by E. K. Hunt, Mark Lautzenheiser. 2011.
(... ...) By the early 1950s, neoclassical economic theory was on defensive. We have seen that neoclassical economic theory contained three basic ideological defenses of capitalism. [:]
- The first was the invisible-hand argument that free market exchange harmonized all people's interests, created "rational prices," and resulted in an efficient allocation of resources. Theoretical work in welfare economics that formed the basis of the critique of welfare economics(see Chapter 14) was done mostly in the 1930s and 1940s. This work had put the neoclassical ideologists on the defensive.
- The second ideological tenet was the neoclassical faith that the free market would automatically adjust to a full-employment equilibrium. The Great Depression of the 1930s and the work of Keynes had cast profound doubt on this proposition.
- The third ideological pillar was the belief that the distribution of income was determined by the marginal productivity of the different factors of production and that each individual received as income only that value created, at the margin of production, by the individual's own factors. While this proposition did not receive its theoretical coup de grace until 1960 with the publication of Sraffa's Production of Commodities by Means of Commodities, the marginal productivity theory of distribution had never been convincing to critics of capitalism. In third-world capitalist countries, the abject poverty of the majority of people and its stark contrast with the opulence of the wealthy elite was so extreme that hardly anyone believed the theory to be applicable to these economies. The ideology was therefore in a state of intellectual disarray and capitalism (particular in the third world, but in the industrial countries as well) was in danger of a severe critics of legitimzation.
The precursors of neoclassical theoryㅡSay, Senior, and Bastiatㅡused each of these ideological doctrines to argue for a policy of extreme laissez-faire. These writers wanted the government to use its power only to protect the existing inequalities of power and wealth by enforcing the laws of contract and the laws of private property. Once these existing inequalites were coercively protected by the government, free market exchange was sufficient to perpetuate them. If worker had no way to exist except by selling their labor power in the market, and if a substantial pool of unemployed workers could be kept in a state of constant competition for the available jobs (as has almost always been the case under capitalism), then the free market would perpetuate the extreme wealth and power of the numerically tiny capitalist class. Under these basic conditions of capitalism, however, the free market was merely a financial slaughterhouse, where the rich increases their wealth by chopping up the poor.
Neoclassica economists have always adopted these three ideological defenses of capitalism. During the past century, however, neoclassical economics has split into two quite separate (and not infrequently hostile) traditions. This split has been the result of both the force of existing social, economic, and political circumstances and the persistent barrage of criticisms leveled at the neoclassical ideology.
The split existed since at least 1870s. The social, political, and economic consequences of the Soviet industrialization, the Great Depression, the Cold War, and the anti-imperialist movement in the third world significantly exacerbated the split, however.
The problem was that while neoclassical economics continued to constitute the intellectual foundation for intellectually sophisticated ideologies of capitalism, most economists and politicians had lost faith in the free market, laissez-faire policy conclusion that is derived from the theory. This loss of faith can be seen most cleary in the rapid development during the 1940s and 1950s of two important trends in economic theory. The first was the nearly instantaneous and almost unanimous acceptance of Keynsian economics and the second was the birth and virtually explosive growth of a vast literature in the new field of "development" economics. Keynsian economics and the new development economics shared a genera abandonment of faith in laissez-faire capitalism and both advocated policies that involved widespread and profound extensions of government into economic processes.
The neoclassical arguments for laissez-faire remained important throughout the entire peird, however. They have always constituted the most elaborate, and seemingly scientific, ideological defense of capitalism. There is another important reason for the persistence of the neoclassical laissez-faire doctrine during the period in which confidence in free market capitalism was at a low ebb. Government intervention, in the United States economy, for example, has usually taken the form of either various government regulatory agencies or the "military Keynsianism" of expenditures on space programs and the military. These interventions affect the various capitalist enterprises very differently. Regulatory agencies have generaly acted in a manner that protected and expanded the power of giant oligopolistic business firms, not infrequently at the expense of medium- and small-sized firms. The overwhelming buk of the profits from space contracts and military contracts have gone to corporations that were among the largest and most powerful in the economy. Moreover, the profits reaped from the worldwide American economic empire have generally gone to the largest and most powerful of the multinationa corporations.
For many thousands of medium- and small-sized capitalist firms, the expansion of government into the economy has steadily undermined their abolity to compete with the corporate giants. They typically see themselves as reaping few, if any, of the benefits of government's expanding economic activities. To them bigger government means a deteriorating competitive position compared with the giant firms, mountains of "red tape," bureau- (... 466-469 생략 ...)