Political entrepreneur

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The term Political entrepreneur may refer to any of the following:

  • a businessman who seeks to gain profit through subsidies, protectionism, government contracts, or other such favorable arrangements with government(s) through political influence (also known as a rent-seeker).
  • a political actor (not necessarily a politician) who seeks to further his or her own political career and popularity by pursuing the creation of policy that pleases the populace.

Politician as a political entrepreneur[edit]

In the field of business, entrepreneurship involves people taking a risk in order to create new business ventures, to gain advantage over a competitor, and to maximize profits.

Traditionally entrepreneurs have been associated with the world of business, however the term is used in the political arena also. For example Choi Taewook in 2004 wrote:

A political entrepreneur refers to a political player who seeks to gain certain political and social benefits in return for providing the common goods that can be shared by an unorganized general public. These common goods that political entrepreneurs attempt to provide to the populace generally include foreign- and domestic-related public policy, while the benefits they hope to gain involve voter support, public recognition, and personal popularity.

History and cultural context[edit]

The political activism of American business as a class has surged and ebbed at various historical moments. Variations in both business and countervailing political mobilization should be approached as problems of collective interpretation and action. To explain the historical patterns of class-wide business activism, we need to look at the dynamics of partisan regimes in American politics. Partisan leaders, not businesses or other policy-seekers themselves, have the strongest incentives to absorb the transaction costs associated with either broad-scale business or countervailing collective action. When partisan entrepreneurs see an opportunity to alter the distribution of power at the national level, they engage in a discursive exercise to remold business or oppositional interests and undertake the mobilization of these interests.

An analytical framework for dealing with political entrepreneurship and reform is proposed which is based on some new combinations of Schumpeterian political economy, an extended version of Tullock's model of democracy as franchise-bidding for natural monopoly and some basic elements of New Institutional Economics. It is shown that problems of insufficient award criteria and incomplete contracts which may arise in economic bidding schemes, also - and even more so - characterise political competition. At the same time, these conditions create leeway for Schumpeterian political entrepreneurship. The same is true for various barriers to entry in politics. These barriers affect a trade-off between political stability and political contestability which will be discussed with special emphasis on incentives and opportunities for political entrepreneurship in the sense of risking long-term investments in basic political reforms.

Businessperson as a political entrepreneur[edit]

However the term is also used in a very different way by those that wish to contrast what they see as a pure "market entrepreneur" with someone that uses the political system to further a commercial venture or their own career. On this definition a political entrepreneur is a business entrepreneur who seeks to gain profit through subsidies, protectionism, government contracts, or other such favorable arrangements with government(s) through political influence (also known as corporate welfare).

Ed Younkins (in 2000) wrote: "Political entrepreneurs seek and receive help from the state and, therefore, are not true entrepreneurs." Similarly, Thomas DiLorenzo says, "a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors." He says, in contrast, the "market entrepreneur succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect." He gives the example of a mousetrap manufacturer who seeks to gain market share by making a better mousetrap as being a market entrepreneur, and a manufacturer who lobbies Congress to ban the importation of foreign-made mousetraps as a political entrepreneur. (DiLorenzo, Thomas, Chapter 7 of How Capitalism Saved America) [1]

In practice, the division between the market entrepreneur and the political entrepreneur can be hazy. Many business entrepreneurs share both characteristics in varying degrees. The term appears to have been coined by Burton W. Folsom Jr. in his book, The Myth of the Robber Barons.

See also[edit]

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