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Commons commenting on Marx and Proudhoun

Commons provides a short discussion to contrast Karl Marx (communism) and Pierre Joseph Proudhon (anarchism) in Institutional Economics.  His point in writing about these two authors is to continue to flesh out the idea of theory of efficiency versus an economic theory of value. This is section eight in the chapter of efficiency and scarcity pages 366 to 378.  Commons wants us to understand that Ricardo and later Marx led us to a theory of efficiency and not a theory of value.  This is not in itself a negative as a theory of efficiency is important to Commons. However, Commons wants us to understand that a theory of efficiency as espoused by Ricardo and Marx is only half the story of a theory of value.  Marx is the real part of the story in this section with some attention paid to Proudhon. As usual, Commons points out both the advanced and faults in the various thinkers he is addressing. Marx, Commons writes, did improve on Ricardo and others by replacing a subjec...

Contrasting Views on Power and Commons Initial Views

Economists and other thinkers have long thought about the nature of economic and political power in a capitalist system.  One of the large concerns since the advent of the industrial economy has been the potential for producers and firms to wield power and influence and disrupt the economic system to their advantage. Adam Smith wrote in the Wealth of Nations that producers rarely gather together except to determine the course of events in their own favor.  Economists have long regarded this as a difficult challenge to confront.   The typical perfectly competitive market model assumes price taking as opposed to price making power for stability and equilibrium. Hayek talk about power as, "the capacity to achieve what one wants".  He wants to contrast power from coercion. Hayek does not per se see a problem with power we can be put to good use.  He uses the example of people coming together and submitting themselves to the power of a manager to do more together. ...

Habitual Assumptions in "Institutional Economics"

Habitual Assumptions Habitual assumptions are an important component of the reasonable value model that Commons is trying to build. It is focused in section V of the Reasonable Value chapter of Institutional Economics from pages 697 to 719 and the idea appears later in different parts of that chapter as well. Habitual assumptions was defined by Commons as "when one has acquired ways of looking at things when making one's decisions, choosing ones alternatives and dealing with others in ones transactions" (pg. 697).  Commons cites favorably in this section a book by E. Jordan called "Forms of Individuality".  Jordan talks about the "institutionalized mind".  This means how a persons mind is shaped by the customs and traditions of the place or "going concern"that they are embedded in.  Thus, Commons has introduced the terms habitual assumptions and institionalized mind.  In terms of analytical approaches, Commons writes that, "social ...