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Showing posts from June, 2023

Commons Futurity pg. 456-472

We are now moving to section 2 of the Futurity chapter entitled “Release of Debt”.  This section is about 20 pages long. Here Commons starts by focusing on G.F. Knapp and his idea of a “pay community”. Georg Fredrich Knapp was a German economist who published an important book in 1905 titled “The State Theory of Money”.  For Knapp money is not a commodity but an “institution” that allows for the creation and release of debt or liabilities. Commons calls him the German “Macleod”. Common believes that the expansion of means and methods for the release of debt as a form of duty is the history of civilization.  He writes that both Macleod and Knapp understood that the expansion of forms of debt release were an important part of the economic story. He writes that, “Capitalism is the present status of releasable debts, and Knapp's definition of means of payment is a special case of the general principle of the changes in means and methods that have been going on through changes...

Commons Futurity pg. 443-455

 Subsection (11) separation of debt markets The section starts with Commons pointing to Henry Sidgwick who used Macleod's distinction between ownership and materials.  Sidgwick differentiated between wealth and capital; capital was the private ownership of wealth and wealth was the use value created by labor regardless of ownership. Sidgwick declares that interest is paid to the capital owner for use of their property in regards for more money in the future. Capital is defined as bonds, shares of stock and land by Sidgwick. He also recognizes, according to Commons, that a change in the interest rate will change the value of the capital to the private owner up or down. This will not result in any change from the community's point of view (does not constitute a change in real wealth). How does the capital owner convert his capital into spending power? He converts it into bank deposits and draws down those deposits. This is important as Sidgwick is trying to define money against ...

Commons Futurity pg 438-443 Section (10) from psychological economics to institutional economics

Section (10) from psychological economics to institutional economics   This section lays out Commons views on whether we need to evolve from the psychological school or hedonistic school of economics that had become important in the 19th century and early 20th century. The basic outline is that Commons believes that the psychological school provides some important insights but is based on a non-exchange economy.  Commons view on psychological or hedonistic economics is that its plays an important role in our understanding human consumption and even home production but only where there is no exchange involved. The psychological school doesn't focus on social conflict as institutional economics.  In this case you need an understanding of conflict and scarcity and ownership.  Commons also points out that we need an objective unit of measurement for exchange and courts or systems of arbitration to address conflicts over transactions. The other major point that Commons wa...