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Barter

Barter
An 1874 newspaper illustration from Harper's Weekly, showing a man engaging in barter: offering chickens in exchange for his yearly newspaper subscription. The inefficiency of barter in archaic society has been used by economists since Adam Smith to explain the emergence of money, the economy, and hence the discipline of economics itself.[2] However, no present or past society has ever been seen through ethnographic studies to use pure barter without any medium of exchange, nor the emergence of money from barter.[3] Since the 1830s, direct barter in western market economies has been aided by exchanges which frequently utilize alternative currencies based on the labour theory of value, and designed to prevent profit taking by intermediators. Examples include the Owenite socialists, the Cincinnati Time store, and more recently Ithaca HOURS (Time banking) and the LETS system. Economic theory[edit] Adam Smith on the origin of money[edit] Limitations[edit] Absence of common measure of value Related:  Economic Theory of Value

Communism Communism is represented by a variety of schools of thought, which broadly include Marxism, anarchism and the political ideologies grouped around both. All these hold in common the analysis that the current order of society stems from its economic system, capitalism, that in this system, there are two major social classes: the proletariat - who must work to survive, and who make up a majority of society - and the capitalist class - a minority who derive profit from employing the proletariat, through private ownership of the means of production, and that political, social and economic conflict between these two classes will trigger a fundamental change in the economic system, and by extension a wide-ranging transformation of society. The primary element which will enable this transformation, according to communism, is the social ownership of the means of production. Because of historical peculiarities, communism is commonly erroneously equated to Marxism-Leninism in mainstream usage.

Capitalism The degree of competition, role of intervention and regulation, and scope of state ownership varies across different models of capitalism.[5] Economists, political economists, and historians have taken different perspectives in their analysis of capitalism and recognized various forms of it in practice. These include laissez-faire capitalism, welfare capitalism, crony capitalism and state capitalism; each highlighting varying degrees of dependency on markets, public ownership, and inclusion of social policies. The extent to which different markets are free, as well as the rules defining private property, is a matter of politics and policy. Many states have what are termed capitalist mixed economies, referring to a mix between planned and market-driven elements.[6] Capitalism has existed under many forms of government, in many different times, places, and cultures.[7] Following the demise of feudalism, capitalism became the dominant economic system in the Western world. Etymology[edit]

Capital in the Twenty-First Century Capital in the Twenty-First Century is a 2013 book by French economist Thomas Piketty. It focuses on wealth and income inequality in Europe and the United States since the 18th century. It was initially published in French (as Le Capital au XXIe siècle) in August 2013; an English translation by Arthur Goldhammer followed in April 2014.[1] On May 18, 2014, the English edition reached number one on the New York Times Best Sellers List for best selling hardcover nonfiction[2] and became the greatest sales success ever of academic publisher Harvard University Press.[3] By January 2015, the book has sold 1.5 million copies in French, English, German, Chinese and Spanish.[4] Publication and initial reception[edit] Contents[edit] Piketty predicts a world of low economic growth and dismisses the idea that bursts of technological advances will bring the growth back to the levels of the 20th century, arguing that we should not base ourselves on the "caprices of technology Reception[edit] James K.

A Theory of Justice A Theory of Justice is a work of political philosophy and ethics by John Rawls. It was originally published in 1971 and revised in both 1975 (for the translated editions) and 1999. In A Theory of Justice, Rawls attempts to solve the problem of distributive justice (the socially just distribution of goods in a society) by utilising a variant of the familiar device of the social contract. Objective[edit] In A Theory of Justice, Rawls argues for a principled reconciliation of liberty and equality. The “original position”[edit] Rawls belongs to the social contract tradition. "...no one knows his place in society, his class position or social status, nor does anyone know his fortune in the distribution of natural assets and abilities, his intelligence, strength, and the like. According to Rawls, ignorance of these details about oneself will lead to principles that are fair to all. The agreement that stems from the original position is both hypothetical and ahistorical. Criticism[edit]

