| Review of: | The dynamics of intervention: Regulation and redistribution in the mixed economy edited by P. Kurrild-Klitgaard |
|---|---|
| Reviewed By: | Jørgen Grønnegaard Christensen |
| Reviewed in: | Public Administration |
| Date accepted online: | 14/01/2008 |
| Published in print: | Volume 85, Issue 03, Pages 857-883 |
Reviews
Rational choice theory assumes an important position in contemporary political science. It is the source of inspiration for important contributions that have considerably enhanced our understanding of political and administrative institutions. These advances are often connected to the influence of economics on the study of politics, the public sector and public bureaucracy. However, this widespread impression overlooks the extent to which rational choice institutionalism has found inspiration in theories developed within a stimulating environment that existed in the early part of the 20th century: namely, that in the Austrian economic and social science community. Members of this community, including Schumpeter, Friedrich Hayek and Ludwig von Mises, found congenial spirits amongst Anglo-American economists, for example, in Israel Kirzner. Their common endeavour was both to improve the understanding of the interaction between politics and the economy and to draw attention to the dangers to individual freedom and general welfare if political intervention into individual activities, and especially economic affairs, was allowed.
This edited volume is dedicated to the Austrian contribution, undertaken within the school's basic framework, to the study of political economy. Its contributors are economists and political scientists who to a large extent work within the public choice tradition and who, consequently, share a strong interest in the Austrian political economy. Their common goal is both to present a thorough introduction to and critical discussion of the relative merits of Austrian economics to modern political economy and to demonstrate its potential as a theoretical framework for empirical analysis of public policy and government.
The book clearly succeeds in fulfilling the first goal. Readers who are familiar with rational choice institutionalism and institutional economics, but know little about their intellectual genealogy, will learn much from the contributions. There are insightful discussions of the relationship between Austrian economics and public choice theory, although the contributors do not agree on whether they are two manifestations of the same positive theory. Are individuals, including policy-makers and bureaucrats, self-serving by assumption? Or can they be benevolent, while at the same time suffering from severe ignorance as to the impact of their decisions? Overall, the reader gains a much better understanding of the critical stance that Austrian economists (similarly to public choice theorists) take against neo-classical economists who are often 'mixed up' in much mainstream political economy. Equally important, these theoretical contributions pay due attention to the theory of economic entrepreneurship developed by Schumpeter and, later on, by Kirzner. Austrian political economists transferred this to the political and bureaucratic sphere and it thus served as an important source of inspiration for mainstream political scientists.
Austrian political economy is thus presented as a theoretical approach to the study of politics and administration. It is also, and quite rightly, described as a strictly individualistic critique of big government, even of government in general. Its libertarian mission is prominent in many of the contributions, something which may make the interested reader who nevertheless does not belong to the community frown. One reason for this is the realization that for an acolyte of the Austrians the theory represents an undisputable truth. Some of the contributors to this volume acknowledge the epistemological kinship with neo-Marxist theory: for example, the now classic welfare state critique by Claus Offe. Other contributors claim that Austrian theory is so strong that even studies apparently raising doubt about its empirical validity must be refuted because they
This dogmatic limit to the theory explains why the contributions become much weaker when it comes to demonstrating the strengths of Austrian political economy as the basis for empirical analysis as opposed to interesting, but highly abstract, theoretical discourse. First, some of the contributions that attempt an empirical analysis hardly move beyond a discursive illustration of its relevance. Second, although there are a number of case studies based on conscientious work with documentary sources, they have been written with the clear intention of demonstrating that governmental intervention has predominantly harmful consequences, whether the field of intervention is US energy policy, land use in England, or Swedish restrictions on full individual freedom.
These limits to the book's empirical achievements all follow from the fact that Austrian economics is not only a scientific programme for the study of the interplay between economics and politics, but constitutes a general world view that, in von Mises' words, is 'an interpretation of all things, and as a precept for action, an opinion concerning the best means for removing uneasiness as much as possible' (quoted by Erik Moberg, p. 212).
This is quite ironic, as the editor Peter Kurrild-Klitgaard in his excellent introductory chapter has quite properly indicated, that the Austrian claim of irreversibly increasing government intervention may be open to empirical testing and that such a test, if it was conducted, might not provide unequivocal support for it. Even if the book does not fulfil its promise of demonstrating the empirical strengths of Austrian political economy it is to be recommended on its theoretical merits. It presents an incisive discussion of an original contribution, not only to the social sciences, but also to recent thinking about regulatory reform. Finally, even if the rather missionary zeal may disturb the reader, the Austrian programme (at least for this reviewer) represents a formidable tool for critical analysis of the unintended impact of government intervention.