The problems we face after economics is understood

All this has a moral for our tale and provides a proper ending to it. In much of the West, and especially in our country, government is today much criticized and denounced. There is often good reason for the antipathy: governments can be – and perhaps always are – bureaucratic, slow-moving, inefficient, and irritating. They are not repositories of unsullied virtue, exemplary foresight, stirring vision.

What they are however, is the only means by which a body of people can provide itself with what it cannot obtain elsewhere: foreign policy and defense, law and order, the provision of public capital, and – crucial for our purpose – a counterforce against the unwanted effects that emerge from the private sector. That counterforce may not always be effective – there are plenty of unsolved problems in capitalism – but it is the only such capacity that exists.

In a word, no complex society can exist without government. That is why the public sector is as much a part of a capitalist order as is the private sector, which could not longer exist if government were somewhere to disappear. We should not forget, moreover, that he functions of government under capitalism are not only to provide defense and public capital and law and justice, but also to act as a kind of gyroscope or a steering mechanism when the nation needs a balancing counterweight or a hand on the steering wheel. (Where is the Invisible Hand of Adam Smith? Ed. comments) There will assuredly be such situations in the years ahead, as globalization and then global warming become even more insistent problems that require powerful guiding and containing forces.

Here, as so often, economic analysis goes just so far. In the end, large-scale changes require not just an adaptive revolutionary capitalism, but the elusive contribution of things that lie outside that framework, such as collective temper of peoples and the wisdom or folly of their leaders. Hence it seems proper to end this book with the admonition that we must come to understand our subject, not to achieve a Good Society, but to prepare ourselves for the really difficult problems that we will still face after economics is understood.

Robert Heilbroner and Lester Thurow in Economics Explained, 1982/1998