Economic Thought 7.2: 15-53, 2018 Cherchez la Firme: Redressing the Missing – Meso – Middle in Mainstream Economics Stuart Holland and Andrew Black, Faculty of Economics of the University of Coimbra, Portugal; Faculty of Economics of Brunel University, UK.
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[email protected] Abstract Aristotle warned against a ‘missing middle’ in logic (Gk Mesos – middle; intermediate). This paper submits that one of the reasons why there has been no major breakthrough in macroeconomics since the financial crisis of 2007-08 has been a missing middle in mainstream micro-macro syntheses, constrained by partial and general equilibrium premises. It maintains that transcending this needs recognition that large and dominant multinational corporations between small micro firms and macro outcomes – while also influencing both – merit the conceptual paradigm of mesoeconomics. Drawing on a range of uses of the concept, it relates this to reasons for ‘too big to fail’ and suggests implications for policies to gain accountability of big business, including how a meso dimension to input-output could yield transparency on risk-prone financial transactions by banks, and of corporations contributing to climate change. It also critiques misrepresentation of Walras and Pareto, as well as suggesting areas for research which could address, and potentially redress, ‘missing middles’ in mainstream micro-macro syntheses. Key words: meso, global, governance, environment, accountability JEL as yet has no classification for meso rather than micro and macroeconomics. The already wide range of literature cited in this paper suggests that it should. 1. Introduction In an address in October 2016, when still heading the US Federal Reserve, Janet Yellen observed that the 1930s Depression motivated new ways of thinking about economic phenomena, and questioned why a Great Recovery in economic thought has proved elusive since the 2007-08 financial crisis (Yellen, 2016).