This is very long section the Futurity chapter so I will likely break it down into several posts.
A couple of key points that are key to understanding this section:
1. The difference between an interval in time (interest payment) and a flow of time during which successive transactions are taking place (profit and loss). This distinction in time will come up often. It has taken me a long time to understand why this matters to Commons and I will share what insights I have.
2. Having a good or service and using it (use value) and being able to exchange that good or service (alienation of the thing) exchange value is critical. Economics take account of use value but is really about exchange value.
3. Commons also introduces the idea of economic status. Status is "expectation of working rules within which individuals adjust their present behavior" (pg. 412, Commons). This is important as a status works on both sides of market as a both buyers and sellers conform to patterns and expectations of working rules.
4. the value of property is based on the ability to use and/or alienate that property in the future, rights and duties in potential and actual transactions
5. an economic transaction creates a double duty or debt which must be satisfied by the buyer paying in money for the good (duty of performance) and a debt on the part of seller (duty of performance) to deliver the good at the specified time and place. The buyer can sell the right to the goods to another party in a separate transaction and get their money sooner if their a lag in the duty to perform. "every economic transaction creates two debts and two credits, the economic equivalent of two rights and two duties, the right and duty of performance and the right and duty of payment" (pg. 412, Commons). These rights and duties create assets and liabilities on the balance sheets of the two parties.
6. "it is this two sided status instead of physical commodities and individualism, that makes economics proprietary and institutional" (pg. 412, Commons). In the quote, we see Commons acknowledging the interdependence and and the nature of economic transactions. Macleod did not make the mistake of counting the physical thing and the ownership of the physical thing twice, his mistake was to omit counting the two sided nature of the transaction.
The main message of pages 401-415 is the classical economists and their offshoot throughout the 19th century got economics wrong at least partially because they thought it was about the use of physical things. its wasn't. Economics was about the exchange and alienation of the physical goods and the exchange of goods and mental models being used by those parties. This included physical objects, services and even debt itself could be exchanged.
A couple of key points that are key to understanding this section:
1. The difference between an interval in time (interest payment) and a flow of time during which successive transactions are taking place (profit and loss). This distinction in time will come up often. It has taken me a long time to understand why this matters to Commons and I will share what insights I have.
2. Having a good or service and using it (use value) and being able to exchange that good or service (alienation of the thing) exchange value is critical. Economics take account of use value but is really about exchange value.
3. Commons also introduces the idea of economic status. Status is "expectation of working rules within which individuals adjust their present behavior" (pg. 412, Commons). This is important as a status works on both sides of market as a both buyers and sellers conform to patterns and expectations of working rules.
4. the value of property is based on the ability to use and/or alienate that property in the future, rights and duties in potential and actual transactions
5. an economic transaction creates a double duty or debt which must be satisfied by the buyer paying in money for the good (duty of performance) and a debt on the part of seller (duty of performance) to deliver the good at the specified time and place. The buyer can sell the right to the goods to another party in a separate transaction and get their money sooner if their a lag in the duty to perform. "every economic transaction creates two debts and two credits, the economic equivalent of two rights and two duties, the right and duty of performance and the right and duty of payment" (pg. 412, Commons). These rights and duties create assets and liabilities on the balance sheets of the two parties.
6. "it is this two sided status instead of physical commodities and individualism, that makes economics proprietary and institutional" (pg. 412, Commons). In the quote, we see Commons acknowledging the interdependence and and the nature of economic transactions. Macleod did not make the mistake of counting the physical thing and the ownership of the physical thing twice, his mistake was to omit counting the two sided nature of the transaction.
The main message of pages 401-415 is the classical economists and their offshoot throughout the 19th century got economics wrong at least partially because they thought it was about the use of physical things. its wasn't. Economics was about the exchange and alienation of the physical goods and the exchange of goods and mental models being used by those parties. This included physical objects, services and even debt itself could be exchanged.
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