Commons spends a lot of time thinking about the double meaning of many words and how we use them. One of those words he is concerned with is "commodity" (page 393, IE). He talks about the meaning of a commodity as a physical object and secondly as the ownership of a physical thing. Commons claim that the classical economists had an inherent contradiction in their work because they used both of these definitions.
Commons spends some time in the first part of the chapter "Futurity" thinking about the various ways we can classify a commodity. He uses the example of water (pg. 399-400). He states that the Austrian economist Bohm-Bawerk classified water in four ways: 1. as a physical object, 2. as having some chemical or physical qualities 3. as having some value to humans (use-value) and 4. as having attached to it legal rights and duties. Commons goes on to state that engineering and engineering economics is focused on number 2, hedonistic or psychological economics is focused on number 3 (like Bohm-Bawerk) and proprietary or institutional economics is focused on number 4.
Commons is of course on the side of number 4. He introduces Henry Dunning Macleod as the original institutional economist and the importance of his work as an economist even though he is mostly forgotten by mainstream thinking.
Macleod used the term debt to refer to the ownership of a commodity rather than the physical thing as commodity. In this case debt meant a legal duty. Macleod introduced the common idea that there was corporeal property whose ownership was bought and sold and incorporeal property that was bought and sold. The final step was by Macleod to state that economics was a science of the exchange of commodities, both corporal and incorporeal. Commons asserts that this is very different from classical, psychological or even the early original economists. They focused on the physical aspects of property as opposed to the legal rights and duties. This will take us further as we will explore how we define a commodity and the large difference it makes in how economic analysis proceeds.
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As an aside, Commons makes a note on page 401, "it is the expectation of receiving something valuable from others.and this mere expectation can be bought and sold." This is hugely important as Commons understood early on, before most economists, that the expectations of money to be received can be bought and sold as practitioners understood in the early incarnations of the Chicago futures market.
Commons spends some time in the first part of the chapter "Futurity" thinking about the various ways we can classify a commodity. He uses the example of water (pg. 399-400). He states that the Austrian economist Bohm-Bawerk classified water in four ways: 1. as a physical object, 2. as having some chemical or physical qualities 3. as having some value to humans (use-value) and 4. as having attached to it legal rights and duties. Commons goes on to state that engineering and engineering economics is focused on number 2, hedonistic or psychological economics is focused on number 3 (like Bohm-Bawerk) and proprietary or institutional economics is focused on number 4.
Commons is of course on the side of number 4. He introduces Henry Dunning Macleod as the original institutional economist and the importance of his work as an economist even though he is mostly forgotten by mainstream thinking.
Macleod used the term debt to refer to the ownership of a commodity rather than the physical thing as commodity. In this case debt meant a legal duty. Macleod introduced the common idea that there was corporeal property whose ownership was bought and sold and incorporeal property that was bought and sold. The final step was by Macleod to state that economics was a science of the exchange of commodities, both corporal and incorporeal. Commons asserts that this is very different from classical, psychological or even the early original economists. They focused on the physical aspects of property as opposed to the legal rights and duties. This will take us further as we will explore how we define a commodity and the large difference it makes in how economic analysis proceeds.
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As an aside, Commons makes a note on page 401, "it is the expectation of receiving something valuable from others.and this mere expectation can be bought and sold." This is hugely important as Commons understood early on, before most economists, that the expectations of money to be received can be bought and sold as practitioners understood in the early incarnations of the Chicago futures market.
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