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Showing posts from January, 2018

Schmid, Commons and Transactional Types

The various types of transactions are crucial to a Commons-Schmid type approach to institutional economics.  Here we will briefly explore the various types of transactions proposed by Schmid and Commons. Schmid 1. Bargaining Transactions - a mutual consent of transfer of property rights between legal equals; this could include individuals or groups of individuals; there are crucial issues regarding who has what power or authority relative to the other parties 2. Administrative Transactions - a superior and inferior relationship; position of superiority can be a public administrator, legislator, police officers or a private owner; can be confusing because it can change rights but also be subject to rights as well; may be between two parties but for the benefit of third party; source of authority can be be a private contract or public law 3. Status and Grant Transactions -  there is no bid or command, a one way movement of rights based on habit or benevolence of the giver...

A First Idea from Schmid. Knowledge, psychology and power

Schmid believed that institutional analysis must include knowledge, psychology and power.  He took some of these original ideas from Vilifredo Paerto's writing.  Schmid states that neoclassical economics has been very narrowly focused on knowledge via knowing cost and productions functions and psychology via use of the consumer utility function. He states that power is rarely if ever addressed in neoclassical economics and the only real issue of concern is monopoly power and concentration of the ownership of resources.  Schmid believes that human interdedpendence is much richer and more interconnected that simply monopoly power.  his analysis will focus on the issue of power because it has been neglected in traditional analysis.  Schmid also wants to expand our understanding of how knowledge and psychology are used in analysis. He writes that "rights and rules govern access to and use of power" (pg. 6)

Looking at A. Allan Schmid's Work ....and Commons

Today a diversion from John R. Commons.  Al Schmid was a student at the University of Wisconsin Dept. of Agricultural Economics  and thus has a direct intellectual tie to Commons.  Al certainly grew up in the Commonsonian tradition but branched off and developed his own unique approach to institutional economics. I am going to devote some of the following entires to schmid's work via his most important book "Property, Power and Public Choice". I will also tie in my understanding of the relationship between Commons and Schmid.

A Review of the Economics of the Lost Cause by J. Dennis Chasse

Chasse starts with a review of monetary issues in the 1920's and 1930's.  The conventional wisdom at the time was that in times of panic or economic crisis a deflationary period was necessary to wring the system clean of problems.  Commons and others such as Fisher and Keynes were associated with a counter movement known as stable money. In the 1920's Commons, better known as a labor economist, was thrust into the monetary arena serving as President of the National Monetary Association.  Commons recognized that monetary issues were critical to the future of labor and he needed to turn his attention to these issues as argued by Chasse. One interesting point in Chasse's article was that commons was an originator of the idea that expectations play an important role in firm behavior related to monetary variables such as interest rates.  This is reflected in his concept of futurity. In 1926, Commons was directly drawn into federal legislation regarding stable money....

A review of Dutraive and Theret's article on Commons, Money and Sovereignty

A summary and review of Veronique Dutraive and Bruno Theret's article in the Journal of Economic Issues (March 2017) entitled, "Two Models of the Relationship between Money and Sovereignty: An Interpretation based on John R. Commons Institutionalism". This article was very enlightening and expanded the way of thinking about Commons using his ideas of sovereignty and money, which the authors point out he did not directly discuss himself or at least connect these ideas directly.  They take his notions of sovereignty from his articles in the early twentieth century and his ideas on money from his book Institutional Economics.  The authors rightly point out that Commons is less well known for his work on money.  The result of this analysis is an very useful framework for thinking about money in the Commons framework and how his ideas relate to modern money theory through folks like Randall Wray. Commons developed several ideas related to sovereignty.  His concep...