Economics Department


Date of this Version

December 1989


Published by Journal of Economic Issues Vol. XXIII, No. 4, December 1989. Copyright © 1989 Journal of Economic Issues. Used by permission.


We are at a turning point in the United States with regard to state and local public pension funds. First there is a movement to use these pension funds to support new kinds of investment activities, and second, the current economic analysis being provided by economists of the neoclassical ideology is inconsistent with the community intent for the pensions. These pensions were established by the community for what Thorstein Veblen defined as parental purposes, meaning societal activity structured to provide for the common good and the welfare of others [Veblen 1937, pp. 25-38]. Parental institutions function to elevate the broad common welfare above the self-aggrandizment of a few. In contrast, neoclassical analysis is being conducted from the point of individual self-regard and with the assistance of the tools of methodology atomism. This allows those employing neoclassical ideology to assist in the encapsulation [See Bush 1987] of pension knowledge in opposition to the welfare of the community. If the pension funds are to accomplish community intent, it is, therefore, necessary to establish the primary criteria before the policy turn is made in the wrong direction.

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