SOSC 1340 Lecture Notes - Mercantilism, North West Company, Staples Thesis

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6 Apr 2012
SOSC 1340 November 16, 2010
- Market failures = externalities, monopolistic power, limited time
- Types of economic systems: “what, how and for whom the system will produce”
o Does power play a role, or is it simply society
Power, relationship between people
- Not just based on the factors of production but HOW the economic problem is solved within a
particular social and technical division of labour
o ‘They can only be privately owned or by the government’
To fully understand, you must further investigate who labours, who doesn’t
what technology is used
- Mobilizing the productive power of society and understanding how the output is distributed
involves questions of power and an understanding of how the economic system relates to the
social (class) structure of societies
o If you want to explain what is going on in the economy, you cant simply just look at the
But rather look into further details, political, legal, institutions
- Most of human society, economics have been for personal use
- Traditional economies: economies organized primarily on the basis of production for use-
markets incidental/secondary to the internal economic life
- Command economies state or ‘social’ ownership of means of production (USSR)
- Market socialism mix of public ownership of the means of production with markets less
income inequality, reduces ‘property power’ effects
Market Capitalism
- A system of exchange, production and distribution where
o There is private ownership of the means of production (not production for use)
o All production is production for sale on the market
o All incomes are derived from such sales
- You have to see how things are produced to fully understand market capitalism, not simply the
market of exchange, but the market of production the bringing together
- A system of distribution
- Even ‘fictitious commodities’ must be available for sale (labour, natural resources and money)
so that those who ‘own’ them receive an income
- Everything needs to have a price in order to regulate supply and demand
- The ‘price’ of labour is its wage
Fictitious commodities
- Everything ideals in a market capitalist society would be a commodity
- Labour, natural resources and money are not produced for sale (“labour just another name for
human activity which goes with itself...”)
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- There are obviously limits to what we would like to see commodified (“how much for that baby
in the window?”)
o ‘There should be a limit on what the market does’
Welfare State Capitalism
- Markets may fail to provide all the goods society needs theres a struggle to define ‘social
goals’ (state ‘steps in’ to provide public goods, and eliminate/reduce market failures)
- State economic activity in OECD countries ranges from 1/3 to over ½ of GDP
- Double movement spread of markets countered by demands for greater social protection
o Those who want to survive vs. Those who want growth and expansion
Problems with the Market
- Socially unacceptable consequences related with the market:
o Markets don’t, on their own, provide public goods like social services or social
infrastructure (not profitable cannot exclude others from ‘enjoying’ them)
Once its supplied you cannot remove it
o Markets create unequal distribution of income to such a degree there is unrest
If there is too much inequality, then social unrest is bound to occur
o Markets don’t guarantee growth or employment and therefore create crises (capital
goes on ‘strike’)
- Markets are ‘amoral’: produces goods and ‘bads’ (sometimes, doesn’t even produce the goods!)
Capitalism and Power
- Phillips: you cant understand how this happens and what maintains our economic system
without an analysis of power
- Power “the ability of an individual or group to affects or control the economic, political and
social conditions, decisions, behaviour and values of other individuals or groups”
- Ideology: consumerism and the ‘sovereign’ individual
o We are what we consume, in order for us to be happy we have to buy and buy
o We are the authors of our own desires
- Hegemony refers to the social, cultural, political and/or economic dominance of one social
group over others
o Does a society exist with just individuals working within a society
o ‘power would interfere with voluntary exchange’
- Social Divisions: ideology of the individual ignores social divisions that lead to power
- Institutional: property rights wealth power, property power, monopoly power
Power and Political Economy
- A crucial source of power is the power to control property through property rights
- Legally protected right to do what the owner wants despite public interest jobs
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