Entitlement theory Entitlement theory is a theory of distributive justice and private property created by Robert Nozick in his book Anarchy, State, and Utopia. The theory is Nozick's attempt to describe "justice in holdings" (Nozick 1974:150) - or what can be said about and done with the property people own when viewed from a principle of justice. Principles[edit] Nozick's entitlement theory comprises 3 main principles: A principle of justice in acquisition - This principle deals with the initial acquisition of holdings. Nozick believes that if the world were wholly just, only the first two principles would be needed, as "the following inductive definition would exhaustively cover the subject of justice in holdings": Thus, entitlement theory would imply "a distribution is just if everyone is entitled to the holdings they possess under the distribution" (Nozick 1974:151). Differences from other ideals[edit] Entitlement theory also contrasts with the Marxist analysis that equality should be the goal.

Labor theory of value Definitions of value and labor[edit] When speaking in terms of a labor theory of value, value, without any qualifying adjective should theoretically refer to the amount of labor necessary to the production of a marketable commodity, including the labor necessary to the development of any real capital employed in the production. Both David Ricardo and Karl Marx attempted to quantify and embody all labor components in order to develop a theory of the real price, or natural price of a commodity.[1] The labor theory of value, as presented by Adam Smith, however, did not require the quantification of all past labor, nor did it deal with the labor needed to create the tools (capital) that might be employed in the production of a commodity. The Smith theory of value was very similar to the later utility theories in that Smith proclaimed that a commodity was worth whatever labor it would command in others (value in trade) or whatever labor it would "save" the self (value in use), or both. where

Marginal utility Marginality[edit] The term marginal refers to a small change, starting from some baseline level. As Philip Wicksteed explained the term, "Marginal considerations are considerations which concern a slight increase or diminution of the stock of anything which we possess or are considering"[2] In practice the smallest relevant division may be quite large. Utility[edit] Depending on which theory of utility is used, the interpretation of marginal utility can be meaningful or not. Contemporary mainstream economic theory frequently defers metaphysical questions, and merely notes or assumes that preference structures conforming to certain rules can be usefully proxied by associating goods, services, or their uses with quantities, and defines "utility" as such a quantification.[5] Though generally pursued outside of the mainstream methods, there are conceptions of utility that do not rely on quantification. Diminishing marginal utility[edit] Marginalist theory[edit] Quantified marginal utility[edit] is

Paradox of value An image of water, a commodity that is essential to life. In the paradox of value, it is an apparent contradiction that it is cheaper than diamonds, despite diamonds not having such an importance to life. Labor theory of value[edit] In a passage of Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, he discusses the concepts of value in use and value in exchange, and notices how they tend to differ: What are the rules which men naturally observe in exchanging them [goods] for money or for one another, I shall now proceed to examine. Furthermore, he explained the value in exchange as being determined by labor: The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.[4] Hence, Smith denied a necessary relationship between price and utility. The labor theory of value has lost popularity in mainstream economics and has been replaced by the theory of marginal utility. Marginalism[edit]

Subjective theory of value Overview[edit] According to the subjective theory of value, voluntary trades between individuals imply that both parties to the trade subjectively perceive the goods, labour or money they receive as being of higher value to the goods, labour or money they give away. The subjective-value theory holds that one can create value simply by transferring ownership of a thing to someone who values it more highly, without necessarily modifying that thing. Where wealth is understood to refer to individuals' subjective valuation of their possessions, voluntary trades may increase the total wealth in society. Individuals will tend to obtain diminishing levels of satisfaction, or marginal utility from acquiring additional units of a good. In a free market, competition between individuals seeking to trade goods they possess and services they can provide for goods they perceive as being of higher value to them results in a market equilibrium set of prices emerging. Diamond-water paradox[edit] Notes[edit]

The Theory of the Individual in Economics: Identity and Value - John B Davis

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