The economic debate on power: a Marxist critique

Abstract

In the economic debate on power, seemingly opposite positions have been presented. Contractualists have claimed that power relations do not exist in capitalism, and radicals have maintained that they are ubiquitous. In the middle, transaction costs and property rights economists have argued that power relations exist only within the firm. The underlying conception, however, is the same: power is an interpersonal relation caused by imperfections in the decision-making context and is incompatible with Walrasian competition. The difference among these theories involves their viewpoints on the concrete spread of imperfections in reality. The thesis of this paper is that this narrow conception of power is a consequence of neoclassical methodology. Following Marx, I analyze power as a social relation, and I discuss three problematic aspects of the neoclassical conception: its individualistic methodology, the assumption of universal rather than historical categories, and an ontology that conflates production and circulation.

Keywords::

• power
• Walrasian competition
• methodological individualism
• production and circulation
• imperfections
• new institutionalism
• radical political economics
• Marx

Jel Classification:::

• L220
• D230
• B210

Notes

^1. In Palermo (2000), I argue that new institutional economics fails both in its attempts (1) to theoretically characterize the capitalist firm and (2) to analyze power relations in capitalism. In Ankarloo and Palermo (2004), we focus the critique on Williamson's transaction costs economics.

^2. Becker's (1992, p. 68) comment to Cheung (1992) is sharp: ‘We generally know a firm when we see one.’

^3. Elsewhere, I have developed a Marxist view of power, and I have argued that capitalism is a system of power (Palermo, 2007). Nevertheless, I would not locate my position on the far left boundary of economic relations because this representation presupposes an antagonism between power and Walrasian competition, which is meaningless from a Marxist perspective.