Democracia y Desarrollo para México

David A Mayer Foulkes () and Raúl García-Barrios
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David A Mayer Foulkes: Division of Economics, CIDE
Authors registered in the RePEc Author Service: David Arie Mayer-Foulkes

No DTE 547, Working Papers from CIDE, División de Economía

Abstract: We develop a point of view that synthesizes the main strands of economic thought, Neoclassical, Keynesian and Marxist, as well as the conclusions of the modern theory of economic growth, discourses that can hardly be thought to belong to the same discipline. These strands can be viewed as a single body of knowledge by taking a realistic perspective of economic reality that consists of the following elements. Competition in the market economy reaches a balance at a considerable level of concentration of production, which increases as regulation decreases. Financial markets in particular can function as instrument of economic concentration. Economic cycles are an essential feature of economic reality which is continuously present. The determinants of worker and capital participation in income include persistent features of conflict of interest. Finally, the economy deeply affects politics, community, family, and the quality of life. It follows that the Neoclassical model of perfect competition is an ideal that departs considerably from reality; that instability cannot be assumed away with perfect foresight, so that Keynesian economics and its developments are essential for understanding business and monetary cycles; and that the Marxist understanding of the impact of the logic of the markets on human interaction reflects permanent features of capitalism. Finally, a review of the theory of modern economic growth shows that none of the fundamental processes of development, technological change, human development, urbanization, demographic transition, and institutional change, can be understood by means of the neoclassical paradigm, instead requiring specific, particular descriptions including the imperfections characterizing each process. Modern economics thus provides the tools for an understanding of economics so long as this understanding is not forced into the straightjacket of any particular school. To this synthesis we add an ethical analysis. Even at their theoretical best, the ethical level of markets is insufficient for achieving an egalitarian society. This implies that it is indispensable to develop a sufficiently ethical level of governance, at the local, national and global levels, so as to adequately regulate economic activity and distribute its benefits. This is particularly important in the presence of poverty and development traps, and of the global sustainability challenge.

Keywords: Neoclassical; Keynesian; Marxist; governance (search for similar items in EconPapers)
JEL-codes: F43 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012-11
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