Instability, Crisis, and the Limits of Policy Making

Abstract

Beginning with the classical school, the predominant view among economists has been that the virtue of a private enterprise economy depends upon its ability to regulate itself and operate as a self-sustaining organization. The importance of self-regulation stems, of course, from a link between private interest and public good. Modern economists (of the neoclassical school) tend to equate the public good with the satisfaction of private interests, making self-regulation desirable precisely because it eliminates any goals for the economy not defined by private persons acting in pursuit of their particular ends. The classical economics of Adam Smith still distinguished between private ends and public good, but considered the pursuit of private ends to be the only effective way of accomplishing the public good.