Reframing Economics

Reframing Economics

Economic Action as Imperfect Cooperation

Roger A. McCain

The objectives of this book are twofold. Firstly, it proposes that economics should be defined as a study of imperfect cooperation. Secondly, it elucidates the continuities that extend from classical political economy through the neoclassical, Keynesian, and modern economics of the twenty-first century.

Chapter 10: Political economy

Roger A. McCain

Subjects: economics and finance, game theory, history of economic thought, methodology of economics


Chapter 8 speculated about a grand coalition of the whole society, and how it might adapt to the cost of information. We found that this hypothetical grand coalition would not be able to rely exclusively on incentive-compatible rules, but would operate as an organization, with an agent or agency of some sort to enforce an approximation to a cooperative solution for the whole society. Chapter 9 continued the speculation with a focus on what are known as macroeconomic policies. If we suggest that actual governments act as such agents, then we are paralleling the ideas of the social contract theorists in political philosophy. There are some differences. One major point of social contract theory is the normative argument that we are under a moral obligation to obey the state. The purpose of this work is not to draw conclusions about moral obligation but to understand the mixture of cooperative and non-cooperative action that we observe in the actual world. Nevertheless, the insights of the social contract theorists will be useful to us, and particularly those of the founder of the western social contract tradition, Thomas Hobbes.

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