economic essays with some blanks quastions ( REVIEW _ MIDTERM)

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Institutional Economic Theory

Economics 451

University of Missouri-Kansas City

Ceremony

Technology

Institutions

Tools & Skills

Instrumental Logic/Behavior

Ceremonial Logic/ Behavior

Culture

Myth, Legend, Tradition

The Veblenian Dichotomy

•  it squares with Darwinism‑ group elaboration & transmission of culture to other members of the group

•  it explains diversity of human societies that is greater than the individual differences

•  it explains the amazing stability and persistence of this diversity ‑ imposition of sanctions

15. The norms and mores are not commands in the sense that statutes and laws

coming from legislatures and judicial bodies are. They exercise the influence

they do because they are part of a cultural stream going far back into the

history of a society; they have tradition on their side, and they seem to

people to be part of immemorial belief. They owe their strength to the fact

that they have become a deeply entrenched feature of social life and

organization, and that is one reason why they are so tenacious, so enduring,

and so difficult to change. Some of our norms and mores have their roots in

antiquity as the predominance in our society of the Judeo-Christian

tradition, our system of private property, our intense competitiveness, and

our belief in the use of military methods to resolve conflicts. Modern

"political" democracy is quite young, seen in terms of the history of

civilizations, yet soon after the American revolution and subsequent

adoption of a Constitution, legend-building began.

16. All ceremonies are in practice different mixtures or combinations of traits. We

may say that this activity is predominantly ceremonial, and that predominantly

technological, but we are unable, in view of present knowledge, to assign a

verifiable quantitative score to them.

17. Some ceremonies are more functional, permissive, or less dysfunctional than

others. Thus, large numbers of children were once seen as functional both

from the point of view of individual families and society. Now, while having

many children may be seen as functional from the point of view of the family,

they are coming to be seen as dysfunctional from the point of view of society.

Poverty has been growing in some parts of the world in the 20th & 21st

centuries, as in much of Africa, and in parts of Asia. Population is growing in

that part of the world faster than economic growth, and economic poverty may

become more widespread. Furthermore, population imposes great strain on

the environment, especially where the environment is fragile.

Technology/Instrumental

1. Technology is a learned aspect of human behavior. It forms correlated

patterns based upon and deriving from a functional process. This functional

process is an instrumental or tool-using process. This means that the

technological aspect of behavior comes from tool-using activities. Technology

means patterns of behavior that are instrumentally verifiable and justifiable.

2. Technology is not merely tools. A common mistake is to think of technology as

tools or machine or “high-tech” Like all tool using and making activities hammer

production is learned and each new generation is born into an already existing

stream of activities, knowledge and skills. One reason that technology is thought

of as tools is that tools and tool-usings are "part" of this way of behaving.

3.  Technology is part of the network of social and personal relationships and it permeates all relationships. Technology is not external to man -- it is internal, a

part of human behavior. It is not like a coat that can be put on or taken off

depending on the temperature. No person and no society has ever existed that

was devoid of this aspect or type of behavior. It is best understood as internal to

man, a part of human behavior. For example, writing derives from language and

writing instruments. Such behaviors, whether writing, painting, making steel, or

playing music would be impossible without tools.

4.  Tool using is complex and interrelated activity. The modern use of carpentry tools

involves the arts of steel making and fabricating, as well as wood shaping, and

these in turn involve the knowledge included in chemistry, physics, biology and

other fields.

5.  Tool existence implies the skills necessary for tool using. A fundamental principle

of Institutional economics is that tools and skills are inseparable.

6. Inventions or tools include processes or ways of making things as well as things themselves. The modern use of carpentry tools involves the arts of steel

making and fabricating, wood shaping, and these in turn involve the knowledge

included in chemistry, physics, biology and more. The point is that tool using is

complex and interrelated activity. And, these activities and processes grow and

accumulate by combination. The more tools and inventions and skills there are,

the greater the number of combinations are possible and the faster is the

accumulation process. Even if a tool is broken, it can be replaced in much less

time than it took to create it in the first place for the simple reason that all the

knowledge and skill necessary to make it exists. It is a simple job of recreation.

Consider how long it took man to make the first hammer out of stone and

wood, and how long it took to make the first steel headed hammers. Now we

manufacture hammers at the rate of millions per year. If a hammer is broken it

is a "simple and quick" matter to replace it. But not too many years ago a

broken hammer meant long delays in production for the unfortunate

workman whose hammer got broken. Why is this? What has changed? Have

people become naturally or inherently better at making hammers? Are babies

now born knowing how to make hammers? Obviously not.

7. “Tools" is a broad category. It includes both the physical and mental

devices, both concrete and abstract. Tools include hammers, nails,

screwdrivers, the multiplication tables, music scores, computers,

pencils, language, calendars, stirrups, economic theories, books,

names, logical systems, and microscopes: The entire heritage of

activities which stems from doing and thinking.

8. V. Gordon Childe, in Man Makes Himself, has pointed out that when early

humans observed the consequences of certain patterns of action,

compared them with other patterns of action, and concluded that this

was better than that in a contextual situation they were engaging in

sciencing, in truth-making, no matter how tentative or halting the

process. It was by such processes that the funds of tool-skills

developed over time

9.  Tool-using is a physically productive and creative process that underlies all the achievements of mankind.

Even the most ceremonial activities include tool usage.

