On this post I wanted to focus more on a lesser known economist, John R. Commons. He had some radical views on some topics of economics. One topic that he focused on was the idea that economic activity depends on the underlying legal and institutional relationships and how they develop over time. He analyzed these legal and institutional foundations of capitalism by looking at transactions as the basic unit of analysis. He saw these transactions as involving the transfer of property rights, but the transactions did not have to take place through the market. Bargaining transactions take place through the markets while managerial and rationing transactions do not. Bargaining transactions take place between legal equals and there is a double transfer of ownership. Each side can decide whether or not to participate and each side gives something to the other. This essentially led to his view that collective action was necessary to maintain order within a society. Without other parties involved in a transaction, individuals would not respect the institutions that society relied on.
This leads me to my question on this topic. Does the freedom of individuals have to be controlled in order to keep order in a society? Collective action can prevent people from interfering with the freedom of others and also gives a framework where people can act as well. For example, there can only be freedom within a market system if it is possible to make contracts that will be honored, which does limit the freedom of individuals based on the contract. I do believe that individuals have to be controlled in order to keep order in society because without having some sort of control over people, they will act in a selfish way in order to increase their personal gains.
I feel like people will act in a selfish way no matter what institutions or laws are in place for society. I'm not really sure if a society can ever be in complete order. The United States grants freedoms and rights to all citizens, yet they are not allowed to do certain things because there are laws in place and they would have to deal with the consequences. Knowing this, people still commit crimes and there is still a lot of chaos within society. In regards to a market with regulations, people and businesses are always looking for loopholes or ways to get around a system in order to make profits or gains. I'm not assuming everyone but there are a lot of people who continuously look for ways to "beat" the system. I think it is important for there to be guidelines and rules for both a society and within the business place because it sets a foundation for how people should act. I'm just not sure if order within a society is ever truly attainable.
ReplyDeleteLet me answer your question with a question, Michael. Do you think the "impartial spectator" as described by Smith, or the effects described by Veblen are factors in how we choose to act, produce and/or consume?
ReplyDeleteThere is no need to respond to this as we are past the deadline for inclusion in the grade. However, you are more than welcome to continue the conversation through the end of this week.
Professor Schilling