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What makes a market economy? : Schumpeter, Smith and Walras on the coordination problem

By Matthew Watson


The tradition of modern political economy is founded upon attempts to show how a market economy of autonomous individuals can function smoothly in the absence of a central authority to coordinate economic activity. This has become known, for obvious reasons, as the coordination problem. As suggested by the title of this article, to confront the coordination problem is to focus upon the question, ‘what makes a market economy?’. In the pages that follow, I argue that the answer to such a question lies not, as we might expect, in the realm of economics, but in that of moral philosophy. In order to sustain this argument, I revisit debates about the essence of the market economy which are to be found in the history of economic thought literature, but which are almost entirely ignored by modern economists

Topics: HB
Publisher: Routledge
Year: 2005
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