10.  As obtrusive as technology is most of us take the

technological landscape for granted.

11. Inventions are combinations of previous inventions or combinations of

previously existing tools. Literally thousands of previously existing

inventions make up even the simplest tools in our economy.

12. The technological process is cumulative and progressive. It is a process

of tool and skill accumulation through elaboration, combination and

transmission of existing tools. Tool using and making activities are

learned and each new generation is born into an already existing stream

of activities, knowledge and skills. .

13.  The method of knowing, or arriving at the validity of instrumental behavior and instrumental value, is pragmatic: experimental and “scientific.

14.  The path to truth in the realm of technology is probably as old as the

ceremonial path to truth, but took the form of discoveries and inventions,

accidental or otherwise, of a tool-making-using character. This process has

developed in modern times to the point that it is extraordinarily effective, and

loosely called the scientific method. Contrary to ceremonial truth, it does not

rely on authority, tradition and faith; rather, it employs ideas and statements

that are capable of testing and verification or falsification

Production theory

Distinction between: Output alternatives and production theory O = L, L, K, or different combinations of Labor & Capital P = ? What is the nature of these factors Theory of Resources Evolution of production - history of technology/knowledge How does production increase/decrease Organization of Production What is produced Path Dependence

Resources as a Dynamic Process

MAN

ABILITIES Knowledge

arts & sciences

WANTS Including cultural

wants

man Resources CULTURE NATURE

Economic History •  Neolithic Period -‐-‐ (12-‐13K years ago)

– Se:led Life -‐-‐ Civiliza@on -‐-‐ Mesopotamia – First Agricultural Revolu@on

•  Wheat and Water – Accumula@on

•  Tools

Wheat Emmer --

Bread Wheat Goat Grass

Contemporary Bread Wheat

Water •  The Fer@le Crescent •  Mesopotamia

– Iraq – Turkey – Syria

•  The Tigris & Euphrates Rivers

Economic History •  Medieval Era (500 – 1400 AD)

– Feudalism -‐-‐ Western Europe – Second Agricultural Revolu@on (900 -‐ 1500 AD)

•  S@rrup •  Horse Collar

Economic History •  Medieval Era (500 – 1400 AD)

– Feudalism -‐-‐ Western Europe – Second Agricultural Revolu@on (900 -‐ 1500 AD)

•  S@rrup •  Horse Collar •  Horse Power •  Ver@cal Plow

Modern Horse Collar

Economic History n  Medieval Era (500 – 1400 AD)

n  Feudalism -- Western Europe n  Second Agricultural Revolution (900 - 1500 AD)

n  Stirrup n  Horse Collar

n  Horse Power n  Vertical Plow

n  3 Field Crop Rotation

Wheat - Year 1 Fallow - Year 2

Fallow - Year 1 Wheat - Year 2

Field one 300 acres Field two 300 acres

Wheat - year 1 Legume- year 2 Fallow – year 3

Legume-year 1 Fallow - year 2 Wheat - year 3

Fallow - year 1 Wheat - year 2

Legume - year 3

Field one 200 acres

Field two 200 acres

Field Three 200 acres

Two Field Crop Rotation

Three Field Crop Rotation

Two field rotation Plowing 300 + (300 x 2) = 900 Acres Crop 300 Acres Ratio 300/900 = .33

Three field rotation Plowing 200 + 200 + (200 x 2) = 800 Acres Crop 400 Acres Ratio 400/800 = .50 How much new land can be brought into production with same amount of work?

A.  100 acres B.  50 acres C.  75 acres

Economic History

n  Scientific Revolution (1500 - 1700 AD) n  Astronomy, Physics and Mathematics

n  Industrial Revolution (circa 1750 AD) n  Steam Engine

Economic History

•  Scien@fic Revolu@on (1500 -‐ 1700 AD) – Astronomy, Physics and Mathema@cs

•  Industrial Revolu@on (circa 1750 AD) – Steam Engine – Lunar Society of Birmingham

•  Third Agricultural Revolu@on (1794 – Present) –  Iron Plow –  John Deere was the inventor of the self-‐polishing cast steel

– Mechanical Reaper

Scythe

Cradle

Cradles Cradles served as the next advancement in harvesting tools, taking a step up from sickles and scythes. The design of a cradle can be described as a multifingered scythe designed not only to cut, but also easily gather the cut grain or hay as it is being harvested. an experienced field hand using a cradle could harvest two acres of wheat a day and earn twice as much as other field laborers.

Mechanical Reaper

Wheat Threshing Contest

•  Six men with flails -‐-‐ 60 liters of wheat •  Belgian thresher -‐-‐ 150 •  French thresher -‐-‐ 250 •  English thresher -‐-‐ 410 •  US thresher -‐-‐ 740

Paris Exhibition 1854

Economic History •  Industrial Revolu@on in the US

– Railroads – Steel – Interchangeable Parts – Electric Motor – Internal Combus@on Engine

•  Modern Business Organiza@on – Trust – Holding Company – Business Corpora@on

•  Stock as means of ownership and control