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1.4. Contribution to the Economic Theory of J. M. Clark

Main works: "Business acceleration and the law of demand; technical factor in economic cycles "[" Business Acceleration and The Law Of Demand; A Technical Factor in Economic Cycles »] (1917); "Economic theory of overhead costs" ["The Economics of Overhead Costs"] (1923)

Like T. Weblin and W. K. Mitchell, J. M. Clark interpreted human behavior as based on habits, and not on instant accusals of benefits and costs, pleasures and suffering. But he went in analyzing this sphere further than other old institutionalists, for the first time in the history of economic analysis, explicitly indicating the majority of information costs and decision-making costs. The fact is that to make an optimal solution, it is necessary to incur costs associated with the collection and processing of information. However, the benefits of this information are not yet known in advance. In addition, direct decisions also require significant (psychological) costs (while the benefits of efforts to make a decision are also not known to a priori). These costs create irresistible obstacles to optimizing behavior and serve as the basis for the formation of habits. Of course, such habits are not the result of some maximizing choice or optimization. Thus, J. M. Clark anticipated both the theory of limited rationality of Symeon, and the theory of searching for information J. Stigler (despite the fact that the latter is less realistic compared to the approach of J. M. Clark).

Another scientific merit J. M. Clark is the development of microeconomics - cost theory and competition. He first introduced into economic science the concept of overhead costs. These are the costs that cannot be attributed to any particular enterprise division, i.e. Not related to directly with the production process. J. M. Clark believed that they constitute a consequence of large investments in fixed assets. The overhead costs are covered at the expense of prices, which, in his opinion, meant the absence of pricing with the principle of equalizing limit costs and revenues. J. M. Clark also criticized the concept of perfect competition and laid the foundations of the theory of "effective competition", which is such a specific implementation of the elements of the market structure, which is acceptable from the point of view of public welfare. The theory of "effective competition" is important because it provides realistic - in contrast to the concept of perfect competition - landmarks for conducting public policy to stimulate competition. At the same time, J. M. Clark tried to give the theory of competition dynamic nature; For him, the degree of "effectiveness of competition" was determined how quickly and in what volume the processes of creating, destruction and recreation of various profits in various industries occur in various industries. Unfortunately, he did not explain the causes of such differences.

Finally, J. M. Clark left a trail in the field of macroeconomics. Like the U. K. Mitchell, he was engaged in research on business cycles. He interpreted them as a multifactor process, highlighting many reasons for cycles - from wars and natural cataclysms to the dynamics of investment. And here, J. M. Clark was one of the first to opened the idea of \u200b\u200bthe accelerator as a phenomenon, reinforcing cyclical fluctuations in economic activity (on the role of this idea in the macroeconomic theory of Keynesian-neoclassical synthesis, see Section 6.5.5). Again, after W. K. Mitchell, J. M. Clark put forward the idea of \u200b\u200bthe need for state regulation of cycles. He first in the history of economic analysis put forward the idea of \u200b\u200bembedded (automatic) stabilizers. In his opinion, such a built-in stabilizer should be a tax system.

1.5. TRANSACTION THEORY J. KOMMONS

Main work: "Institutional Economic Theory" ["Institutional Economics"] (1934)

Another well-known representative of old institutionalism, J. Commons, in his views stood a mansion from other adepts of this direction of economic analysis. In his research, he did a big focus on legal factors. His main scientific merit is the theory of transactions.

This theory is based on the idea of \u200b\u200brarity resources known for the neoclassical theory. As a result of this rarity, business entities arises conflict about their use. This conflict is permitted by making transactions, which are basic institutions of society. Without such institutions, the conflict of interest would be degenerated into universal violence of people with each other, which would lead to enormous economic and social damage.

Transaction - who are, on J. Commons, the main category of economic science, cannot be confused with ("simple") exchange of resources, goods or services. According to the definition of J. Commons, "Transaction is not exchange of goods, but alienation and assignment of property rights and freedoms created by society." The difference between the exchange and transaction indicates the difference between the physical movement of the goods and the movement of ownership of these benefits.

Transactions, in turn, are divided into market, managerial and ourselves.

