“The entire history of economics can be summed up in a deconstruction of the initial postulate of market efficiency”

Grandstand. At the end of the XVIIand century in Great Britain, classical political economy is constructed against the state of the Ancien Régime, and denounces the many corsets it imposes on the economy. For the “classics”, Adam Smith, David Ricardo, John Stuart Mill (or in France, Jean-Baptiste Say), the “invisible hand” of competition in markets free of any public intervention is the most effective mode of coordination between a multitude of actors who, pursuing their individual interests, nevertheless produce the common good and ensure “the wealth of nations”. The role of the State must be reduced to sovereign functions that maintain civil and external peace, and guarantee the proper functioning of markets: enacting property, trade and labor rights; raise and maintain army, police, and justice. The arguments of “orthodox” neoliberal or ordoliberal economists, supporters of a minimum state, are the contemporary extension of this.

However, the entire history of the discipline can be summed up as a deconstruction of the initial postulate of market efficiency. It begins with Marx, who certainly falls within the framework of the classics, but considers that, in the struggle between social classes for the sharing of collective production, the State is the “charged with power of the bourgeoisie”, incapable by nature of making capitalism escape pauperization and the crises engendered according to him by the free functioning of the markets.

Dominant position of monopolies

The greatest deconstructors were in fact the neoclassicals themselves, from the end of the 19th century.and century. Therefore, like the classics and against Marx, from the postulate of the superiority of free markets, Alfred Marshall (1842-1924), Arthur Pigou (1877-1959) and others were quick to identify and analyze important “market imperfections”, which required the intervention of State.

First, there are “pure public goods” which, once produced, cannot be appropriated, and whose consumption by one does not hinder that of another – for example a public lighting system: only the he State can decide on the volume of a public good to be produced and compel citizens to finance it through taxes. Secondly, certain interactions between economic actors take place outside any market: these are “externalities”. Some are positive (for example the dissemination of knowledge), others negative (for example pollution). The State must correct them, otherwise they move the economy away from the optimum promised by the harmonious functioning of the markets. Third, monopolies abuse their dominant market position. The state must ban them, or dismantle them. In short, the idea that the State should correct these market imperfections has therefore been accepted since the beginning of the 20th century.and century.

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