The Power of Economics vs the Economics of Power: Introduction

Abstract

This article analyzes the systematic absence of power in economic analysis, beginning with early economist's almost universal denial of the process of primitive accumulation. Microeconomics also excludes considerations of power, except for what it considers to be abuse of power by government and labor unions. Monetary theory also avoids the application of Federal Reserve power to create unemployment in order to reduce wages. Businesses also employ power in competing with other businesses. Economists ignore such use of power, emphasizing the benign consequences of competition: lower prices, improved quality, and even entirely new products. Business wields power against workers, the power that might be limited by labor unions, which themselves are limited because of business' application of political power. Not only can business use monopolistic power in order to increase prices, as buyers, business can use monopsonistic power to reduce the prices it pays. Business can also apply power in order to hamper competitors. The final form of power is the power of economists to exclude power from their theory, except for the two exceptions mentioned.