Economics

"Every machine is constructed for the purpose of performing certain mechanical operations, each of which supposes the existence of two other things besides the machine in question, namely, a moving power, and an object subject to the operation, which may be termed the work to be done. Machines, in fact, are interposed between the power and the work, for the purpose of adapting the one to the other."

"Modern industry is stated by some writers to have begun in 1738 when brought out a . Others place the period as between 1750 and 1800, when the and came into being. It was marked by the development of labor-saving machinery. It was brought about by the change from handicraft to manufacture."

"Mediocrity serves it best because mechanization best serves the mediocre."

"Oliver Williamson has argued that markets and hierarchical organizations, such as firms, represent alternative governance structures which differ in their approaches to resolving conflicts of interest. The drawback of markets is that they often entail haggling and disagreement. The drawback of firms is that authority, which mitigates contention, can be abused. Competitive markets work relatively well because buyers and sellers can turn to other trading partners in case of dissent. But when market competition is limited, firms are better suited for conflict resolution than markets. A key prediction of Williamson's theory, which has also been supported empirically, is therefore that the propensity of economic agents to conduct their transactions inside the boundaries of a firm increases along with the relationship-specific features of their assets."

"Neil Fligstein is one of the most productive empirical researchers in economic sociology. His new book [The Architecture of Markets, 2001] can be interpreted as an attempt to answer the questions just mentioned, among others. He argues that “the sociology of markets lacks a theory of social institutions” (p. 8) and “needs to be clarified theoretically” (p. 9). The book’s aim is to give an outline of new theoretical foundations of a sociology of markets. Fligstein points out that “there are real differences in theoretical assumptions” between institutional economics and his version of a sociology of markets (p. 10). The first major part of the book is devoted to an explication and elaboration of a specifically sociological approach to markets called the “political-cultural approach.” In the second part, Fligstein applies this approach to various empirical cases and data of twenty-first-century capitalist societies."

"The importance to economics of the study of institutions is no longer a controversial proposition, thanks in part to the scholarly literature generated by the new institutional economics movement. Institutions are more than organizations – property is an institution, but not an organization – but organizations are an important form of institution and will be the focus of my paper, as it is, to a considerable extent, of the new institutional economics."

"Learning organizations [are] organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together."

"Institutions are the humanly devised constraints that structure political, economic, and social interaction. They consist of both informal constraints (sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, property rights). Throughout history, institutions have been devised by human beings to create order and reduce uncertainty in exchange."

"What is missing from the policy analyst's tool kit - and from the set of accepted, well-developed theories of human organization - is an adequately specified theory of collective action whereby a group of principals can organize themselves voluntarily to retain the residuals of their own efforts."

"Learning can be defined as occurring under two conditions. First, learning occurs when an organisation achieves what it intended; that is, there is a match between its design for action and the actual outcome. Second, learning occurs when a mismatch between intention and outcome is identified and corrected; that is, a mismatch is turned into a match.... Single-loop learning occurs when matches are created, or when mismatches are corrected by changing actions. Double-loop learning occurs when mismatches are corrected by first examining and altering the governing variables and then the actions."

"I see the tasks of social sciences to discover what kinds of order actually do exist in the whole range of the behavior of human beings; what kind of functional relationships between different parts of culture exist in space and over time, and what functionally more useful kinds of order can be created."

"Following the lead given by new institutional economics, we shall take the transaction as our unit of analysis. For our purposes, a transaction can be thought of as any act of social exchange that depends on information flows for its accomplishment. Transactions can be as simple and brief as the purchase of a packet of cigarettes, or as complex as and extended as those which bind a Zen master to his disciples. Like institutional economists, we are interested in the relationship that can be established between different transactional characteristics and the phenomenon of institutionalization. Our use of the term transaction, however, will extend beyond that of institutional economics where the focus has tended to be primarily on transaction costs and efficiency considerations. These, to be sure, are relevant. But, as we shall see, they are not the whole story."

"It has been the failure of American institutionalists to develop an adequate theory of institutions that has caused their work to remain largely fragmentary and without much cohesion. Professor Mukerjee's study of institutional economics is the only work of its kind to make an appearance since John R. Commons published in his well-known Institutional Economics in 1934. It gives the reader a much clearer understanding of the nature of institutional economics than does Commons' pioneering study."

"If economists wished to study the horse, they wouldn't go and look at horses. They'd sit in their studies and say to themselves, "what would I do if I were a horse?""

"In spite of such limitations, the New Institutional Economics research programme, given its willingness to acknowledge the central role played by information in the economic process, constitutes a marked advance over what is on offer from the neoclassical orthodoxy. There, information retains the status of the luminiferous ether of classical physics before Einstein: a ubiquitous medium that admitted of a mechanical account of action at a distance and kept the world conveniently Newtonian. Institutional economics, however, needs a more explicit and dynamic theory of information flows if it is to make more than a dent in the neoclassical defences. Having established that there exists credible institutional alternatives to markets, it needs to show how information production and exchange underpins them all, shaping their internal evolution as well as how they collaborate and compete. In effect, what is needed is a theory of social learning that extends beyond the individual or the organization to encompass more complex institutional settings. Such as theory, I believe, is foreshadowed in Douglas North’s historical studies of institutions. It now needs further development."

