Policy making Primary aim: Introduce theory on (industrial) policy making.

The school of public choice: Politics-as-exchange combined with the idea about individuals as utility-maximisers Business communities are consumers of public benefits: ”Regulation is acquired by industry and is designed and operated primarily for its benefits” (Stigler1971) Criticism of the political agent as an exogenous benevolent social welfare maximiser Neglects limitations on individual information-processing capabilities.

Evolutionary approach to policy making: Information-processing ability limited: Framing of policy processes a primary concern Three issues: 1.The process of policy making 2. Models and instruments used for ip-analysis 3. Normative Judgements

The process of policy making: Self-interest governs political behaviour Limited information-processing abilities forces people to be highly selective in their learning Learning is social contingent: Parallel communication processes (political parties, mass media and networks and conversation circles) leading to agenda-setting effects. Policy-shapers involved in interactive learning, where he or she can support the policy process by framing societal communication

Models and instruments for ip-analysis: Constructivist rationalism based on myths about: 1.The omniscient policy maker, who knows everything. 2.The possibility to set up models that can predict economic processes 3.Allocating the normative goal analysis to politicians and the examination of the instruments to the economist Constructivist rationalism does not take account of induced inventive learning caused by a policy

…….Models and instruments for ip-analysis: The policy maker as an engineer, who chooses from a tool box of policy measures is rejected as being illusionary Piecemeal policy or adaptive policy making: pilot studies and trial and error that admit the policy maker to readjust to responses coming from the policy process

Theory of normative judgements: Legitimises particular goals (secular innovativeness) Induced learning triggers a feedback from the factual to the normative level, where the economist behave selectively (drawing the attention of the public to certain conflicts neglecting others) Should predict how normative judgements change over time and also consider the legitimacy of using instruments that incorporate coercive elements

Questions for discussions: 1)A small Swedish municipality - Gnosjö (close to Älmhult, where IKEA was born) – is known for excellent entrepreneurial activities. The region is also famous for an extremely high rate of membership in free church parishes. Are there any connections between these two characteristics? If the answer is yes; can we learn anything from this for a theory of institutional innovation? 2)Country A relies on nuclear power for energy production. You are asked by the government to prepare a new energy policy based on wind energy, which is expected to become the main issue in the next election. Is it appropriate to apply methods in the field of constructivist rationalism for policy-analysis in this case?