quarterly Journal of Austrian Economic, Vol. 11, No. 3, 2008, pp. 188-207.
[6]	A. D. Sheingate, “Political Entrepreneurship: Institutional Change, and American Economic Development,” Studies in American Political Development, Vol. 17, No. 2, 2003, pp. 185-203. Hdoi:org/10.1017/S0898588X03000129
[7]	Mitchell and C. William, “Schumpeter and Public Choice, Part I: Precursor to Public Choice?” Public Choice, Vol. 42, No. 1, 1984a, pp. 73-88.
[8]	Mitchell and C. William, “Schumpeter and Public Choice, Part II: Democracy and the Demise of Capitalism: The Missing Chapter in Schumpeter,” Public Choice, Vol. 42, No. 2, 1984b, pp. 161-174. Hdoi:org/10.1007/BF00124158
[9]	Dahl and A. Robert, “Who Governs? Democracy and Power in an American City,” Yale University Press, New Haven, 1961.
[10]	Klein, G. Peter, T. Joseph Mahoney, M. Anita McGahan, and N. P. Christos, “Toward a Theory of Public Entre- preneurship,” European Management Review, Vol. 7, No. 1, 2010, pp. 1-15. Hdoi:org/10.1057/emr.2010.1
[11]	Campbell and D. Noel, “Political Entrepreneurs and the Transfer Demanding Process: Homesteading the Unas- signed District,” Review of Austrian Economics, Vol. 12 No. 2, 1999, pp. 201-225. Hdoi:org/10.1023/A:1007868226432
[12]	DiLorenzo and J. Thomas, “Competition and Political Entrepreneurship: Austrian Insights into Public-Choice Theory,” Review of Austrian Economics, Vol. 2, No. 1, 1988, pp. 59-71. Hdoi:org/10.1007/BF01539298
[13]	DiLorenzo and J. Thomas, “How Capitalism Saved Ame- rica,” Crown Forum, New York, 2004.
[14]	López and J. Edward, “The Legislator as Political En- trepreneur: Investment in Political Capital,” The Review of Austrian Economics, Vol. 15, No. 2/3, 2002, pp. 211-228. Hdoi:org/10.1023/A:1015770705872
[15]	Mintrom and Michael, “Policy Entrepreneurs and the Diffusion of Innovation,” American Journal of Political Science, Vol. 41, No. 3, 1997, pp. 738-770. Hdoi:org/10.2307/2111674
[16]	Rowley, K. Charles and D. T. Robert, “Rent-Seeking and Trade Protection,” The Political Economy of Rent-Seek- ing, Kluwer Academic Publishers, Boston, 1988.
[17]	Schiller and J. Wendy, “Senators as Political Entrepre- neurs: Using Bill Sponsorship to Shape Legislative Agen- das,” American Journal of Political Science, Vol. 39, No. 1, 2005, pp. 186-203.
[18]	M. Wohlgemuth, “Political Entrepreneurship and Bidding for Political Monopoly,” Journal of Evolutionary Eco- nomics, Vol. 10, No. 3, 2000, pp. 273-295. Hdoi:org/10.1007/s001910050015
[19]	Shockley and E. Gordon, “Policy Entrepreneurship: Re- conceptualizing Entrepreneurship in Public Affairs,” Non-market Entrepreneurship: Interdisciplinary Appro- aches, Edward Elgar, UK, 2008.
[20]	Schneider, Mark and T. Paul, “The Bureaucratic Entre- preneur: The Case of City Managers,” Public Administra- tion Review, Vol. 54, No. 4, 1994, pp. 331-340. Hdoi:org/10.2307/977380
[21]	Fran?ois and Abel, “The Political Entrepreneur and the Coordination of the Political Process: A Market Process Perspective of the Political Market,” Review of Austrian Economics, Vol. 16, No. 2/3, 2003, pp. 153-168. Hdoi:org/10.1023/A:1024588606724
[22]	Holcombe, and G. Randall, “Political Entrepreneurship and the Democratic Allocation of Economic Resources,” The Review of Austrian Economics, Vol. 15, No. 2/3, 2002, pp. 143-159. Hdoi:org/10.1023/A:1015758419984
[23]	Holcombe and G. Randall, “Entrepreneurship and Eco- nomic Progress,” Routledge, New York, 2007.