The market transaction is the only twist of transaction, which suggests the same legal status of its participants (counterparties). This means that for the implementation of the market transaction, the mutual voluntary consent of the counterparties should be made. In other words, the market transaction is the exchange of ownership rights on the benefit on the basis of a voluntary agreement of both parties to this transaction. As examples of market transactions, any transactions can be given in free markets - the purchase of consumer goods, the provision of a loan, hiring to work, etc.

Management transaction, on the contrary, implies the legal advantages of one of the counterparties, which owns the right to make a decision. This type of transaction is based on the management relationship - subordination. Examples of such relations are the relationship between the slave owner and the slave, the boss and subordinate, master and student, etc. Management transactions play a leading role in firms, state structures and other organizations based on hierarchical relations.

The incidental transaction is similar to management transaction, since it also implies the asymmetry of the legal status of counterparties. The specifics of the increasing transaction is that the party entrusted with exceptional decision-making powers is a collective body that performs the function of the specification of property rights. This body is the state. Type examples of the incidental transaction are taxes or judicial decisions that redistributing wealth on one side to another.

It is easy to see that in the dependence of the ratio of market transactions, on the one hand, and management and rising transactions, on the other hand, determines the ratio of market and hierarchical types of economic relations between people.

At different stages of the development of society, in various economic systems, the relative role of different types of transaction varies. For example, in a slave-owned private society, management transactions play the main role, while at the stage of the origin of capitalism, during the period of "shopping capitalism", - market.

In addition to the "shopping capitalism", J. Commons also allocated "industrial" and (modern) "Financial capitalism". The main features of "financial capitalism" are manifested not only in strengthening the role of banks and other financial institutions, but also in the emergence of developed collective social groups - trade unions, corporations and political parties. It is these groups that are the main parties involved in the conclusion of transactions at the "Financial Capitalism" stage.

The actual implementation of transactions depends on the "working rules", which are various judicial norms. These norms partly spontaneously evolve, as a result of concrete court decisions taken after addressing transaction participants, and partly form artificially, through relevant state regulations. The state, according to J. Kommonsu, plays a big role and as a body that reconciles the interests of the part of transactions, and as a force forcing the fulfillment of obligations taken over by the participants of the transaction. Thus, the state contributes to a more harmonious resolution of conflicts between collective groups of business entities.

... "allowed to give a description of some new social aspects of the economic life of the era of imperialism, which was expelled from the position of the methodology of marzhinalism. In the field of methodology, institutionalism, according to many researchers, has a lot in common with the historical school of Germany. For example, V. Leontyev writes that outstanding representatives of American economic thought, having in mind T. Weblin and W. K. ...

The decisive role belongs to group psychology, and not individuals (classical political economy). This expresses unity with the historical school of Germany. Institutionalism is one of the leading directions of modern economic science, which formed in the first decades of the 20th century, as an alternative to a neoclassical school. The center of attention of institutionalists is the mutual influence of the aggregate ...

Features of the emergence and evolution of institutionalism - directions in the economic thought making the chief emphasis on the analysis of institutions. Distinctive features of American institutionalism. John Maurice Clark's theory is an outstanding scientist and economist.

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Books

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Jeffrey Archer. False impression. Richard Paul Evans. Sunflower. Mary Higgins Clark. Two girls in blue. John Grohan. Marley and me, Jeffrey Archer, Richard Paul Evans, Mary Higgins Clark, John Grohan. This book includes four novels of foreign authors ...

John Maurice Clark (Eng. John Maurice Clark; November 30, 1884, Northampton - June 27, 1963, Westport) - American economist, investigated the effect of the accelerator.

Biography

John Clark was born on November 30, 1884 in Northampton, Massachusetts. Son J. B. Clark (1847-1938).

He received a bachelor's degree in 1905 in Amherst College, in 1910 received a doctoral degree in Columbia University. He taught in 1908-1910 in Colorado College, in 1910-1915 in Amherst College, in 1915-1926 at the University of Chicago. In 1926-1957, Professor of the Department of Economics of the Columbia University instead of the Father. In 1934-1954, collaborated with a number of US government agencies.

