Market Organization and Monetary Contracts

  • Heinz-Peter Spahn
Chapter

Abstract

Economies which are characterized by private property of resources and market agents striving for their private interests typically create judicial and monetary systems which then cause the process of economic transactions to look much different compared to the often propagated idea of a direct exchange of goods and services. Social and legal norms establish a framework for individual economic behaviour. Transactions on labour, goods and asset markets are regulated by means of explicit or implicit contracts. They render economic processes — to some extent at least — predictable and less risky and allow some planning in a “spontaneous order”. Hence, market relations between firms and households exhibit some degree of stability, which facilitates the employment of optimizing calculations within these decision making units. The terms of these contracts reveal — on the part of the agents involved — the desire for commitment or flexibility.

Keywords

Manifold Income Cute Monopoly 

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References

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    Efficient coordination in the economy cannot occur unless the various agents involved (that is virtually everybody) speak the same monetary language. The institution that allows them to do so is money, but more specifically the unit-of-account function of money. The decentralised plans of hundreds of millions of consumers and millions of producers cannot mesh harmoniously in the aggregate if this common financial language [...] is missing. The efficiency of this language in performing this vital coordination role depends crucially on whether the unit of account always means the same thing to different individuals both at one and the same moment in time and over time“ (Issing 1999a: 10).Google Scholar
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Copyright information

© Springer-Verlag Berlin Heidelberg 2001

Authors and Affiliations

  • Heinz-Peter Spahn
    • 1
  1. 1.Lehrstuhl für Wirtschaftspolitik, Institut für VolkswirtschaftslehreUniversity of Hohenheim (520 A)StuttgartGermany

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