Edited by Geoffrey M. Hodgson
Chapter 3: The meaning and role of power in economic theories
David Young INTRODUCTION The meaning and signiﬁcance of power in economic analysis has seldom been a subject that has engaged the efforts of mainstream neoclassical theorists. That is not to say that the term ‘power’ is never used or that it does not play a signiﬁcant role in certain models. But, it tends to be used in a very speciﬁc and narrow way and its alternative meanings and wider signiﬁcance are seldom acknowledged. In 1971 Rothschild commented that as ‘in other important social ﬁelds we should expect that individuals and groups will struggle for position; that power will be used to improve one’s chances in the economic “game”. Power should, therefore, be a recurrent theme in economic studies of a theoretical or applied nature. Yet if we look at the main run of economic theory over the past hundred years we ﬁnd that it is characterized by a strange lack of power considerations’ (Rothschild, 1971, p. 7). This state of affairs has fundamentally changed very little. To a large extent, this neglect has continued almost uninterrupted as mainstream economists reﬁne and extend the basic model postulated by neoclassical theory. Despite more common usage of the term ‘power’ in mainstream game-theoretic analysis, its meaning is still constrained by the conception of neoclassical competition, and so the general neglect of ‘power’ in mainstream analysis remains. The main objectives of this chapter are to consider the alternative meanings of ‘power’ and to assess the different interpretations and roles...
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