Complementing and Refining the Abstract Theory of Policymaking
This chapter has accomplished a number of tasks. After the first four chapters sketched an abstract theory of policymaking and a fifth chapter applied our conception of economic policy to the main current issues, in this chapter we have tried to refine the theory and application of the previous chapters.
We have done so from three points of view. The first refers to suitable institutions disciplining and directing both the private and public agents for correct decisions through signals and incentives. In addition, we have raised the issue of the model used for policymaking and its congruence with the private sector's model. Finally, we have discussed the need for more realistic assumptions about effective policymaking, notably with reference to the incorporation of political economy concepts and the need of ensuring conditions for a democratic government in systems with economic inequality. When noting the need for realism in devising institutions and policy, one should not forget that some degree of abstract and even utopian thinking is useful and needed in order not to become prisoners of compromises and special interests.[125] In a number of points, we have dealt with the issue of a proper institutional setting, which is the object of Chapter 7 as a unifying concept of economic policy as a discipline.
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