Lost in Translation: Scarcity and Small Government Within Mainstream Economics

Abstract

Mainstream economic theory entails a series of non-traditional definitions which serve to obfuscate how the economy works and create a narrative that mainstream economists often refer to as “the economic way of thinking.” Two such narrative creating topics within the mainstream arsenal are the stories of scarcity and small government. Mainstream theory distorts these concepts so that their definition in economics texts differ dramatically from what the terms mean in regular parlance. Post-Keynesian Institutionalist (PKI) economists can serve as translators of this mainstream narrative. This essay uses PKI analysis to show that the mainstream narrative serves to conceal a vision of society that is profoundly antisocial, narrowly conceived, and financially stratified. Unfortunately, this mainstream obfuscation has itself become a social institution that is one of the major barriers blocking desperately needed political change. By serving as translators, PKI economists can help to tear down this destructive institution.

Keywords:

• Post-Keynesian Institutional Economics
• scarcity assumption
• property rights
• small government
• economic imperialism

JEL Classification Codes:

• A12
• A13
• B5
• B52

Notes

1 This mainstream vision of the economy is readily observable in economic textbooks and “top” journals.

2 According to Robbins (1932, 15), “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”

3 Mr. Gault would like to start up a major corporation helping to support the world on his Atlas-like shoulders. He believes his ability to optimize makes him a philosopher and inventor of unmatched quality. Unfortunately, his ability to blossom may run into roadblocks as will soon be seen. Please note that any similarity of name between Mr. Gault and other fictious characters and real people is merely coincidental.

4 There is a second potential possibility in most modern economies due to government programs such as disability support, social security, or other public assistance, all of which would likely be challenged as inappropriate under the mainstream call for “small” government.

5 Comparing a modern worker’s life to a feudal peasant’s life offers an interesting thought experiment. The peasant was born into his economic role and failure to do as the role required would bring down the lord’s wrath quickly. The modern worker has the ability to choose their role and who they will serve, but failure to choose a lord will still result in the state’s use of violence. So the difference between a modern worker and a peasant does not appear to be large.

Additional information

Notes on contributors

Timothy A. Wunder

Timothy Wunder is at the University of Texas at Arlington. This article derives from the author’s “What Do Economists Really Mean? Post-Keynesian Institutionalists as Economic Translators,” in A Modern Guide to Post-Keynesian Institutional Economics, chapter 10, edited by Charles J. Whalen, Edward Elgar (2022).