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From Crusoe to Going Concern

In section seven, entitled, "From Crusoe to going concern", Commons follows on the limits of coercion with more details.  Commons starts by having us consider various types of differences in parties to a bargaining transaction.  One type of difference is the relative difference in physical strength.  This may result in different economic outcomes.  If we imagine physical strength and violence are taken as equal, another difference would be the power of persuasion.  Another difference may be the strength of wants or needs between buyer and seller.  The final difference, number four, may be due to fraud, misrepresentation or ignorance.

To reiterare, physical strength used to effect can be called duress.  Differences in economic strength can be termed coercion.  Finally, the difference in moral power can be termed persuasion.  Commons states that, "Duress is the direct or threatened compulsion of physical force.  Coercion is the indirect coercion of economic power to withhold.  Persuasion is the moral power of inducement" (pg. 338).  Commons believes that we can largely eliminate physical duress as a force but we cannot eliminate moral power or persuasion.  Commons believes that the state can set limits to the use of persuasion.  He states that, "In lieu of equalizing them, the state may set upper and lower limits of coercion or fraud beyond which economic power is not permitted" (pg. 339).

Commons states that in the United States and much of Europe, judicial decisions must come into the fore to decide disputes between buyers and sellers.  These decisions set the stage or framework upon which bargaining transactions are to occur.  He also states judges will adopt a comparative analysis to determine if the transaction at hand is practical and based on the customers of the time.  Commons believes that in general the principle should be based on the reasonable elimination of duress and coercion and unethical persuasion.

Commons defines the three key issues that must be decided in any dispute related to a bargaining transaction:


  • equal or unequal opportunity 
  • free or fair competition
  • equality or inequality of bargaining power
So we have more clarification from the limits of coercion, but more to come....

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