"Once a company has adapted to a new environment, it is no longer the organization it used to be; it has evolved. That is the essence of learning."

"Peter Senge (1990), Fritjof Capra (1996), Peter Checkland (1999), and other researchers have transferred systems thinking principles and theories into practice by applying them to real-world organizational- wide issues, thus encouraging the creation and development of learning organizations."

"American institutionalists were not theoretical but anti-theoretical.... Without a theory they had nothing to pass on except a mass of descriptive material waiting for a theory, or a fire."

"The smallest unit of the institutional economists is a unit of activity — a transaction, with its participants. Transactions intervene between the labor of the classic economists and the pleasures of the hedonic economists, simply because it is society that controls access to the forces of nature, and transactions are, not the "exchange of commodities," but the alienation and acquisition, between individuals, of the rights of property and liberty created by society, which must therefore be negotiated between the parties concerned before labor can produce, or consumers can consume, or commodities be physically exchanged."

"A learning organization is an] organization that is continually expanding its capacity to create its future."

"This book provides a detailed picture of the institutionalist movement in American economics concentrating on the period between the two World Wars. The discussion brings a new emphasis on the leading role of Walton Hamilton in the formation of Institutional economics, on the special importance of the ideals of “science” and “social control” embodied within the movement, on the large and close network of individuals involved, on the educational programs and research organizations created by institutionalists, and on the significant place of the movement within the mainstream of interwar American economics."

"I do not overlook the important contributions to economic theory in the past whether orthodox or heterodox I correlate them with institutional economics. The classical and communistic economists used as their measure of value the man hour of labor. This is evidently since the incoming of scientific management the engineering economics of efficiency. The Austrian and hedonistic economists deriving from Bentham used as the measure of value the diminishing marginal utility of consumption goods. This is evidently the home economics recently introduced in the college curriculum."

"As we, the leaders, deal with tomorrow, our task is not to try to make perfect plans. Our task is to create organizations that are sufficiently flexible and versatile that they can take our imperfect plans and make them work in execution. That is the essential character of the learning organization."

""Institutional economics" alone meets the demand for a generalized description of the economic order. Its claim is to explain the nature and extent of order amid economic phenomena, or those concerned with industry in relation to human well-being. In the words of Edwin Cannan, it attempts to tell "why all of us are as well off as we are" and "why some of us are better off than others." Such an explanation cannot properly be answered in formulas explaining the processes through which prices emerge in a market. Its quest must go beyond sale and purchase to the peculiarities of the economic system which allow these things to take place upon particular terms and not upon others."

"At the heart of this culture is an understanding that an organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive business advantage."

"In a learning organization, leaders are designers, stewards, and teachers. They are responsible for building organizations where people continually expand their capabilities to understand complexity, clarify vision, and improve shared mental models – that is, they are responsible for learning."

"[We may view the] economic organization as a system of prize relations. Seen in the large, free enterprise is an organization of production and distribution in which individuals or family units get their real income, their "living," by selling productive power for money to "business units" or "enterprises", and buying with the money income thus obtained the direct goods and services which they consume. This view, it will be remembered, ignores for the sake of simplicity the fact that an appreciable fraction of the productive power in use at any time is not really employed in satisfying current wants but to make provision for increased want-satisfaction in the future; it treats society as it would be, or would tend to become, with progress absent, or in a “static” state."

"Institutions is a verbal symbol which for want of a better describes a cluster of social usages. It connotes a way of thought or action of some prevalence and permanence, which is embedded in the habits of a group or the customs of a people."

"The Hawthorne researchers became more and more interested in the informal employee groups which tend to form within the formal organisation of the Company, and which are not likely to be represented in the organisation chart. They became interested in the beliefs and creeds which have the effect of making each individual feel an integral part of the group and which make the group appear as a single unit, in the social codes and norms of behaviour by means of which employees automatically work together in a group without any conscious choice as to whether they will or will not co-operate. They studied the important social functions these groups perform for their members, the histories of these informal work groups, how they spontaneously appear, how they tend to perpetuate themselves, multiply, and disappear, how they are in constant jeopardy from technical change, and hence how they tend to resist innovation."

"Human relations today has its iconoclasts and believers, critics and supporters, detractors and zealots. This is not surprising; for during the past twenty years, numerous research groups have burgeoned, and many individual investigators have become most active in the field. There has been a fantastic outpouring of professional and popular books and articles, untold new or revised college and university offerings, a plethora of in-plant training courses, a growing number of training laboratories and seminars, and a seemingly ever-increasing schedule of meetings and speeches—all concerned, in whole or in part, with "human relations.""

