Austrian economics often focuses on the vital role the entrepreneur plays in driving the economy, through the constant arrangement of the capital structure, in order to provide consumers with a constant stream of goods and services. But the question of what happens when government tries its hand at the same function of ownership, uncertainty-bearing, and decision-making is not addressed much in Austrian theory (see the literature review in the link). To try and close this partial theoretical gap, Joseph Salerno and I recently co-authored a paper on the subject of political entrepreneurship, available for download here.
What we attempt in this paper is to provide a theoretical framework with which to analyze government investment decisions, and furthermore, to see in what sense government can be entrepreneurial. An implication of our argument is that by looking at government in an entrepreneurial way, we can gain additional insight into the nature and effects of government activities. Events of recent years, such as the de facto nationalization of General Motors for example, take on new significance when viewed as acts of political entrepreneurship. What such cases imply is actually a transfer of the entrepreneurial function from the market to government, along with the emergence of problems closely associated with government management, e.g. the lack of recourse to economic calculation, bureaucratic inefficiency, and so on.
There is a great deal of research, both theoretical and applied, which can be done on this topic, and we hope the paper spurs fruitful discussion.