CLASSICAL LIBERALISM: THE FOUNDATION FOR A NEW ECONOMICS?

In Robust Political Economy, Mark Pennington argues for a minimal state founded not on neoclassical economic principles but on a return to classical liberalism. Pennington makes his case on the basis of Hayek's "knowledge" problem and public-choice theory's "incentive" problem. While this is a welcome start, classical liberalism is a promising agenda for a new economics, and for the "reform of capitalism," only if it is accompanied by an explicit rejection of Milton Friedman's subordination of normative to positive economics, and by a move beyond the traditional division of the economy into twin spheres (the state and the market) to embrace a third element: the domestic sphere.