Power and Illusion in the Marketplace: Institutions and Technology

Abstract

Both in writing and in lectures, C. E. Ayres frequently quoted Thorstein Veblen's warning concerning triumph of imbecile institutions.1 Our times seem to be dominated by crisis-environmental crisis, energy crisis, and so on. In the United States, domestic economy and economic policy tools, once gloried for their efficacy and precision, are failing spectacularly. Government economists advise inaction on inflation and unemployment since, as they admit, they do not fully understand the causal forces. In many ways our response to crisis is following patterns that Ayres warned against. The system of ideas that led us to these crises, rather than being seen in need of revision or rethinking, is held to more firmly by some as the answer to all of our problems. Nowhere is faith manifested more than in the ability of markets and unhindered price signals to channel resources to problem areas, and nowhere is Ayres more cogent in his strictures than against the mysteries of the price system. In the Preface to the paperback edition of The Theory of Economic Progress, Ayres calls attention to his attack in the opening chapters against the with the of conventional economics.2 To Ayres, this obsession with market activity diverted attention from the technological processes and implied a causal relationship between buying and selling and economic well-being. Obviously, individuals