From Aggregation to Emergence: Wagner’s New Book "Rethinking Public Choice"
In September, Edward Elgar Publishing released Richard E. Wagner’s latest book, "Rethinking Public Choice." This compelling addition is part of the "Rethinking Economics" series, which is committed to infusing rigorous academic critique and fresh perspectives into economics. Wagner's work offers a deep exploration of public choice, challenging the traditional "additive" approach anchored in neoclassical economics. In its place, Wagner champions the "entangled political economy" perspective, drawing inspiration from complexity and evolutionary economics. While charting new territory, Wagner also pays homage to the foundational contributions of the existing public choice literature.
Since its inception, public choice has been rooted in the methodology of neoclassical economics, emphasizing rational action and economic equilibrium in analyzing political processes and institutions. Wagner argues that this approach morphed public choice into an "additive political economy"—a reductionist perspective that views political outcomes as mere aggregations of individual decisions. For example, this approach might equate the aggregation of individual voters' preferences to determine election outcomes with how market transactions collectively determine market equilibria. Wagner, however, sees these collective outcomes differently. He views them as emergent phenomena, highlighting the distinct processes that give rise to them, setting them apart from mere aggregations.
Expanding on themes he's previously explored, such as in his 2016 work "Politics as a Peculiar Business," Wagner delves deeper into the "entangled political economy." This approach offers a stark contrast to the traditional "additive" method. One of the primary distinctions is its departure from the notion of economic equilibrium. The entangled perspective emphasizes a continuous process of adaptation and change, rooted in the understanding that individuals are continually formulating new—and often conflicting—plans. This leads to ongoing negotiations and confrontations, giving rise to intricate social institutions. These institutions are in a state of constant evolution, shaped by the unending interactions of individuals. Conventional models, anchored in economic equilibrium, often fall short of capturing this dynamic and evolving landscape.
Moreover, while the traditional public choice theory operates on the presumption of universal rational action, the entangled political economy suggests that the operational aspects of rationality are intricately tied to the epistemic characteristics of the environment. Recognizing the inherent differences in knowledge within a complex society, this approach posits that distinctions between knowledge, belief, and ideology can become ambiguous in specific contexts. With its disorganized complexity, markets can aggregate and operate on incomplete individual knowledge— the inevitable differences in knowledge are minimized through collective wisdom. Those who are ignorant can benefit from the knowledge of the informed few. The individual making choices in the market bears the value consequences of those choices. Due to the direct consequences the chooser faces in market environments, there's a high degree of rationality, making markets an environment of “logical action,” a term Wagner borrows from Vilfredo Pareto.
In politics, the direct correlation between choices and their consequences often becomes obscured. Consider voting: voters don't experience the immediate repercussions of their electoral decisions. When selecting candidates, voters are presented with persuasive arguments that, on the surface, appear as testable propositions. However, a closer examination often reveals these arguments to be more reflective of aspirations and desires rather than verifiable claims. The intricate nature of politics complicates the genuine evaluation of options. As a result, electoral victories often hinge more on evoking transient emotions in voters than on fulfilling campaign pledges. This isn't to suggest that voters act irrationally but rather that the requisite knowledge for informed, logical decisions might be lacking. Echoing Vilfredo Pareto, Wagner labels such decisions as "non-logical actions."
When asked why they voted, people might offer statements that reflect rational voting even though no policies are being chosen. What is in play is surely the desire of voters to look good in the eyes of their inquisitors, which is a nearly universal human condition. Political campaigns and contemporary politics are continually in campaign mode and are centrally about the formation and maintenance of images (Boulding 1956) that resonate with targeted voters. Where arenas of logical action make continual contact with the world of experience, arenas of non-logical action inhabit the world of contestation among images where experiences are creations of the imagination derived from images. (Richard E. Wagner, "Rethinking Public Choice," p.14, Edward Elgar Publishing, 2022)
Wagner's book offers invaluable insights for scholars and academics across disciplines, including economics, political science, and public administration. His approach masterfully interweaves these fields, presenting a holistic approach that challenges traditional paradigms. Wagner's 'Rethinking Public Choice' is a must-read for those intrigued by the potential of entangled political economy.
