Review of Richard E. Wagner’s fiscal sociology and the theory of public finance: An exploratory essay

Abstract

Joseph Schumpeter ([1954]; 1991: 100-101) observed that public expenditure has an enormous influence on economic organization, culture, human spirit, and the fate of nations. For this reason, he argued that the study of the social processes behind public finances, that is, fiscal sociology, is one of the best starting points for an investigation of society and, particularly, its political life. Although there have been a number of insightful attempts to answer the Schumpeterian call, the field remains without a coherent intellectual framework. Richard E. Wagner, however, in his stimulating book Fiscal Sociology and the Theory of Public Finance: An Exploratory Essay, lays out an emergent theoretical approach for fiscal sociologists and public finance economists.In offering "a personal statement regarding the theory of public finance…[as]…one aspect of a broader scheme of social theorizing," this book is written quite effectively. As opposed to averring why a social-theoretic approach to public finance is superlative, for example, Wagner presents each chapter as a discussion of how an emergent approach to public finance can strengthen the existing public finance literature. To present his conceptual framework, Wagner stays close to the spontaneous order core of Knut Wicksell. This manner of presentation brings unusual clarity and precision to a difficult area of study. Throughout, Wagner brings remarkable scholarship to bear on elucidating the emergent approach and connecting it to the vast and varied public finance literature.Fiscal Sociology is presented in eight illuminating chapters. Much of the theoretical heavy lifting is undertaken in Chapters 1 and 2. Chapter 1 examines the two contrasting approaches to public finance: the Edgeworthian-inspired approach (or the systems design approach) and the Wicksellian-inspired approach (or the social-theoretic approach). The former approach assumes that the state is a rational actor responding through fiscal policies to market failures in ways that are consistent with macroeconomic policy programs and neoclassical efficiency criteria. According to Wagner (2007: 6), "The [Edgeworthian] method of analysis is that of comparative statics, where the Rev Austrian