Addressing the Poverty of Mainstream Economics

This essay develops the rudiments of a historical-analytical approach to hierarchical control in human societies. We question the adequacy of mainstream economic theory in two fundamental aspects: a) the absence of an explicit class structure and consequent interclass conflicts of interest, and b) the benevolent government or social planner approach to policy decisions. We begin with an anthropological view of the genesis of the state and class society and construct a series of simple models inspired in different phases of human development in which producers and governors face the same consumption-toil trade-off as the workers (slaves, serfs, or wage workers) at the bottom of the class hierarchy. Public goods and bads play a fundamental role in the functioning of society and in the power structure that sustains it. In most of the models the consumption-toil decision is present for all the classes involved. In the case of classes that organize production (whether in civil society or in the state sector) the planning, organizing, commanding and controlling (POCC) labor of members of the higher rank contributes to the production function along with the labor of the members of the lower rank. The final model is a stylized representation of capitalism, with three large classes: wage workers, capitalist entrepreneurs, and governors, and is based on an extension of the monopolistic competition model. The essay ends with a disquisition on the concept of exploitation.