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FISCAL SOCIOLOGY AND THE THEORY OF PUBLIC FINANCE: AN EXPLORATORY ESSAY Richard E. Wagner, Cheltenham, UK: Edward Elgar, 2007
ABSTRACT
Public finance theory has historically treated government as an omniscient actor working outside of the market. The state is assumed to be able to identify problems and take the necessary action to fix them. In this book, Wagner redefines the foundational assumptions of public finance. Instead of an omniscient actor, state, like markets, is an emergent order where people interact. While this book leaves certain applications underdeveloped, it addresses important implications of a social-theoretic approach to public finance. This book provides a strong critique to welfare economics, and lays the groundwork for future scholars to redefine how we think about public finance.
BOOK REVIEW
Economic theories of the public sector typically branch into two catego-ries: public finance and public choice. Public finance theories take a normative approach, treating the state as an omniscient actor working to correct market failures. In contrast to this system's design approach, public choice generally takes a positive approach to explain the current state of affairs. Public choice theories tend to treat the government as an organization of individuals acting in their own self-interest.
Richard Wagner, however, takes a social-theoretic approach to public fi-nance in his book Fiscal Sociology and the Theory of Public Finance: An Ex-ploratory Essay. In it, he treats the state not as an actor or organization inter-vening in an existing market order, but as an emergent order within which societal interaction occurs. Wagner defines an interconnected relationship be-tween state and market, which each emerge from aspects of human nature. Building offthe work of dozens of scholars, he presents a new way to think about the public sector and strengthens the existing public finance literature.
In his first chapter, Wagner lays the...