The question is inspired by this post from Jonathan Catalan.
I opt for the latter, not the former. Far from saying something innovative, public choice theory actually says something people have known for a long time - and it fails to mention a lot of other things we've known about the behavior of public officials.
So it doesn't seem right to say it's a theoretical contribution. It's not.
It is a group of economists who said "we're going to talk about something not as many people are talking about". It was a research agenda push.
Of course there was always a political economy literature, so it's not even a brand new research agenda contribution. But it's better to think about it as that than as a theoretical contribution.
Did economics suffer when it did not consider this research agenda before? I think this case is overblown, in an effort to advertise for public choice theory. "Benevolent dictators" are a way of saying "we are not going to focus on this right now". It was never an argument that government did not fail and could perfectly apply ideas. It was a demarcation of the subject of study, not a rejection of the idea of government failure.
Government failure is obvious, assumed, and long recognized. Market failure is what can be tougher to grasp. That's why people cordoned off politics for a while to talk about markets.
Agree or disagree?
8 hours ago