[24]	Schneider, Mark and T. Paul, “Toward a Theory of the Political Entrepreneur: Evidence from Local Govern- ment,” The American Political Science Review, Vol. 86, No. 3, 1992, pp. 737-747. Hdoi:org/10.2307/1964135
[25]	Cantillon and Richard, “An Essay on Economic Theory,” Translate by Chantal Saucier Auburn, The Ludwig Von Mises Institute, 2010.
[26]	Knight and H. Frank, “Risk, Uncertainty, and Profit,” Houghton Mifflin Company, Boston, 1921.
[27]	Mises and V. Ludwig, “Human Action: The Scholar’s Edition,” Ed. Jeffrey M. Herbener, Hans-Hermann Hoppe, and Joseph T. Salerno. Auburn, AL: The Ludwig Von Mises Institute, 1998.
[28]	Hébert and F. Robert, “Was Richard Cantillon an Aus- trian Economist?” Journal of Libertarian Studies, Vol. 7, No. 2, 1985, pp. 269-279.
[29]	Hébert, Robert and L. Albert, “The Entrepreneur: Main- stream Views and Radical Critiques,” 2nd Edition, Praeger, New York, 1988.
[30]	Hoselitz and F. Bert, “The Early History of Entrepre- neurial Theory,” Essays in Economic Thought: Aristotle to Marshall, Rand McNally & Company, Chicago, 1960.
[31]	Rothbard and N. Murray, “Man, Economy, & State: Scholar’s Edition,” AL: The Ludwig von Mises Institute, Auburn, 2004.
[32]	North and C. Douglass, “Structure and Change in Eco- nomic History,” W.W. Norton & Company, New York, 1981.
[33]	Machaj and Mateusz, “The Nature of Socialism,” Pro- perty, Freedom, & Society: Essays in Honor of Hans- Hermann Hoppe, AL: The Ludwig von Mises Institute, Auburn, 2009.
[34]	Rothbard and N. Murray, “Toward a Reconstruction of Utility and Welfare Economics,” The Logic of Action One, Cheltenham, Edward Elgar, UK, 1997.
[35]	Gordon and David, “Toward a Deconstruction of Utility and Welfare Economics,” Review of Austrian Economics, Vol. 6, No. 2, pp. 99-112. Hdoi:org/10.1007/BF00842706
[36]	Herbener and M. Jeffrey, “The Pareto Rule and Welfare Economics,” Review of Austrian Economics, Vol. 10, No. 1, 1997, pp. 79-106. Hdoi:org/10.1007/BF02538144
[37]	McCaffrey and Matthew, “A Note on Government Invest- ment and Production,” Unpublished Manuscript, 2011.
[38]	Schumpeter and A. Joseph, “Capitalism, Socialism, and Democracy,” Harper and Bros, New York, 1942.
[39]	Mises and V. Ludwig, “(1944) Bureaucracy,” Liberty Fund, Indianapolis, 2007.
[40]	Mises and V. Ludwig, “Profit and Loss,” AL: The Ludwig Von Mises Institute, Auburn, 2008.
[41]	Hoppe and Hans-Hermann, “Of Private, Common, and Public Property and the Rationale for Total Privatiza- tion,” Libertarian Papers, Vol. 3, No. 1, 2011. Hdoi:org/10.1086/261712
[42]	W. J. Baumol, “Entrepreneurship: Productive, Unproduc- tive, and Destructive,” Journal of Political Economy, Vol. 98, No. 5, 1990, pp. 893-919.