Commons most cited article is "Institutional Economics" from the American Economic Review of December 1931. He defines an institution as "collective action in control, liberation and expansion of individual action". Many of us imagine that collective action of any group against an individual is inherently negative or restrictive. In Commons view however, collective action can both restrict or liberate individuals. In fact, in any transaction or relationship between two individuals, the rules of the collective may liberate one party and restrict the other. This is a critical point to understand. Traditional economics views the individual as being set against nature or the market and not any other individual. Any rules are by definition restrictive in this view of the world. In the Commons view of the world, the rules that help restrict one party may provide a liberation or expansion of activity for another party. This begins to help understand power in the world which is rarely touched upon in the traditional economic view.
VI. The Transactional System of Money and Value The overall objective of this section is to understand money and its role and relationship to economic value in the institutional economics of John R. Commons. Commons writes that, "It is because Value is a two-dimensional concept (omitting futurity)—with two different causations, the one being the scarcity-value, or price, determined by supply and demand, the other being the greater or smaller output of use-value which will be created in the labor process that follows the transaction. " (Commons, pg. 517, 1934). The point here is again Commons is fighting against what he observes are the limits of other definitions of economic value such as simply individual utility or the classical case of exchange value only. In this section, Commons make an important move on pages 520 and 521. He states that for a thing to be objective it needs to be independent of any objective will as opposed to other competing definitions. He will ...
Comments
Post a Comment