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)
Commons Futurity VII. The Margin for Profit pg 526-528 In this section, Commons turns to thinking about a specific aspect of modern banker capitalism addressing the question of profit's role in the economy. He starts with some terminology regarding profit share - the share of national income that goes to profit earners and the profit margin - the dynamic aspect that drives a going concern forward. We then move into another set of terms that are rate of profit and profit yield. The rate of profit is related to the par value of stock and yield is related to market value of stock or outstanding equity. The social question to Commons is what the role of profit in keeping the overall economy and does society or community pay too much or too little for this service. Economists have long thought about the role of profits in driving the economy up or down. Commons believes there are profit share theories and profit margin theories as two diction categories in economic thinking...
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