Past perfect


More reading on neo-classical economics. It was invented in the 1870s but is still at the heart of mainstream economics. It’s probably more fundamental to the resurgence so-called free-market capitalism from the 1970s than “neo-liberalism”, the corresponding global political project. Especially, I’m anxious not to do a hatchet-job on neo-classicism that skates over the power behind its enduring appeal, despite some of its well-known obvious drawbacks.

On this, I was thinking yesterday about the idea of perfect competition, and what an amazing tool for wealth-creation—as the basis for universal human freedom—and a severe check on capitalist excess, it would be, if it were not a mostly unattainable ideal-type. It’s a transcendental dream of freedom and democracy of a sort.

(Perfect competition describes a situation in which many small firms without price-setting power compete to sell interchangeable products, achieving just enough profits to sustain the industry to meet consumer desires. It’s the core theoretical market structure of the neo-classical paradigm, on which its peculiar picture of dynamism and continuously re-attained stability go hand in hand.)

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