Average Reviews:
(More customer reviews)This book examines the transformation of traditional society into market society: the necessary pre-conditions and steps. The author reminds us that, despite the material advances of modern society, some key economic ideas still apply. All societies must be organized for the material survival of its members. The inter-dependencies among societal members in simpler societies have not been eliminated in market societies, despite the hyping of the independent, self-maximizer by modern theorists; in fact, the complexities of modern societies may well create more dependence, not less. And market societies do have some inherent problems.
The author points out that any society must have a coherent system for producing useful goods and services and then distributing them in a manner sufficient for society's perpetuation. Man has relied upon combinations of tradition, command, and markets to solve those production and distribution problems. Tradition uses time-honored methods of work, "allocated by heredity," which are reinforced by "law, custom, and belief." Change and competitiveness are not tolerated. Command is authoritarian control of economies and is mostly associated with economies operating in rapid catch-up mode, such as the Soviet Union. However, even democracies use elements of command during periods of crisis. In market societies, the aggregation of supply and demand guide economic functioning with no distinct center of control or allegiance to past practices.
Manorial estates and the guilds dominated life in the Middle Ages along with the Church, but the author points to small beginnings of a more commercial world. Itinerant merchants established a small niche for commercial activity in some urban areas. The more successful of them came to be key financiers of monarchs keen on expanding their authority. The gold and silver realized from 16th century New World expeditions stimulated commercial activity. Calvinism, in contrast to the Catholic Church, sanctified hard work and the accumulation of wealth as an indicator of spiritual worthiness. Gradually, feudal society became more reliant upon money as a basis of social exchange. No longer were manorial lords obligated for the overall well being of serfs. The displacement of peasants by the enclosure movements was justified by the opportunities for the landed aristocracy to use their estates as sources of cash revenue.
The author identifies several changes that are necessary for a market economy to emerge. Virtually every task, good, or service has a monetary reward. The anticipation of financial reward guides such decisions as where to labor or what to produce. A society of contracts supercedes a society of status and traditional social bonds. With those changes, a certain amount of social uncertainty is introduced. Yet a market society is not without its own forms of control. The competitions of seller versus seller and buyer versus seller are constraining forces on economic behavior.
Generally it takes a market economy to substantially change the material well being of an entire society. In the first place, traditional societies are not unhappy with the status quo. What is needed are investments in capital goods, or "tools, equipment, machines, and buildings," to increase human productivity leading to higher living standards. And it is the hope for profits or higher wages that spurs investment of money and labor in those goods. But investment implies savings, which, in turn, generally requires a sacrifice in consumption and lower wages. The author suggests that the growing pains of industrialization, mostly on the backs of the working class with the "forced emigration of the peasantry by enclosure and heavy-handed exploitation," could not have been avoided. He undercuts that argument slightly by acknowledging that the forces of democracy in the 19th century ameliorated conditions for the working class.
Scientific and technological advances are often large factors in the development of capital goods and increased productivity. English industrial production literally exploded based on the inventions of such men as Wilkinson, Watt, and Arkwright. The factory system came to dominate English life. New technologies have often literally transformed market societies. The automobile, for example, drastically changed residential patterns, facilitated social independence, and was a massive generator of employment. Can anyone doubt the impacts of electricity, airplanes, television, and computers?
However, the author points out that market societies do not necessarily operate according to the basic theory. "Consumer power" is a first principle of classical economists; according to that notion, consumers force products to be sold "at the lowest price compatible with continued production." But market societies invariably tend to be dominated by a few large firms, where economic efficiencies can be attained. These large enterprises often agree among themselves to set pricing above truly competitive levels. In addition, because much of what is produced in modern economies is non essential, consistency of demand must be created through advertising. While large firms may be needed, consumer sovereignty is mostly a fiction.
Stable market economies must maintain the balances between production and purchasing and savings and investment. Workers' purchasing power must be consistent with production volumes. In addition, savings ought to be converted into investment, or capital formation. The Great Depression was brought about by workers being underpaid and capital investments not being made. The Great Depression and WWII established that government must intervene in a market economy through fiscal and monetary policies to bolster economic stability.
The author emphasizes that basic instabilities remain in market societies. In a market economy, it remains the anticipation of profit on the part of businesses and entrepreneurs that motivates most investment and growth. Technological displacement and unemployment continue to undermine purchasing power. And the author wrote in an era before the evisceration of large "countervailing" unions, the forces of globalization, and a resurgence of rightist, anti-government ideologies. Those developments could have only added to the author's concerns of instabilities.
The book is hurt by not being able to contend with the tremendous changes of the last forty years, though the cautions remain relevant today. It is, however, an excellent guide for understanding the economic and societal changes from the Middle Ages to the era of science and capitalism. Try Charles Lindblom's "The Market System."
Click Here to see more reviews about:
Making of Economic Society, The (12th Edition) With its roots in history and eyes on the future, this book traces the development of our economic society from the Middle Ages to the present, offering a balanced perspective of why our economy is the way it is and where it may be headed. It explores the catalytic role past economic trends and dynamics–particularly capitalism–have played in creating the present challenges we face, and offers suggestions on how we may deal with them most effectively in the future. Chapter topics include the economic problem, the premarket economy, the emergence of market society, the industrial revolution, the great depression, the rise of the public sector, modern capitalism emerges in Europe, the golden age of capitalism, the rise and fall of socialism, the globalization of economic life, and why some nations remain poor. For individuals interested in the economic history of the U.S.
Get 17% OFF
Click here for more information about Making of Economic Society, The (12th Edition)
