Political Economy Students' Journal

Keywords: Power, Economics, Inequality, Pluralism

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Power (/ˈpaʊə/), noun – 1. the capacity or ability to direct or influence the behaviour of others or the course of events. 2. the force that compels. 3. what you won’t find in a mainstream  economics textbook

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It is hard to look at today’s society (or any other in the past, for that matter) and not look at the power relationships that are formed between individuals and between individuals and institutions. Be them the most or less legitimated by law, the largest or smallest in scale, the most visible or invisible, it would be unwise to ignore them in order to comprehend even the least oppressive and freer society. Direct coercion, agenda control or even the formation of a hegemonic ideology are all in some way present in human relationships, in our organization as a society and, sometimes, just submerged in our habits. These constitute forms of power that rule or condition all those relationships and, therefore, social life.  

However, if you ever feel tired of the intricate, complex and sometimes unfair prospects that a  society where power plays this sort of role can bring, you can just check your local library or bookstore and ask for an economics textbook, which is sure to transport you to a benign and powerless world. That is right, apart from the odd reference to heterodox economic theories in the history of economic thought, namely Marxist, students spend the vast majority of their time learning and doing mainstream economic analysis that completely disregards the agency of power. This is highlighted and criticized by Nobel-prize winner Joseph Stiglitz who says that  “concepts like exploitation and power” have been deemed “useless” by mainstream economists who “worry about introducing such emotionally charged words into the analysis”. This creates a notion that the actions which are political in some way or are done in a context of obedience to rules and coercion should not be studied in economics, and the voluntary actions and non-coercive relationships that arise mainly in the markets, should and would be indeed studied in economics. Now, we are soon disabused of this notion when we realise the massive divide that this sort of analysis would require between economic actions and agents and all other aspects of society in order for it to be viable. It is simply not verifiable in a reality where governments,  big firms, labour unions, financial institutions and advertisers use their political power to influence the economy and what it does is that it not only creates an analysis lacking in several aspects but also leaves a hiding space for ideology and power to be unnoticed and unregarded. 

This mainstream analysis could be seen as an alignment between neoclassical economics and a  liberal view of the social contract where the only coercive power would be the one needed for protection, granted by the state. Power should and normally would be absent elsewhere, and in the case, it arises in the market as an imperfection (as monopolies, oligopolies and cartels), anti-trust laws or incentives to cheat would take action, dissolve them and promote competition again. What we can observe though, is that cartels or other concentrated structures can maintain themselves for much longer than expected – in contrast to what would happen in an atomized and perfect market, concentration enables political power and incentivizes lobbying,  creating conditions for its continuation or even increase. Similarly, asymmetric power and information in the labour market create a context that is more complex than what 2 lines on a graph can show and goes way further than a simple voluntary relationship. Power plays a role and is clearly visible in most economic relationships whereas perfect competition is nowhere to be seen. Inequality data seems to back this all up and its dimension reinforces the need to rethink the role of power in economic relationships.

At the same time, economics as a subject is also both influenced by and influences power relationships. Unlike natural sciences, which economics has maybe obsessively tried to compare itself to over time, economic theories and ideas are very hard to verify universally. Thus, the direction and the financing of research and educational institutions may lead to interests being pushed and the environment or intellectual atmosphere promoted in those spaces could lead to hegemonic thought and ideology. This is especially the case in business-financed institutions and is, of course, a dangerous route to go down.  

Imbalances in the real world, namely in political forces, business (finance vs industry), means of production and society in general (including questions on diversity) can then create an imbalance in the ideas, not necessarily or at least not decisively on those thought, but on those that are produced, accepted and that can then thrive. These ideas will then influence the world around them in, quoting Keynes, a “more powerful way than what is commonly understood”.  On the other hand, a more equal balance of power between agents will lead to more divided and diverse conclusions in economic findings – to more pluralism. And more pluralism in economics will be deeply connected with the creation of a more equal society. Both the real economy and the classroom are important arenas to get this positive cycle to substitute the old vicious one. A good start is to take a proper look at the sociological and political theory studies that focus on the way power is formed, maintained, distributed and how it operates and maybe integrate them into economic analysis, as well as using the heterodox theories that do just that,  instead of keeping them on the very dusty shelf they are now. But this is only a topic of many that pluralism could bring into economic thought with repercussions as big as this, which is a  power in its own right, and a power that we should put into practice.