ABSTRACT
Economics is the social science that has concentrated on the study of the processes of exchange, and more particularly those exchanges that are mediated by money. The dominant influence on Western economic thought for the last two hundred years has come from the so-called classical and neo-classical theorists. Neo-classical economic theory proposes that this can be achieved most effectively through competition in a free economic market. Criticisms of neo-classical theory have focused first of all on whether the Pareto optimum is an adequate criterion of efficiency and secondly on whether the model is a sufficiently accurate picture of modern capitalism to provide guidance for government policy. The validity of the neo-classical case for severely limiting government activity in the provision of goods and services, in so far as it depends on arguments about economic efficiency, requires that these areas of market failure are of relatively minor significance.
