Confronting Power in Economics: A Pragmatic Evaluation
All social sciences have in common their preoccupation with human interaction. Maiiistream economics has traditionally preferred to assume that such interaction is essentially harmonious, if not because of the intrinsic nature of human beings, at least by virtue of their subservience to the Invisible Hand. Generally, institutionalists, following Charles Darwin, have always assumed that human interaction is essentially based on conflict; therefore, the pursuit of power by participants in the economy-the ability to prevail over others-must always be assumed.' Coping with this pursuit must, therefore, be a major concern of any social science. Mainstream economics confronts the implications of concentrated power from two perspectives, one theoretical and the other applied. Formal theory was amended many years ago to incorporate oligopoly as a market structure intermediate between competition and monopoly. This effort to inject "realism" into economic theory remains to this day, we shall see, one of the least satisfactory aspects of conventional theory. In applied economics, the field known as industrial organization has attempted to measure concentration and to explore its implications for resource allocation via markets. It has led to a variety of possible evaluative