Markets Versus Governmental Allocation Normative

Transcript:Markets Versus Governmental Allocation Normative:
Markets Versus Governmental Allocation Normative Discussions Historical Synopsis Our historical treatment of government and the economy should have produced the understanding that the market economy is not the only means of allocating the scarce goods and resources of society. Indeed, in order for exchange and accumulation to occur in the first place, it was necessary for government to exist and establish the parameters of exchange. Indeed, market allocation systems such as we have today were preceded by other types of systems. Allocation by Tradition Allocation by Hierarchy Combinations of Tradition and Hierarchy Fully developed market allocation systems only developed with the industrial revolution in the early 19th century. We can view the method of allocating scarce resources of a society as evolving through time. It has been a social learning process, and one that is ongoing. Adam Smith was not the “beginning and the end” of understanding. Prior to the development of nation-states there was only the community, either clans, tribes, or other local units. Nation states evolved over time. The claim to power was often religious. Prior to the 18th century the only large organizations were the church and the state. The church and the state discouraged the development of large organizations that would compete for power. Power centers in Europe and elsewhere continued to discourage the development of large organizations that would compete for power. However, a weak national government in the U.S. was unable or unwilling to discourage the development of large organizations. At the beginning of the 19th century in the U.S. and elsewhere most exchange was local and most production was agricultural. Most production was for home consumption; what little surplus there was was sold in market towns. Elites in the American colonies turned states could only grow in economic power by developing large economic organizations to support their desire to accumulate surplus and extract resources from society. They kept government weak through most of the 19th century to enable the development of elite economic power. By the latter part of the 19th century the economy had become less communal and more hierarchical. There were no companies employing more than 1000 employees in 1787. By 1900 there were many. Now large companies and corporations are the dominant mode of employment. Where in 1787 there was very little wage labor, in 2009 virtually everyone works in wage labor. What has been dubbed by sociologists as “wage