Competing Paradigmatic Views

 How might different economists address Different Microeconomic Issues?

1. Consider the issue of Negative Externalities – When a third party suffers a loss from the actions of others.  For example, consider the massive social costs associated with carbon emissions and climate change.

• Conservative Economists: Argue that the solution to market failure associated with externalities is to assign property rights. If the party causing or impacted by the externality has property rights, then markets and accurate prices emerge.
• Progressive Economists: Argue that the government is needed to assist in correcting for externalities. Taxes and/or regulations can be instituted that require producers of externalities to account for the social costs they have generated.
• Radical Economists: Argue that externalities are pervasive in market economies.   Assigning property rights encourages producers of externalities to produce more negative externalities in an effort to extort payments from those afflicted.  Also it is impossible to tax and/or regulate all externalities.  An alternative to the market, as an allocative institution, is needed.

How might different economists address structural issues in economics?

1. Consider the issue of Preferred Economic Institutional Structure(s),

• Conservative Economists: Argue that the free market is the ideal institution for allocating resources to their best (socially optimal) outcomes. Advocate that government should be limited to institutions useful toward the defense of private property and the enforcement of economic contracts.
• Progressive Economists: Argue that as a result of market failure such as environmental pollution and significant unemployment, institutions, typically government institutions, are necessary in order to correct market failure and return markets to a more efficient allocation of resources.
• Radical Economists: Argue that government institutions are an incomplete and ineffective mechanism for addressing market failure. Advocate for the creation of alternative institutions, such as worker cooperatives, that are designed to challenge and potentially supplant institutions favorable to the current operation of the economic system.

How might different economists address economic development issues?

1. Consider the issue of Income Inequality,

• Conservative Economists: Argue that income inequality arises from productivity differences that emerge between and among individuals.  Efforts to reduce inequality should be avoided as they distort incentives and market allocation.
• Progressive Economists: Argue that income inequality results from social circumstances.  Children born into higher income (higher wealth) families have more opportunities available to garner both the resources and skills necessary for higher incomes.  Hence, these economists favor government programs that promote equality of opportunity.
• Radical Economists: Argue that income inequality is a byproduct of a class-based economic system.  Also inequality is exacerbated by social circumstances.  Generally, they would support government programs that promote equality of opportunity, however, also argue that those programs cannot eliminate inequality in a system built upon inequality.

How might different economists address world economic issues?

1. Consider the issue of Global Poverty,

• Conservative Economists: Argue that free trade between nations will drive specialization and the expansion of material production, thus gradually reducing global poverty.
• Progressive Economists: Argue for a degree of government intervention in international trade. Suggest trade via such policies as infant industry, fair labor standards, and environmental protections. Trade is an economic development tool.
• Radical Economists: Argue that international trade worsens class tensions. Low wages in developing countries cause wages to decline in developed countries.  Poverty is a part of capitalism, free trade and/or managed trade cannot end global poverty.