Commodities in Economics: Loving or Hating Complexity

Abstract

A review of economic thought since the sixteenth century reveals two streams of economic discourse, dirigisme and laissez-faire. Starting with the mercantilists, dirigiste approaches to economics embrace the real-world complexity of commodities that often differ greatly in attributes that are growth and rent-augmenting. Most importantly, this means that free trade is likely to be polarizing: it concentrates growth- and rent-augmenting commodities in countries that already enjoy a head start in these commodities. Advanced countries, therefore, support laissez-faire, while lagging countries tend to support dirigisme. In order to rationalize their laissez-faire stance, advanced countries began developing a new economic discourse that strips commodities of their complexity. The foundations for this ideological reconstruction of economics were first laid by Adam Smith; this process eventually reached its climax with the neoclassical economists who stripped commodities down to one attribute: their capital intensity. In opposition to this laissez-faire economics, other writers, supportive of the interests of lagging countries, brought complexity back into their economic discourse; they argued that lagging countries had a fighting chance of catching up to advanced economies only by indigenizing a growing array of growth and rent-augmenting commodities.