Complexity, Governance, and Constitutional Craftsmanship

Economic policy is commonly treated as a vehicle for selecting among possible allocative outcomes within an economy. An economy, however, is a complex network of relationships whose patterns can be understood but whose details can be neither predicted nor controlled. Because of this complexity, allocative outcomes are not direct objects of choice. Allocative outcomes are simply emergent consequences of human interaction that takes place within some framework of governing rules and conventions. All economic policy can do is modify some of the rules that govern human interaction. Economic policy is thus constitutive and not allocative in character, in that it is centrally involved in shaping the character of the regime that governs our relationships with one another. Author’s Paragraph Richard E. Wagner is Holbert L. Harris Professor of Economics at George Mason University, Fairfax, VA 22030. E-mail: [email protected]. His scholarly writings have covered a broad range of topics on matters of political economy and public policy. His current research activities fall into three primary categories: catallactical public finance, coordinationist macroeconomics, and constitutional political economy. More information about these activities is posted on his web site at http://mason.gmu.edu/~rwagner/. An earlier version of this paper was presented at the University of Pisa and the University of Rome “La Sapienza.” I am grateful to the participants in those seminars, and especially to Alberto Vannucci in Pisa and Domenico DaEmpoli in Rome.