July, 2022

State–market entanglement

some implications for the theory of public finance
  • Richard Wagner

    Distinguished Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics
  • Zachary Kessler

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This article is concerned with the way economists conceptualise the relationship between state and market within their theories of public finance. It is customary for them to treat polity and economy as comprising separate domains of human activity. In contrast, the recently developing notion of entangled political economy treats the state–market dichotomy as an abstraction, whereas political and economic organisations are deeply entangled with one another. While property and its distinction between mine and thine is a universal quality of the human species, specific and particular rights of property are always contestable through entanglement among political and commercial entities. Entanglement calls attention to the processes through which rights of action are established and challenged within an entangled system of political economy. What results from our exploration of entanglement and public finance is recognition of the high analytical potential of reviving Antonio de Viti’s initial interest in transforming the focus of public finance from the practice of public finance into a scientific theory, thereby joining public finance and public choice to form political economy.