Eclipsed Sun of Bastiat: Adjusted Look at Market Allocation in Imperfect World

Abstract

Even though neoclassical orthodox economists do reject Keynesian macro economics due to its lack of micro foundation, it is common knowledge within heterodox economic schools that the micro foundation of orthodox neoclassical economics is not sound either. However the fatal mistake of heterodox economics is to crown state as leading engine of economic development, after identifying failures of perfect market. Since imperfection of market does not grantee preference toward state intervention and since to reject an orthodox market theory is not the same as rejecting the virtue of market itself, evolutionary justification for virtue of market is given in this paper by heavily depending on existing literature of economics, other social sciences and natural sciences. Unless we are able to start from enlightened point of view to eliminate this never ending reincarnation of ignorance, our pendulum of economic policy will never stop swinging from market or state, one after another, as almighty institution which will solve every problem of development in vain.