Commons spends a significant portion of the latter half of chapter seven on issues related to the nature and mechanics of bargaining transactions. while we will explore several parts of that discussion, a key point to focus on here is his critique of perfect competition as a benchmark of assessing bargaining transactions in the marketplace.
He discusses several authors including Carey, Bastiat, Marshall, Davenport and Green. One of his critiques is related to Marshall's idea of the law of substitution. This relates to the idea that business people are constantly searching for an ideal pathway to maximize their gains. This leads us to the notion of free markets in the form of equal opportunity, perfect freedom and immediate action. These are different criteria than today's economists would use regarding competition. Nevertheless, in this world, Commons acknowledges that, "there would be no measurable difference between competition and choice of opportunities" (Commons, pg. 331).
Here we see Commons setting up the idea that we must observe and measure the world that people actually operate in and the alternative opportunities they have in those worlds to determine and value the outcomes we observe. This provides perhaps a perspective similar to the arguments made by Ronald Coase in a somewhat later period. Commons states frankly at the end that, "simply because there is not perfect freedom, perfect equality or perfect promptitude of compassion. We must therefore turn to more realistic alternatives that people are up against. these we name the limits of coercion"....
Next up....the limits of coercion
He discusses several authors including Carey, Bastiat, Marshall, Davenport and Green. One of his critiques is related to Marshall's idea of the law of substitution. This relates to the idea that business people are constantly searching for an ideal pathway to maximize their gains. This leads us to the notion of free markets in the form of equal opportunity, perfect freedom and immediate action. These are different criteria than today's economists would use regarding competition. Nevertheless, in this world, Commons acknowledges that, "there would be no measurable difference between competition and choice of opportunities" (Commons, pg. 331).
Here we see Commons setting up the idea that we must observe and measure the world that people actually operate in and the alternative opportunities they have in those worlds to determine and value the outcomes we observe. This provides perhaps a perspective similar to the arguments made by Ronald Coase in a somewhat later period. Commons states frankly at the end that, "simply because there is not perfect freedom, perfect equality or perfect promptitude of compassion. We must therefore turn to more realistic alternatives that people are up against. these we name the limits of coercion"....
Next up....the limits of coercion
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