ECONOMIC SCIENCE IN THE TRAP OF GLOBALIZATION

Fundamental economic subjects of our time are transnational corporations (TNCs) and transnational banks as leaders and mirror reflections of the globalization process. Basic microeconomic principle of their behavior is the principle of increasing returns and diminishing costs! Transnationalization or globalization of the world economy forms a global market whose one of the main characteristic is imperfect competition with the prevailing oligopolistic market morphology. While the existing microeconomic theory helps to understand how transnational corporations do business, macroeconomic theory of the global economy is not even on the horizon. One wonders whether any of the assumptions of virtual neoclassicism is valid in such emerging global world. If not, then neoclassicism during the time of global economy deserves to go into the dustbin of history. Again, the global economy does not have a theoretical construct as seen from the so-called macro plan. What is optimized in a global economy? Is it GDP? Who’s GDP should be optimized: global GDP or GDP related to individual non-sovereign states that have deprived hemselves of their resources during privatization and now have nothing to manage? What about employment? What about optimal allocation of resources at macro-level or what about general equilibrium? We can ask the same questions even for the EU as a potential federation of member states. It appears that we are caught in the trap between economic realities of globalization and application of virtual neoclassicism and/or possibly its offshoots (schools) relevant to the territorial state which leads us directly to mega-capitalism.