“Few economists doubt that Marx flunked economics, a judgement mostly based on his labour theory of value. But this column argues that Marx’s representation of the power relationship between capital and labour in the firm is an essential insight for understanding and improving modern capitalism. Indeed, this insight is incorporated into standard principal–agent models of labour and credit markets.”
To dictate how much a company must pay its workers is to tinker with the beating heart of the employer-employee relationship, a central component of life under capitalism. This is why the dispute over these laws and their effects – which has raged for decades – is so acrimonious: it is ultimately a clash between competing visions of politics and economics.
“Socialism is extremely in vogue. Opinion pieces which tell us to stop obsessing over socialism’s past failures, and start to get excited about its future potential, have almost become a genre in its own right. […] Despite differences in style and emphasis, articles in this genre share a number of common flaw.”
To show how economics can help us realize the common good, Tirole shares his insights on a range of topics, including the moral limits of the market and the proper balance between the free market and regulation. On our bookshelf you can find this book and more.
“Basic knowledge and skills may be developed in formal education. Yet, the full stock of a human’s capacity is developed through daily work, practice, reflection, and refinement. Strong and full human capital development requires participation in free markets. There is no substitute.”
“Today’s youth are increasingly unhappy with the way their elders are running the world. growing numbers are rejecting capitalism. […] This led us – a sociologist and an economist – to wonder how would young people redesign the economic system if they could. The answer, based on recent surveys, should make any status-quo politician seriously rethink their economic policies.”
Three TEDx talks – from two business consultants and the dean of an MBA program – on purpose in business.
“Human rights abuses might be embedded in the business model that has evolved for social media companies in their second decade. Essentially, those models are based on the collection and use for marketing purposes of their users’ data. And the data they have is extraordinary in its profiling capacities, and in the consequent unprecedented knowledge base and potential power it grants to these private actors.”
“For Adam Smith, crony capitalism fails on two grounds: It is unjust, favoring a few at the expense of the many, and it is destructive of the desired end of political economy—economic growth. Smith’s writings are of great use today in their capacity to properly frame this problem, its causes, as well as solutions for preventing or mitigating the corruption of free markets.”
“American antipathy to nationalization of course means that the U.S. is unlikely to consider seriously Facebook’s nationalization. That said, we all need to take seriously the danger of continuing to treat personal data as just another good to trade, and Facebook as just another company. Our societal well-being is too important to leave this problem to the whims of the market’s invisible hand.”
New on our Book Shelf: “The Invisible Hand? How Market Economies have Emerged and Declined Since AD 500”
About this book: “Enables the reader to take a fresh look at the present debates about the future of capitalism, the effects of inequality, and the relation between wealth and political leverage.” Or see all the books on the shelf
“Is there economic power? If so, is it being used? Finally, is the use of it detrimental to consumers? It is only if we’ve three affirmatives lined up in a row there, as with the ducks above the mantlepiece, that the shotgun of state power needs to be used.”
“… the people best placed to control Facebook are the 2 billion users of Facebook, who can choose to use the service or not. But such free-market liberalism isn’t quite the fashion de nos jours, is it?”
“The Financial Services Royal Commission has seen evidence that bank directors and executives deliberately put in place policies to ignore the law. But research suggests the very organisational structure of banks makes it difficult to hold directors and senior executives criminally responsible for systemic misconduct. The way corporations are arranged, how decision-making is delegated, and information is gathered and distributed, appears to fragment and diffuse individual responsibility.”
“Millions of Russians and eastern Europeans now believe that they were better off under communism. What does this signify?”