A Theory of Political Entrepreneurship

Abstract

Modern Economy, 2011, 2, 552-560 doi:10.4236/me.2011.24061 Published Online September 2011 (http://www.SciRP.org/journal/me) A Theory of Political Entrepreneurship Matthew McCaffrey, Joseph T. Salerno Auburn University, Department of Economics, Auburn, Alabama, USA Pace University, Lubin School of Business, Department of Finance and Economics, New York, USA E-mail: jsalerno@pace.edu Received June 20, 2011; revised July 21, 2011; accepted August 1, 2011 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 po- litical 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 entrepre- neurs which closely resembles the profit of market entrepreneurs. Keywords: Entrepreneurship, Political Entrepreneurship, Ownership, Production, Uncertainty, Income Distribution, Profit and Loss 1. Introduction1 Recent literature has stressed the importance of capital …

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