Economic theories encode rival justifications for who should receive resources

Evidence

Finally, economic theories are also partial and rival insofar as different economic ideas contain within them justifications for different distributions of resources. For example, as we shall see in chapter 4, both contemporary neoliberal and classical liberal economic theory focus on the microlevel supply-side of the economy; that is, on how saving leads to investment, which leads in turn to employment and to the wages that buy the products made by the workers themselves, which leads in turn to profits reinvested in the firm. No supply of investment, no demand and no consumption. Keynesian economics, in contrast, argues that consumption drives investment, not saving. For Keynesians it is the macro world of aggregates (income, consumption) and the demand-side of spending that matters. In a Keynesian world, consumers, not investors, are the heroes because consumers’ demands determine what investors supply. No demand, no supply of investment. Given these “rival views of market society,” as the economist Albert Hirschman once put it, who should get, for example, a tax cut? The Keynesian wants to give it to the poor so they will consume now to boost demand and consumption. Meanwhile, the neoliberal wants to give it to the rich to invest wisely. Different economic theories therefore empower, and disempower, different political and economic constituencies. — Mark Blyth, Austerity, 121

Categorization

• DEFINE: A crisp, symmetric definition of the supply-side vs Keynesian cleavage that grounds the whole austerity debate.
• XREF: The competing tax-cut prescriptions (poor-to-consume vs rich-to-invest) connect directly to the political economy of distribution in Mattei and to Hirschman’s rival views of market society. — connects to: Prejudice is best explained as rational resource expropriation by advantaged groups — , Rudman, Laurie A - On the Nature of…, 666; Public-choice logic applied to economists themselves reveals built-in incentives toward rent-seeking theories. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 597; Economic theories serve as blueprints for institutions, and faulty theories produce fragile ones — Mark Blyth, Austerity: The History of a Dangerous…, 120 (+6 more)

Broader Connections

• Economics functions as conflict over belief rather than objective science #expands (0.85) — Yanis Varoufakis, Technofeudalism, 779
• Economic justifications let financiers view profit-seeking as serving the common good #exemplifies (0.85)
• Market ideology conceals exploitation by making exchange stand in for production #exemplifies (0.85)
• Essentialist stereotypes justify unequal resource distribution rather than reflecting real differences #exemplifies (0.85) — John F. Dovidio, Peter Glick, Laurie A. Rudman, On the Nature of Prejudice, 1390
• Prejudice is best explained as rational resource expropriation by advantaged groups #expands (0.80) — , Rudman, Laurie A - On the Nature of…, 666
• Economics serves power more effectively when it operates in innocence of serving it #expands (0.80) — Clara E. Mattei, Escape from Capitalism, 241
• Public-choice logic applied to economists themselves reveals built-in incentives toward rent-seeking theories. #exemplifies (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 597
• Economic theories serve as blueprints for institutions, and faulty theories produce fragile ones #expands (0.75) — Mark Blyth, Austerity, 120