The new international economic order and primary commodities: prices and power

Abstract

There is a well-worn saying that if two economists meet and exchange views, there will be three economic theories put forward. To the extent that this is saying that there is no one economic theory which is recognised as 'correct' or 'proven' by some unchallenged scientific test, I go along with it. Indeed, I would go further and say that it is healthy to recognise that there are competing theories in economics, as well as in the other 'social sciences'. In economics these competing theories make up an important part of the ideology of different interest groups within capitalist society. But in the same way as the power of the different interest groups has varied over time, so the dominance of the theories has varied. It is beyond the scope of this paper to go beyond a brief introduction, but the important point to emphasise is that these different approaches permeate all economics including international economics and, what is relevant here, the analysis of how the markets for primary commodities work or should work. A summary of the three schools of economic thought is given in Table 1 for a longer discussion of the three schools, their assumptions and their characteristics please refer to Cameron, Cole and Edwards (1980).