Background
A coalition in economics refers to an alliance between individuals, firms, or political parties who align their strategies and policies to achieve shared objectives. Although the coalition members may have differing individual goals, they find mutual benefit in joining forces temporarily.
Historical Context
Coalitions have been present throughout economic history, evolving as agents sought alliances to gain competitive advantages or political authority. Historical examples reveal coalitions forming out of necessity, like during wartime economies or economic reforms requiring broad support.
Definitions and Concepts
A coalition is:
- An amalgamation of distinct entities, such as individuals or firms, uniting for common economic, political, or strategic purposes.
- A coalition government formed from the mutual agreement of two or more political parties to collaboratively hold power.
Essentially, coalitions are formed with the intent of leveraging collective action to increase influence or accomplish goals unattainable by singular entities.
Major Analytical Frameworks
Classical Economics
Classical economics typically does not extensively analyze coalitions, focusing instead on individual market forces and actors. However, classical theories acknowledge the role of cooperation in creating efficient markets.
Neoclassical Economics
Neoclassical economics addresses coalitions through game theory and the principles of cooperation and competition. It evaluates how coalitions form, maintain stability, and dissolve as situational variables and agent incentives shift.
Keynesian Economic
Keynesian views on coalitions might emphasize the role of large-scale, coordinated efforts in fiscal and monetary policy, primarily focusing on government coalitions driving economic intervention.
Marxian Economics
Marxian economics analyzes coalitions in terms of class struggle and the alliances between labor groups or capitalist interests to consolidate power and promote economic reforms or class advantages.
Institutional Economics
Institutional economics explores how coalitions can influence, create, or modify economic institutions and their regulatory frameworks. It places significant importance on the rules and norms governing coalition behavior.
Behavioral Economics
Behavioral economics studies coalitions by observing how psychological factors and social preferences influence cooperative behavior and decision outcomes among coalition members.
Post-Keynesian Economics
Post-Keynesian economics views coalitions through lenses such as income distribution and power dynamics, examining how various economic groups collaborate to affect changes in policies like wage controls or fiscal policies.
Austrian Economics
Austrian economics may analyze coalitions’ role in market entrepreneurship and decentralized decision-making, highlighting how voluntary alliances form in free-market environments.
Development Economics
Development economics considers coalitions in the context of economic growth and development, especially alliances between nations, states, and private sectors aiming to address socio-economic challenges.
Monetarism
Monetarism might analyze how coalitions impact inflation and monetary policy, particularly observing central bank coalitions and international agreements influencing money supply and economic stability.
Comparative Analysis
Coalitions across economic schools see varied interpretations but universally recognize the advantages and challenges of cooperative strategies. Successful coalitions achieve equilibrium benefiting all members, while unstable ones lead to shifts in alignment based on strategic gains.
Case Studies
Examples include coalitions in the European Union negotiating trade policies, and corporate coalitions in tech industries adjourning competitive advantages.
Suggested Books for Further Studies
- The Strategy of Conflict by Thomas C. Schelling
- Governing the Commons: The Evolution of Institutions for Collective Action by Elinor Ostrom
- Coalition Politics and Economic Development: Credibility and the Strength of Weak Governments by Hiski Haukkala
Related Terms with Definitions
- Alliance: A mutually beneficial agreement between parties, typically firms or nations, for combined actions towards shared objectives.
- Joint Venture: A business entity created by two or more parties to undertake economic activity together.
- Oligopoly: Market condition where a small number of firms hold a large market share and may form coalitions to influence market conditions.
- Lobbying: The process of influencing public-policy and decisions through various forms of advocacy and coalition-building.
