From Colonial Past to Global Reality
New Horizons in Competition Law and Economics series
Chapter 2: The economic view
It is in the history of economic ideas that one is able to identify the clearest and most linear evolution towards acceptance and even appreciation of economic power. Unlike philosophy, characterized by ups and downs, typical of the speculative nature of philosophical reasoning, economics experiences a much more linear development, which leads to a strong pragmatism. The apparent scientism that it involves from the classical liberals and that is exacerbated by the mathematical methodology introduced by marginalist microeconomics causes the evolution of economic ideas to be linear and even predictable. The starting point of modern economic study is undoubtedly the work of the classical liberals Adam Smith, Jeremy Bentham and John Stuart Mill. It is important to highlight not only the well-known defects but also the qualities of liberal thought. On one hand, the strongly liberal ideology underpinning this theory caused the authors to disregard completely any possible failure in the market. Although Smith and Mill make express reference to weaknesses and/or to differences in information from various market participants, they do not believe that these problems are able to minimally affect the model. There is, however, in classical economics, especially in Adam Smith, something positive that would be completely lost in the subsequent ‘developments’ of economic theory. There is no concern among the classics to define the results of the economic process. There is no attempt to formulate equilibrium models because, at the time, it lacked the instrument to do so.
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