Power and Economic Institutions: Reinterpretations in Economic History.

McCandless, Amy Thompson

Power and Economic Institutions raises numerous questions about the assumptions of economic behavior and change made by neoclassical economists. The eight essays in the volume, revised versions of conference papers presented at the 1986 Swedish Collegium for Advanced Study in the Social Sciences, focus on the ways in which power relationships and economic institutions shape economic thought and action. The authors reject what they see as "a rationalistic and utilitarian tradition within political economics . . . to model economic behavior and change as an historical and deductive science based upon abstract individuals maximizing utility under constraints" |p. 4~.

Bo Gustafsson, the editor of the volume, is a professor in economic history at Uppsala University and director of the Swedish Collegium for Advanced Study in the Social Sciences. The other contributors include two of Gustafsson's colleagues at Uppsala and professors in economics and economic history from India, England, and the United States. Although Gustafsson's introduction provides a historical framework for the economic theories discussed in the essays, the volume lacks the thematic continuity and developmental organization of a monograph.

The essay by Stephen A. Marglin, a professor of economics at Harvard University, is the strongest piece of the eight. Marglin's chapter, entitled

"Understanding Capitalism: Control versus Efficiency," compares the views of "mainstream" and "radical" economists on various aspects of economic development. Because most of the other contributors cite Marglin's work, this probably should have been the lead essay.

Marglin makes no attempt to hide his bias. Unlike the mainstream economists whom he criticizes, he does not believe that economics is "a neutral, value-free science with eternal truths." He argues that class is a much better unit of analysis than household and that the workplace "operates by command rather than through markets" |p. 228~. "Capitalism," he writes, "inherently tends to appropriate control of process and product to the capitalist; and, by so doing, denies meaningful and satisfying work to the typical worker" |p. 233~. Although mainstream economists attribute the growth of the factory system to its efficiency as a means of production, Marglin believes that capitalists preferred factory organization to the putting out system because it gave them far more control over their work force.

Despite his criticisms of capitalism, Marglin is not so naive to think that the liberation of the workplace will naturally follow the abolition of capitalism: "the commissar," he notes, "is no less formidable an obstacle to workers' control than is the capitalist" |p. 250~. He shares the view of other radical economists that human liberation will only come when the "participatory principles" of Western political democracy are extended to the economy |p. 229~.

The other essays in the volume examine power and economic relationships on a smaller scale than Marglin. Amit Bhaduri, an Indian economist, considers the importance of class power relations to understanding economic organization in traditional agricultural societies. Bo Gustafsson looks at the ways in which medieval craft guilds create functional markets for their membership. Stefano Fenoaltea criticizes the "Whig" view of the scattered strip farming used in Europe before the Industrial Revolution.

The most provocative piece is probably that by William Lazonick on "Organizations and Markets in Capitalist Development." Lazonick, a professor of economic history at Barnard College, Columbia University, believes that the best remedy for the ailing British and American economies is not a "return to unfettered individualism" but rather the development of a "collective capitalism" whereby "business enterprises use organizations rather than markets to coordinate economic activities within enterprises" |p. 253~. Organizational coordination, Lazonick notes, has been the key to the Japanese domination of the international market. "By supporting the development of educational institutions, financial systems, communications networks and public sector research and development organizations," the American and British governments could similarly create more competitive, corporate forms of business enterprise |p. 296~.

Power and Economic Institutions provides an interesting summary of the literature on economic behavior and change for the undergraduate studying for comprehensive examinations or for the graduate preparing for preliminary examinations. Most professors will find its focus too narrow to use as a supplemental reading in a course in economics or economic history. Despite revisions and editing, the essays still read like the conference papers they were, and seventy dollars is a lot of money to pay for a conference proceedings!