"One of the undesirable by-products of the factory system was the frequent abuse of unskilled workers, including children, who were often subjected to unhealthy working conditions, long hours, and low pay. The appalling conditions spurred a national anti-factory campaign. Led by Mary Parker Follett and Lillian Gilbreth, the campaign gave rise to the “human relations” movement advocating more humane working. Among other things, the human relations movement provided a more complex and realistic understanding of workers as people, instead of merely cogs in a factory machine."

"The study of human relations in business and the study of the technology of operating are bound up together."

"It is obvious that the problem of human behavior with which we are dealing can not be understood in terms of psychology or any one of the social sciences alone. Is it not possible, therefore, that in attempting to follow the problem wherever it leads us, and employing whatever concepts and research techniques are relevant, we shall be able to define the problem in such a way and develop concepts and a theoretical framework of such a nature that a major contribution will be made to the foundation for an integrated social and psychological science? Whether or not this result appears possible or attractive to present scholars in these fields, we who are studying industrial relations are forced to work in this direction. It is not a case of choice alone, but of necessity, for we can not get results satisfactory to ourselves and applicable to the solution of practical problems by employing the concepts, theories, and methods of any one science."

"Facetiously, someone has remarked that human relations are whatever those interested in human relations study. If one may judge by the divergent approaches of a number of research groups, no single definition is at present possible."

"Chester Barnard's works, especially his The Functions of the Executive, exerted an important influence on the human relations movement. He placed great emphasis on informal organizations as well as on the complexity of human motivation, with emphasis on the limited nature of financial incentives."

"As originally conceived, macro is about explaining national-level data series like employment, output and prices. Eventually, economists realized that to explain those things, they would need to understand the smaller pieces of the economy, such as consumer behavior or competition between companies. At first, they just imagined or postulated how these elements worked -- that’s the core of DSGE."

"This sort of thing, is the result of regarding the virtue of hard work as an end in itself, rather than as a means to a state of affairs in which it is no longer needed."

"Whatever merit there may be in the production of goods must be entirely derivative from the advantage to be obtained by consuming them."

"No man can be a good citizen unless he has a wage more than sufficient to cover the bare cost of living, and hours of labor short enough so that after his day's work is done he will have time and energy to bear his share in the management of the community, to help in carrying the general load."

"So long as you have a Congress dominated by big money, I can guarantee you that the discussion about universal basic income is going to go nowhere in a hurry."

"A certain small income, sufficient for necessaries, should be secured to all, whether they work or not."

"The coming age of the machine is part of a new time, and offers unprecedented possibilities to re-design the way we live. Technological innovation will, we are told, destroy more jobs than it creates. This will liberate human beings from lives of drudgery, allowing time to explore life, be creative and collectively redefine what civilization can be. But, as Yanis Varoufakis, Professor of Economic Theory at the University of Athens, makes clear, in order for everyone to benefit from these opportunities, “every citizen must be granted property rights over part of the wealth that the machines produce”. This requires a new approach to how we think about the economy and the way it operates."

"The present model – while it can boast of successes – is ill-equipped to respond to the challenges and opportunities of the time, and must go. Materialistic values are built into the system: selfishness, desire and excess promoted, and (speaking generally throughout) while philanthropy is part of some corporate strategies, presented with the choice of saving lives but losing money, administrators side with the money. Fundamental change has been needed for some time. The advance of automation adds one more imperative to the process. A new, sustainable, humane economic model is required, worthy of the 21st Century and beyond. The revolution in work requires an evolution in living: a new approach, in which the acknowledgment that humanity is One is primary. We are brothers and sisters of One humanity; the systems that govern our lives should be based on and encourage the realization ofthis fact. Sharing as a principle that animates human affairs naturally follows such an understanding and when pragmatically applied will allow everyone tolive dignified lives free from fear of poverty. Everyone is entitled to the means required to meet their needs, irrespective of whether they have a job and income or are unable to secure either…."

"A minimal guarantee with regards to income seems to me as almost inevitable."

"People should receive an income without conditions attached... It's a fragment of the massive inheritance we owe to nature, to previous generations, to technological progress, to the know-how, and all these gifts which we receive from nature, and the past."

"There shall be paid to every person, when arrived at the age of twenty-one years, the sum. ... as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property."

"It is proposed that the payments ... be made to every person, rich or poor ... because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above property he may have created, or inherited from those who did."

"Is this not utopian? Of course it is, in the sense in which ... the social security system was utopian before Bismarck put together its first building blocks."

"Since the advances in technology are going to mean fewer and fewer jobs in the market economy, the only effective way to ensure those permanently displaced by machinery share the benefits of increased productivity is to provide some kind of government-guaranteed income. ... With guaranteed income independent of their jobs, workers would be more free to set their own schedules and adapt to changing conditions. That adaptability would in turn allow greater flexibility for employers, plus many benefits for society as a whole."

"There are, in every country, some magnificent charities established by individuals. It is, however, but little that any individual can do, when the whole extent of the misery to be relieved is considered. He may satisfy his conscience, but not his heart. He may give all that he has, and that all will relieve but little. It is only by organizing civilization upon such principles as to act like a system of pulleys, that the whole weight of misery can be removed."