Jennings, Frederic (2007) The Design of Free-Market Economies in a Post-Neoclassical World. In: Change, Rules and Institutions: Law and Economics in the Context of Development, 29-30 Sept 2007, SOAS, London, England. (Submitted)
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The ‘Washington Consensus’ supporting competitive frames and market solutions in economics and law was shown inadequate to address social problems in non-U.S. settings. So would diversity and dynamics suggest theories in need of adjustment to other realities such as culture, increasing returns and market power. Reform must account for an economics of falling cost, ecological limits and complementarity in our relations. Such shall open new applications for economics and law. In this paper a theory of planning horizons is introduced and then employed to raise some meaningful questions about the neoclassical view with respect to its substitution, decreasing returns and independence assumptions. Suppositions of complementarity, increasing returns and interdependence suggest that competition is inefficient by upholding a myopic culture resistant to change. Growth – though long believed to rise from markets and competitive values – may not derive from these sources. Instead, as civilizations advance, shifting from material wants to higher-order intangible output, they evolve from market tradeoffs (substitution and scarcity) into realms of common need (complementarity and abundance). If so, then neoclassical arguments shall no longer apply to any advanced information economy also restrained by its ecology. Indeed, this paper opens standard theory into a more general framework constructing ‘horizon effects’ into a case for cooperation – as more efficient than competition for all long-term problems of growth. The case is made that competition is keeping us stupid and immature, rewarding a myopic culture at the expense of learning and trust, therefore retarding economic growth instead of encouraging it as believed. The policy implications of horizonal theory are explored, with respect to regulatory aims and economic concerns. Such an approach emphasizes strict constraints against entry barriers, ecological harm, market power abuse and ethical lapses. Social cohesion – not competition – is sought as a means to extend horizons and thereby increase efficiency, equity and ecological health. The overriding importance of horizon effects for regulatory assessment dominates other orthodox standards in economics and law. In sum, much of the reason for the failure of the Washington Consensus stems from myopic concerns central to any horizonal view. Reframing economics along horizonal lines suggests some meaningful insight to how regulations should be designed to keep pace with this approach in economics and law.
|Item Type:||Conference or Workshop Items (Paper)|
|Keywords:||Washington Consensus, Reform, Growth, Ecology|
|SOAS Departments & Centres:||Faculty of Law and Social Sciences > School of Law|
|Depositing User:||Dr Ioannis Glinavos|
|Date Deposited:||27 Oct 2007|
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