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Mohammad Gani wrote: 
 
>If a Marxian state were to exist to sanction and protect property rights,  it ought to
protect the laborer's property as well. Marx's own theory is that the state should
monopolize all property and override the <capitalist> market and use <political power> to
ensure fair distirbution.
> 
>I have trouble with the monopoly part. My personal thinking is that a properly
constituted state should be able to let individuals own their labor and capital, and
engage in trade without fear of exploitation or exclusion. The state should prevent and
punish economic crimes (of theft or fraud or monopoly).
> 
 
Mohammad, I should think that you would also have trouble with the exploitation part. Are
you referring to the Marshallian principle that, under monopsony, a factor of production
may be paid less than its marginal product? If so, more recent work by property rights
economists like Harold Demsetz, should persuade you that the restrictive assumptions
needed for this principle to be relevant would not exist in a truly free enterprise system
(i.e., in what Smith seems to have had in mind when he wrote of the system of natural
liberty). They might exist if factor owners were not aware of alternatives or did not wish
to take advantage of them, but that is a different matter. The same argument applies to
your idea that the state should punish monopoly, which is different, of course, from the
argument that the state should punish conspiracies to monopolize for the sole purpose of
charging a monopoly price (and not the purpose of saving costs or carrying out
investments). To evaluate the latter argument, one would have to build a model of how such
punishment would be decided upon and administered in order to have a framework for judging
costs and benefits.
 
As for systems that are not truly free enterprise, one would be wise, I think, to focus on
what kind of "property rights" the coercion of the state is used to define and enforce
(or, more generally, how the coercion is used), as you seem to recognize.
 
>  
>Someday, we must clarify what the market must look like as an institution, vis-a-vis the
state, to make sense of <property> and <theft>. I have some ideas, but this is not the
thread for my ideas.
> 
 
Has this not already been done? Persistent problems exist in the case of externalities and
so-called public goods. However, regarding private goods, I think that we know what "the
market" is vis-a-vis the state. The pure market economy is a system in which state
coercion is used, if necessary, to assure that individuals own the property they produce
or that they acquire from others or with the help of others who have agreed to allow them
to own the property. And it is a system in which individuals are free to enter whatever
business or occupation they want. But there are no guarantees that a particular business
or occupation will be profitable. No other use of coercion is warranted except perhaps for
fraud. Of course, this image of the relationship assumes national security and, as I said,
the absence of externalities and public goods.
 
Demsetz, Harold. (1968) "Why Regulate Utilities?" Journal of Law and  
Economics. 11: 55-65. 
 
 
Pat Gunning, Feng Chia University, Taiwan 
 
 
 
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