Africa Should Discard Mainstream Economic Theory

John Komlos

A chapter in The Palgrave Handbook of Africa’s Economic Sectors, 2022, pp 995-1017 from Springer

Abstract: Abstract Economists in developing countries should abandon the ideas enshrined in the Washington consensus, and resist teaching mainstream economic theory, because the idealized markets of mainstream economic theory differ greatly from real markets in ways that disadvantages those who are at the lower end of the global income distribution. The inconvenient truth is that real markets have numerous Achilles heels that prevent them working as described within the neoliberal framework. Real markets reduce the chances of those born into poverty to succeed in today’s complex global economy. These intrinsic imperfections, generally overlooked or trivialized by mainstream economists, are discussed in this essay. They include such factors as the costs associated with acquiring reliable information about market conditions, the myriad of problems associated with bounded rationality, manipulation of utility function of market participants.

Keywords: A00; B50; D60; J15; Z13; Information imperfections; Bounded rationality; Opportunistic behavior; Power; Exploitation (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-75556-0_39

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DOI: 10.1007/978-3-030-75556-0_39

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