Prelude to Political Economy

A Study of the Social and Political Foundations of Economics

• Author(s): Kaushik Basu,
• Publisher: Oxford University Press
• Pages: 288
• ISBN_10: 0198296711
  ISBN_13: 9780198296713
  
• Language: en
• Categories: Business & Economics / Economics / General , Business & Economics / Economics / Theory , Business & Economics / Economics / Social & Behavioral , Business & Economics / Industries / General , Political Science / Political Economy , Political Science / Public Policy / Economic Policy ,

Description:... Mainstream economics was founded on many strong assumptions. Institutions and politics were treated as immaterial, government as exogenous, social norms as epiphenomena. As the horizons of economic inquiry have broadened, these assumptions have become hindrance rather than aid. If we want to understand why some economies succeed and some fail, why some governments are effective and others not, why some communities prosper while others stagnate, it is essential to view economics as embedded in politics and society. This is a study of this embeddedness; it argues for an inclusive approach to institutions and the state. Modern economics recognizes that individuals' pursuitof their own selfish ends can result in socially suboptimal outcomes - the "Prisoners Dilemma" being the stark example. It has been suggested that what we need in such an eventuality is third-party intervention, which can take the form of imposing punishment on players. Kaushik Basu objects to this method of wishing third parties out of thin air.