Chapter 1 - The Economics of the Powerful

Summary

All professions are conspiracies against the laity.

—George Bernard Shaw, 1906

The lack of explicit consideration of power in modern mainstream economics is odd. Mainstream economics is built around the theme that people impersonally use their resources to achieve their goals. No one seriously denies that power is an important goal for many people, so why then would the theory of the acquisition and use of power not be a core part of economic theory, especially given that power relations and hegemonics are a core part of most other social sciences? A look at the history of economic doctrine reveals that power was not always absent. It dropped from the radar screen at some point; or rather, it was erased.

This chapter will examine how we got from an economic science that treated relative economic power as an important variable and regarded the resulting income distribution as a core issue of the discipline, to a science that de-emphasizes power and does not want explicitly to deal with distributional issues. The reader should not expect a history of economic thought in general from this chapter. Rather, it is concerned with the dogmatic shifts that led to the current mainstream, which dominates textbooks and policy advice.

Three developments were particularly important. The first was the triumph of marginalism in the second half of the nineteenth century, which allowed economists to appear to have the power to predict the future using numbers just as a hard science like physics might.