When Things Go Wrong: the Political Economy of Market Breakdown
AbstractPrepublication version of ‘When things go wrong: the Political Economy of Market Breakdown’ in Westra; R and Alan Zuege (Eds) (2003) Value and the World Economy Today: Production; Finance and Globalization; pp91-118. London:MacMillan; ISBN: 1 40390 002 7 This paper constructs a theoretical framework for understanding what happens when markets break down. It argues that when this happens; the ‘invisible hand becomes visible’ and conscious agencies (classes; states; governments; etc) intervene in the economy. ‘External Intervention’ into the market is thus not an imposition on the market but a product of the market. The paper grapples with what is arguably the most basic question in economics: are breakdown and recovery endogenous or exogenous? Do markets fall or are they pushed? Conversely; do they mend themselves; or does someone have to stick them back together? The primary ‘finding’ of all dominant economic theories is that the market works: that breakdown is exogenous and recovery is endogenous. I show that this finding arises from the shared starting point of these theories; the equilibrium or comparative static paradigm. This is equivalent to assuming that; the market works so perfectly that nothing needs to change. It then becomes impossible to deduce endogenous market failure. This why is one of the primary shortcomings of mainstream economic theory is its inability to two-way causal links between political institutions and the market.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5586.
Date of creation: 2003
Date of revision:
Keywords: Divergence; stagnation; World Economy; Kondratieff; Development; Europe; US; value; price; TSSI; temporalism; profit rate; polarisation; inequality; globalisation; deregulation; imperialism; World Systems Theory; unequal exchange; dependency; North-South;
Find related papers by JEL classification:
- B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
- B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
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- Freeman, Alan, 1995. "Marx without Equilibrium," MPRA Paper 1207, University Library of Munich, Germany.
- Freeman, Alan, 2010. "Crisis and ‘law of motion’ in economics: a critique of positivist Marxism," MPRA Paper 48619, University Library of Munich, Germany, revised 05 Jul 2010.
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