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Showing posts from April, 2023

Commons Futurity pg. 410-413

  This is about subsection (3) duty and debt and right and credit pages 410-413. Commons, who gives a lot of credit to him, next tracks a second confusion by Henry Dunning Macleod in his book “Economics for Beginners” from 1879 which caused him to be written out of the history of economic thought. His conception of transactions and future time. Macleod argued that under common law a right to receive money from a debtor comes into existence now for a creditor but the debtor's duty to pay will only come into effect later when the due date arrives. This is a fallacy as both come into existence at the same time.  Why is this important?  It is important because a creditor can sell that duty to pay to someone else so it must be in existence now. Common wants to correct this problem by stating that in a transaction two duties are created and introducing the notion of economic status.The duties are the “duty of performance” and the duty of payment” The buyer/creditor must perform...

Commons Futurity pg 407-409

  This subsection is basically asking the question what are we to make of the past, all of the wealth and property that was created in the past.  Commons acknowledges that the past had value but his focus is on the future and futures from the present moment we are in now.  Commons argues that economics is about the future value of the things that now exist that were created in the past.  All of the economic values such as assets, liabilities, debts are based on future uses. Commons believes the past is only useful for justifying a certain pattern of ownership in the present based on past activity and practices.  The owners of today's future value may need to argue before a tribunal or court that they do in fact have rightful ownership over some object or even intangible item.Perhaps most importantly, commons identifies this problem of thinking about economics and the economy as a “prime difficulty”. Commons says too often people try and do economics by appealing...

Commons Futurity pg 401 - 407

 In this next section entitled "Corporeal, Incorporeal and Intangible property", we look at a number of things and this is very long section of almost 50 pages so we will break it down over several weeks. First, Commons is looking in subsection one at time and the measure of time.  Macleods problem was a confusion of definitions related to time and corporeal and incorporeal property. He seemed to define corporal property as of time now and incorporeal property as one year in the future, but later seems confused on this point. He seems to be saying corporeal property exists only now based on past value but then also has value in the future as well. in fact according to Commons, Macleod's double counting was not counting the physical thing and ownership of the physical thing but rather counting the ownership issue twice. Commons tries to clarify by stating that corporeal property's value is based on future value and exchangeability.  It means I have property that is wor...

Commons Futurity pg. 395-401

 Commons next turns to highlight the important of Macleod and his impact on our understanding of economics. Macleod creates the conceptual apparatus on commodity market and debt markets. Commons also acknowledges that Macleod did do a few things wrong - but let's start with what Commons believes he did right. Macleod made economics about the exchangeability of property rights and not the exchange of physical commodities.  He also made the first moments at least in economics towards what Commons would futurity or the fact that economic values are based on future uses. This was common knowledge for merchants, bankers and accountants but not in classical economics. To Quote Commons here (pg. 400), "property is the same as property rights; the material things have no value for economics except as they lawfully be owned and their ownership lawfully transferred." Macleod also specifically understood, and perhaps was the first as Commons acknowledges, that debt was a saleable co...

Commons Futurity chapter pg. 390-395

 Commons Futurity chapter in the book "Institutional Economics" is very long - over 200 pages and very complex.  However, I believe a thorough and careful reading it will yield considerable benefits.  In this blog series, we will read through Commons chapter on Futurity in Institutional Economics. This first post covers pages 390-395 of the chapter. I am using the Transaction Publishers third edition published in 2005. The chapter starts with the claim that political economy and economics in general started with a false set of assumptions form Rousseau and Locke.  The basic idea was that people were free but in chains because of government.  This meant that all rules were irrational and were a problem for humans and their behavior.  Commons did not see rules as irrational but rather as structures were based on need to organize society. Instead, Commons viewed the release of rules as a form of debt release over time that helped change and develop the economy...