UNIVERSITY OF THESSALY

2nd International Conference on Economic and Social History

"Markets" and Politics
Private interests and public authority (18th-20th centuries)

Volos, 10-12 February 2012

The concept of the conference Organizers and sponsors Participants The conference programme The conference proceedings

Abstracts

Vassilis Roussopoulos The engagement of economic theories in the struggle of interests

The influence of ideology on the economic theories has been a topic of many authors. For economic reasons we will only state the views of the representatives of the three main institutional schools of the economic science; the Marxist school, the German order theory and the American new institutional school.
According to Karl Marx the quality of the economic theories for the capitalism followed the evolution of the economic system; scientific at the beginning for as long the class struggle remained latent, apologetic after the conquest of authority from the bourgeoisie and critical when the contradictions of the system came to maturity.
In the contemporary Marxist bibliography a relativity of the apologetic character of the economic theory of the capitalism is done; the bourgeois economic theory apart from the ideological function maintains the function of the economic policy as well. The first intends to justify and beautify the system and the second to contribute to the decision making of the economic policy. During the accomplishment of the ideological function the bourgeois economic theory has as a starting point the harmony of interests. Thus, there is a contradiction between the two functions because the function of the economic policy should take into consideration the different social structure and the contrast of interests.
Walter Eucken (1891-1950), slightly known abroad, is considered as the father of the contemporary economic science of neoliberal edition in Germany. (Freiburg’s school). According to Eucken everyone’s opinion of general economic relations is formed by the real or the supposed situation of its interests. Sometimes even economic theories become ideologies of interests. Or even the opposite, ideologies of interests are accepted as part of the economic science. A. Schüller of the same school poses the question, why in the economic theory have been imposed the representatives of a (under condition) harmony position, while in the day to day of the economic policy and in the social-ethic conversation dominates the conflict position.
According to Douglass C. North, main representative of the new institutional school, the ideology does not lessen the scientism of the economic theory, because there is the test of refutation of competitive suppositions. However, he then relates his opinion; just because the refutations are not unambiguous, there continues to exist a variety of theories and suppositions.
On the basis of the above views of the three schools we will examine two matters. How the ideology in the economic theories is involved and how and when the refutation of the economic theories is done.
From the ideology and from the aiming objectives of the economic policy derive influences towards the economic theories during their formation. The ideology is already involved in the first basic sentences of a theory or of a model and influences the context and the results of the economic theories, as well as the effectiveness of the economic policy.
In a historical retrospection the relation of the political ideologies and of the economic theories in the economic science as well as the issue of the refutation of theories are examined. Adam Smith was against the privileges of landowners and of the protectionism of the merchants and for the removal of the market’s restrictions, something that was desired by the up and coming industrial class. In the classical and neoclassical school the idea of the harmony of interests and the automatism of the market dominates something which gives solutions to all the economical problems. After the great economic crisis of 1929 the neoclassical school was replaced from the macroeconomic theory of Keynes. On the contrary Karl Marx, motivated by the economic reality, stresses the conflict between capital and labor and advocated the replacement of the capitalistic system with the communist system for the realization of the ideology of the economic liberty and equality. The system of the planned economy failed, as the events of 1989 showed. The German historic school with a starting point the national ideology is against the liberal theory and for the domestic capital with the embodiment of the working class as a measurement of protection of the Marxism’s influence. The historic school failed to create one economic theory and was replaced by the main stream economy. J. M. Keynes with the theory of insufficiency of the aggregated demand is for the maintenance of the capitalistic system with another economic policy, which embodies the working class for economic reasons and not for political or social or ethical ones. Keynes’ economic policy turned out to be untimely, when in the 1970 decade the economic conditions changed. W. Eucken’s theory and M. Friedman’s monetary theory is a modern edition of the classical liberalism. Friedman’s theory was characterized as “the counter-revolution” against the “Keynesian revolution”. Eucken’s neoliberalism showed its limits with the economic crisis of 1966 in Germany. The results of Friedman’s monetarism in England and in the United States at the 1980 decade are controversial.
The neoliberal globalization seems to reach its end after the economic crisis of 2008 which showed the failure of free market to self regulate and self cure. The governments in both sides of the Atlantic proceeded to intervention policies and some nationalization of banks in order to stabilize the economic condition, contrary to every sense of the neoliberal ideology.
The European Monetary Union is structured on the basis of the ideology of the neoclassical school. It is supposed that the mechanism of the market will bring the convergence among economies of different economical starting point and capabilities of development, without common economic and general common policy and without any permanent equalizing mechanism. In case of a crisis, as now, the only tool of each country for strengthening the competitiveness is the so called interior devaluation, which according to the neoclassical theory will bring a new equilibrium of salaries and prices at a lower level. But the decrease of salaries first of all leads to depression while the decrease of prices that will follow is questionable. For the time being in Greece we have an increase of the inflation.
Conclusions: Just because the refutation is done with a time lag of decades after a great economic crisis, the ideological function of the economic theories finds room for expression and action. For this reason the economic science cannot give trustworthy solutions to the problems of the modern world.
Despite the ideology about the end of ideologies, ideologies continue to exist. In the economic science an open dialogue about the political ideologies and the value systems that each economic school follows, is considered necessary. The purpose is on the one hand the comparison and the confrontation of ideologies and on the other hand the comparison between ideology conception and economic results as a base for a critical economic science.


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