What is Entangled Political Economy — Entangled Political Economy Research Network

Entangled Political Economy

Entangled political economy is a research framework developed by Richard E. Wagner to advance the understanding of social coordination and to restore economics as a study of society (as opposed to a study of markets). It views individuals, and the private and public sectors, as being intertwined in overlapping exchange relationships along competitive and collaborative dimensions.

The conceptual foundations of entangled political economy stand in contrast to those explicitly formalised, or inferred, by adherents of orthodox (or mainstream) political economy. Key parameters of distinction between entangled and orthodox political economies have been described by Wagner as follows:

… The orthodox framework treats society as naturally placid, while the alternative framework treats it as naturally turbulent … Within the orthodox framework, change comes as exogenous shocks accompanied by equilibrating responses to the new data. Within the alternative framework, change is an endogenous attribute of societal processes. In the orthodox framework, polity is external to economy; in the alternative framework, they reside inside each other. The orthodox framework arises out of a treatment of economics as a science of rational choice, where society is merely a landscape on which people act to supply inputs to the market and to take away products from the market. The alternative framework treats economics as a genuine social science which has as its object society, which in turn is not reducible to some representative or average chooser. The orthodox framework reduces quality to quantity through a universal utility function; the alternative framework keeps qualities alive through lexicographic ordering … Entangled political economy is old and not new. It is a concomitant of treating economics as a social science, as against treating it as a science of individual action in an equilibrated society (source: Wagner, Richard E. “Entangled Political Economy: A Keynote Address.” Advances in Austrian Economics 18 (2014): 15-36, pp. 20, 33).

Entanglement is best visualised as a non-random network with uneven patterns of connection among heterogeneous entities, with those entities in turn operated by people. In contrast to orthodox political economy which presumes a solitary, unified political actor intervening with fiscal, monetary, and regulatory policies to alter the behaviour and conduct of economic enterprises, entangled political economy suggests heterogeneous economic and political enterprises all operate, and intertwine with one another, within the same societal plane.

The contrasting relational depictions of orthodox and entangled political economy are illustrated by the following diagram. The left-hand side depicts orthodox political economy, and the right-hand side entangled political economy. Economic enterprises are octagonal-shaped nodes, whereas political enterprises are triangular-shaped nodes. The varied colouration of entities in an entangled political economy (right-hand side) is suggestive of actor heterogeneity.

Source: Novak, Mikayla. Inequality: An Entangled Political Economy Perspective. Cham, Switzerland: Palgrave Macmillan, 2018, p. 33. — **Source**: Novak, Mikayla. Inequality: An Entangled Political Economy Perspective. Cham, Switzerland: Palgrave Macmillan, 2018, p. 33.

The ensuing patterns of entanglement are emergent features of human interaction, and are to some degree subject to influence even if they are not entirely amenable to direct control. In other words, entangled political economy is a framework that fits a bottom-up representation of social phenomena and, as such, is consistent with political economy traditions that stress the emergent- or spontaneously-ordered development of institutions.

The performance of economies will vary depending upon the structural connection among individuals and groups, as well as the qualitative properties resident in the various entities. The reality of modern economic production and consumption patterns is that they are a product of systemic interaction within certain institutional arrangements that govern relationships and actions among participants. It is also important to recognise that patterns of collective activity emerge out of interactions among participants in political processes just as patterns of market activity emerge out of interactions among participants in market processes. A perennial challenge facing societies is to ensure that entangled economic-political relationships are consistent with rule of law precepts and generality in policy treatment, as well as preserving the integrity of interactions based on contract rather than status.

Inspired by a long tradition in political economy stretching back to Adam Smith and Carl Menger, and drawing upon insights found in complexity, evolutionary and network theories, entangled political economy studies have expanded significantly in recent years. Entangled political economy insights can be found on topics as diverse as fiscal and monetary policy, institutional evolution, law and economics, public policy development, social services provision, and economic methodology.

Entangled Political Economy

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