Main contribution to science

Clark Active supporter of state regulation of the economy, and in the field of anti-crisis activities. One of the founders of the theory of oligopoly. He took part in the development of the theory of diffusion of benefits, according to which the results of economic progress are distributed evenly between all classes of society.

Clark first pointed out the role of information costs and decision-making costs. For optimal solution, costs associated with the collection and processing of information are taken, where the benefits of this information are not defined in advance.

Clark first introduced the concept of overhead costs, which cannot be attributed to a specific enterprise cost center, they are not directly related to the production process. Clark indicates that they are a consequence of large investments in fixed assets. Overhead costs are covered at the expense of prices, which means there is no connection between pricing with the principle of equalizing the limit costs and revenue.

Clark criticized the concept of perfect competition in connection with uniformity and proposed the concept of effective competition, in which it is possible to achieve an acceptable level of social welfare, may be a guide for conducting state policy to stimulate competition.

Clark in the study of business cycles allocates many reasons for the cycles and in the article released in 1917. Business acceleration and the law of demand; The technical factor in economic cycles "reiterates the effect of the accelerator as a phenomenon that enhances cyclic oscillations of economic activity. Clark put forward the idea of \u200b\u200bthe need for state regulation of cycles. He first in the history of economic analysis put forward the idea of \u200b\u200bembedded (automatic) stabilizers, which should be the tax system.

Awards

1935 - President of the American Economic Association,
1952 - Francis Walker Medal.

Bibliography

Clark J.M. Standards of Reasonableness In Local Freight DiscrimInations. - New York: Columbia University, 1910
Clark J.M., Clark J.B. The Control of Trusts. - New York: Macmillan, 1914
Clark J.M. Business Acceleration and The Law of Demand; A Technical Factor in Economic Cycles // Journal of Political Economy, Vol. 25, March 1917, pp.217-235
Clark J.M. Studies in the economics of overhead costs. - Chicago: University of Chicago Press, 1923
Clark J.M. Social Control of Business. - Chicago: University of Chicago Press, 1926
Clark J.M. The Costs of the World War To the American People. - New Haven, CT: Yale University Press, 1931
Clark J.M. Strategic Factors in Business Cycles. - New York: National Bureau of Economic Research, 1934
Clark J.M. The Economics of Planning Public Works. - Washington, DC: U.S. Government Printing Office, 1935
Clark J.M. Preface to Social Economics. - New York: Farrar & Rinehart, 1936
Clark J.M. An Alternative To Serfdom: Five Lectures Delivered On The William W. Cook Foundation At The University of Michigan, March 1947. -oxford, England: Basil Blackwell, 1948
Clark J.M. Contribution to the Theory of Business Cycles // Wesley Clair Mitchell: The Economic Scientist / Ed. A.F. BURNS, - NBER, 1952 PP.193-206 - ISBN 0-87014-052-3
Clark J.M. The Ethical Basis of Economic Freedom. - Westport, CT: C.K. Kazanjian Economics Foundation, 1955
Clark J.M. Economic Institutions and Human Welfare. - New York: Alfred A. Knopf, 1957
Clark J.M. Competition As A Dynamic Process. - Washington, DC: Brookings Institution, 1961.

1.4 Contribution to the Economic Theory J. M. Clark

Like T. Weblin and W. K. Mitchell, J. M. Clark interpreted human behavior as based on habits, and not on instant accusals of benefits and costs, pleasures and suffering. But he went in analyzing this sphere further than other old institutionalists, for the first time in the history of economic analysis, explicitly indicating the majority of information costs and decision-making costs. The fact is that to make an optimal solution, it is necessary to incur costs associated with the collection and processing of information. However, the benefits of this information are not yet known in advance. In addition, direct decisions also require significant (psychological) costs (while the benefits of efforts to make a decision are also not known to a priori). These costs create irresistible obstacles to optimizing behavior and serve as the basis for the formation of habits. Of course, such habits are not the result of some maximizing choice or optimization. Thus, J. M. Clark anticipated both the theory of limited rationality of Symeon and the theory of searching for information J. Stigler (despite the fact that the last less

realistic compared to the approach J. M. Clark).

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