Commerce and Sociology: Novak on Entangled Political Economy

10 snips

May 27, 2025

Mikayla Novak, a senior fellow at the Mercatus Center, uses her diverse background to challenge traditional economic views. She introduces the idea of entangled political economy, explaining how market and political networks intertwine rather than operate independently. Novak critiques mainstream economics for its reliance on static models, advocating for a dynamic approach that acknowledges human behavior. Highlights include insights on policy failures stemming from inefficient governance and the significance of transaction costs in understanding institutional frameworks. Her unique perspectives enhance the discussion of how social structures influence economic outcomes.

Ask episode

AI Snips

Chapters

Books

Transcript

Episode notes

INSIGHT

Mainstream vs Mainline Economics

Mainstream economics models economies as equilibrated systems with market failures needing external fixes.
Mainline economics views economies as dynamic processes governed by institutions, focusing on entrepreneurship and institutional quality.

INSIGHT

Sociology Shapes Economy

Culture shapes economic behavior by influencing meanings and norms vital for entrepreneurship.
Entrepreneurship interprets cultural signals and can also change culture through innovation and social impact.

INSIGHT

Transactions Are Socially Embedded

Transactions happen within social contexts shaped by norms and institutional frameworks, not just prices.
Institutional economics and sociology analyze human action as relational and embedded rather than isolated market events.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

Send us a text

What happens when we stop seeing politics and markets as separate spheres and start recognizing their deep entanglement? Mikayla Novak, senior fellow at the Mercatus Center, challenges conventional economic thinking in favor of Dick Wager's "entangled political economy."

Drawing from her fascinating career path through Australia's Treasury, free market think tanks, and her pursuit of multiple courses of study, Novak offers unique insights into institutional economics and political networks. Her background bridges disciplines in ways that embody Hayek's wisdom that "you can't be a good economist by just being an economist."

We consider Boettke's distinction between "mainstream" economics—with its equilibrium models and market failure diagnoses—and the "mainline" tradition that views economies as dynamic processes shaped by institutions. This conversation reveals how Richard Wagner's entangled political economy theory helps understand policy failures. When government and markets form complex networks rather than separate spheres, simplistic reform attempts like "just cut spending" are disastrously unsuccessful.

The discussion vividly illustrates why transaction costs matter deeply for institutional analysis. We examine how political networks form with elites enjoying low-cost access while ordinary citizens remain at the periphery. This structural understanding helps explain why some inefficient policies persist despite their obvious flaws—they benefit the well-connected core of our political-economic system.

Mikayla Novak's page link

Richard Wagner:

Entangled Political Economy Research Network
Buchanan's Liberal Theory
Politics as a Peculiar Business

Previous TAITC Episodes of Relevance:

Late Bloomers book, by Rich Karlgaard

Munger on tariffs and costs

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz