The evolution of socioeconomic order in the move to a market economy.

This paper addresses the problem of the formation of order in socioeconomic systems in transition. One approach, stemming from interpretations of the writings of Bernard Mandeville and Adam Smith, culminates in modern general equilibrium theory in economics. However, no coherent and adequate formal model of the generation of social order and economic equilibrium has yet been produced on the basis of its atomistic and individualistic assumptions. Furthermore, general equilibrium theory does not deal with economic systems in an adequate sense. It can represent neither true markets, nor money, nor key types of knowledge and uncertainty, nor real time. Finally, it does not support a policy of laissez-faire. In sum, the general equilibrium project now lies in ruins. It is argued here that rather than the interactions of atomistic and self-seeking individuals, real capitalist economies depend on complex relations of loyalty and trust, pervading civil society and its interpersonal relationships. The overcentralized economic systems of the former Eastern Bloc prevented the survival and development of these relations. Clearly, this has important consequences for economic policy in those countries now attempting to build modern capitalist market economies. [ABSTRACT FROM AUTHOR]