Conclusion
In his review of The New Palgrave: A Dictionary of Economics, Robert Heil- broner notes a striking fact: In a collection that runs over 4,000 pages and has 2,000 entries, there is no entry for “power” (Heilbroner, 1988:23).
We have noted some of the sources of resistance to power by neoclassical economics. Important segments of Marxian political economy also resist placing power at the center, displacing the concept of class. Resnick and Wolff take pains to distance themselves from Marxian and non-Marxian formulations that try to make power central “by counterposing power as the alternative essence of social structure and development...” (1987:334).Yet the appeal of building political economy on a foundation of power and wealth is strong. How can these two phenomena not be related, the naive realist might ask. While acknowledging this appeal, a good part of this chapter examined the difficulties of melding power and some central economic concepts. From our standpoint, there are two separate difficulties of placing political economy on a foundation of power.
The first problem is whether power by itself is enough to supply the (or “a”) content for politics. Suppose that our subject matter permits power actions (that is, suppose such actions are not prevented by markets). Does the existence of power by itself identify our subject matter as political? Our answer to this question is “generally no.” Power may exist within the firm, between firms, within the family, school, and religious groups. While power actions in these settings may have some political content, they are not intrinsically political. Politics is not identical to all relations of power and domination. So power can exist without definitionally entailing politics. And of the three core approaches to politics explored in our Chapter 1, only one (authoritative allocation of values) necessarily involves power or makes it focal.
Those (other than the state) who exercise power within the economy do so in the pursuit of their private interests. This need not (directly) involve a political struggle over the instruments and institutions of power (government). If not, then power-centered approaches to political economy have to do with politics only in a very limited sense of the word. Unlike the other approaches to political economy, power-centered approaches do not focus on the relation between private interests and public decision making. This sets the power-centered approaches apart.
The second problem with integrating power and economics concerns the capacity for activating a discussion of power within the terms provided by neoclassical economics. We started on a note that questioned the possibility of power relations within markets. We should be clear that rational choice, maximization of utilities, and exchange theory - all central to neoclassical economics - do not provide obstacles. In exercising or attempting to exercise power, people can be thought of as having goals, pursuing them in a costsensitive way, and employing threats and inducements in doing so (the latter typifying negative and positive exchange). We are not arguing that power is irrational or that its exercise takes us out of the realm of intentional behavior.
The obstacles presented by neoclassical economics center on the voluntary nature of exchange and the focus on efficiency. These two concepts go together and make power analysis difficult. If exchanges are voluntary, agents enter into them “of their own free will.” This in turn implies that no one expects to be worse off after the exchange. The exchange situation may have been “set up” (with choices and payoffs manipulated), or the options and constraints may be unequal, or both, but no matter. These factors are treated as parameters, as unanalyzed givens. If this accurately describes economic choice, power in the sense of “power over” is impossible to wield.
While the term “voluntary” applies to individual motivations for exchange, in neoclassical theory, efficiency applies to overall allocation. Neoclassical economists ask, given a set of agents, their preferences, endowments, and the technology available, if there are any further exchanges that will improve some (at least one) without making anyone worse off. The set of exchanges that satisfy these criteria are called Pareto-improving exchanges. They enhance efficiency. There are of course other possible exchanges, such as those that make some better off at the expense of others and some that might make both or all parties worse off.
The idea of efficiency ties economics to the first set of exchanges, those that improve the lot of some without damaging others. This deprives economics of one (some would say the crucial one) way of talking about power, namely the threat of imposing negative sanctions. This idea is rather central to politics and political science. Individuals pursue goals. Often these goals are in conflict. Sometimes agents pursue their goals “at the expense of” others; that is, they use power to threaten to make others worse off if they do not yield.
To the extent that neoclassical economics restricts its focus to efficient exchanges, it deprives itself of one way of talking about power. Other avenues are still open: the power to improve technology or the power to construct institutions within which agents can more efficiently pursue their preferences. Thus neoclassical economics retains the capacity to theorize about a substantial range of “power to” phenomena. However, it generally has not chosen to use the language of power. To the extent that neoclassical economics relinquishes its focus on efficiency, it opens itself up to “power over” thinking but ceases to become the science of allocative efficiency.