Contested Exchange: Political Economy and Modern Economic Theory
Author(s)
Bowles, Samuel; Gintis, Herbert
Abstract
Contemporary liberal writers share a fundamental assumption: societal rule-making concerns not the political structure of the economy, but rather the political structure of the state. As we shall see, an outmoded variant of microeconomic theory has played no small part in suppressing the acute question of economic power and its accountability. Our claim that the capitalist economy has a political structure, one which is undemocratic and on democratic grounds ought to be replaced by a set of rules assuring both liberty and popular accountability of power, will strike those with the benefit of training in economics as not so much wrong as nonsensical. Not by ideological inclination alone will most contemporary economists be more at home discussing the Pareto-inferior properties of the U.S. Department of Transportation than the undemocratic political structure of General Motors. But the silence of economists on the political structure of the economy is unwarranted; perhaps surprisingly, a consistent application of the axioms of rational self-interested individual action does not support the neoclassical view of the apolitical economy but rather, as we shall see, provides the microeconomic basis for the study of economic power.
