Abstract
In this chapter, Rohatinski turns to the evolution economic theory, establishing the foundations for an understanding of how time affects economic activity. Looking at the historic character of economic activity, the author examines narrow and broad concepts of what comprises economic activity. Particular attention is paid to the ideas presented by Karl Marx in Capital and other writings. Rohatinski observes that economic activity is a multi-valued and complex paradigm and includes a relatively broad range of material and social aspects, as well as content. The social character of economic activity reveals that just as society changes over time, the content, form, and properties evolve in parallel.
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Gonzales v. Raich, 545 U.S. 1 (2015).
- 2.
Karl Marx and Frederick Engels, Collected Works. Vol. 50, Letters, 1892–1895 (London: Lawrence & Wishart, 2010) 265.
- 3.
One prominent example is Max Weber’s theory of religion-ethics-legitimacy, which distinguished the four main types of social action: means-end rational, value-rational, traditional, and affectual. The first, means-end rational, represents a rational activity aimed at achieving an individual end by using the means of the certain technical efficiency and the cost of its use and can largely be identified with economic activity. The German sociologist pointed out this type of social action always exists within a legitimate system regulated by legal norms and generally based on the relevant ethical principles. Since the actions are essentially dependent on religious beliefs and norms, Weber emphasised a close relationship between religion and social activities, that is, the influence of the “state of mind” on the material aspect of society (Max Weber, Die protestantische Ethik und der Geist des Kapitalismus [Sarajevo: Veselin Masleša, 1968] 206).
- 4.
In classical economics, “subject” usually refers to households, taken as an elementary subject in the process of production. In contrast, within the systems theory, subjects are separated by their traits and the relationships of different complexity are established among them, depending on their structure and properties. In this sense, Hungarian economist and academic János Kornai distinguishes three subjects within an economic system:
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Economic unit: an “indivisible element of the economic system that behaves according to definite regularities and responses to outside stimuli in a predictive manner.”
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Economic organisation: a “social formation consisting of persons who associate in order to perform some definite social-economic functions .”
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Economic institution: a “subsystem of the economic system, differentiated by its organisational and legal characteristics.”
(János Kornai, Anti-equilibrium [Zagreb: Centar za kulturnu djelatnost, 1983] 53, 95, 102).
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- 5.
As described by Barnes in the early nineteenth century, in one of the most significant representations of the “formal-rational “approach in sociology, German sociologist and economist Leopold von Wiese presented a formula for identifying the factors in any social process. According to his formula, the social process (P) is a result of individual behaviour (H) and the prevailing social situation (S). Further, he implied that the behaviour of individuals depends on their innate traits (I) and earlier experiences (E), while the social situation in which the process takes place depends on non-human factors (U) and the behaviour of other individuals taking part in the process in any way (IxE).His constructions included:
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P = HS
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H = IE
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S = U(IxE)’
and the total:
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P = IEU(IxE)’
(Harry Elmer Barnes, An Introduction to the History of Sociology [Chicago: University of Chicago Press, 1966] and Leopold von Wiese, Allgemeine Soziologie. Vol. 1, Beziehungs lehre [Munich: Duncker und Humboldt, 1924]).
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János Kornai , Anti-equilibrium (Zagreb: Centar za kulturnu djelatnost, 1983) 86–90.
- 7.
In practice, the hierarchical character comprises a wider set of direct and indirect relationships between the economic subjects . Apart from the elements analysed by Kornai, these relations also stem from a dominant position of the individual subjects on the market, an ability to influence consumer preferences, a monopoly over a certain technology , and so on. The simplest explanation of a concept of hierarchical character of the economic system is that it represents different levels of ability of an individual economic subject to influence the behaviour of other subjects and the total economic activity.
When defining the main characteristics of deliberate activity of economic subjects in non-hierarchical systems , as well as the systems themselves, we come across a series of important problems. These problems are difficult to resolve even though they have been thoroughly researched on a theoretical basis. Generally these include:
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Disturbances in the non-hierarchical character of a system because of vertical connections of subjects in the productive process.
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Different economic potential and the total “force” of individual subjects .
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Significantly restricted availability of individual factors of production .
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Technological monopolies.
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Inelastic demand for the certain products.
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Imperfect availability of market information.
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Restricted mobility of subjects and economic factors.
This indicates that, in practice, neither pure hierarchic nor non-hierarchic systems exist and neither have ever existed, but they have always been present in some combination.(For examples of these problems, please see Joan Robinson, The Economics of Imperfect Competition [London: Palgrave Macmillan UK, 1969].)
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- 8.
John Kenneth Galbraith, The New Industrial State (Zagreb: Stvarnost, 1970) 23–32.
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John Kenneth Galbraith, Economics and the Public Purpose (Rijeka: O. Keršovani, 1979) 47.
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John Kenneth Galbraith’s “marginalist” interpretation states that power belongs to the production factor with the lowest elasticity of demand , on the border of cost-effectiveness. This inelasticity may be the consequence of a shortage, of the efficient control over the supply , or of a combination of these two (John Kennet Galbraith, The New Industrial State [Zagreb: Stvarnost, 1970] 66).
References
Barnes, Harry Elmer. 1966. An Introduction to the History of Sociology. Chicago: University of Chicago Press.
Galbraith, John Kenneth. 1970. The New Industrial State. Zagreb: Stvarnost.
———. 1979. Economics and the Public Purpose. Rijeka: O. Keršovani.
Kornai, János. 1983. Anti-equilibrium. Zagreb: Centar za kulturnu djelatnost.
Marx, Karl. 1993. A Contribution to the Critique of Political Economy. Moscow: Progress Publishers. On-line version: Marx.org.
Marx, Karl, and Frederick Engels. 2010. Collected Works. Vol. 50, Letters, 1892–1895. London: Lawrence & Wishart.
Robinson, Joan. 1969. The Economics of Imperfect Competition. London: Palgrave Macmillan UK.
Weber, Max. 1968. Die protestantische Ethik und der Geist des Kapitalismus. Sarajevo: Veselin Masleša.
Wiese, Leopold von. 1924. Allgemeine Soziologie. Vol. 1, Beziehungs lehre. Munich: Duncker und Humboldt.
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Rohatinski, Ž. (2017). Historical Character. In: Time and Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-61705-3_4
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