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 and society.
A key point is that commons argues that the classical economists, as smart as they were, had serious problem in a contradiction in meanings and definitions. The notion of the commodity was there as both a tangible thing and a legal thing. This contradiction was critical and would be come a major problem and an opportunity for a new brand of economics in the middle of the 19th century.
Commons credits Macleod with developing the proper understanding a commodity which he called an "economic quantity". It contained the ideas of scarcity and use value as with the classical economists but also the idea of futurity or that the future use of the commodity was what drove its underlying value. This new idea allowed Macleod to expand the idea of thing owned beyond corporeal property to incorporeal property and intangible property as well. Macleod also made exchange the main thrust of the idea behind a science of economics, exchange of the ownership of things as opposed to the things themselves.
Finally, Macleod called all of this related to transactions of duties or debt to one another in the exchange process. This was his explanation for the so called "debt market" Commons next turns to the idea of the debt market in the 20th century economy.
Next up - debt markets and property rights (pg. 395-400)
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