Key Ideas in Economics Summary

The Modern Stuff
Douglass North
- Institutions = Any socially imposed constraint upon human behaviour, the rules of the game for human interaction
- Institutions limit and guide human interaction and choice thus affecting economic activity
- Key institutions: market, firm and supply contracting
- Dynamic economy
- Transformation and transactional costs
-->Transaction cost = cost of specifying what is being excahnged and enforcing the subsequent agreement
--> Enforcement cost = informal constraints restricting exchange to small group = formal legally enforced rights applicable to large group
--> Specification cost = costs of measuring what is being exchanged (e.g. quality)
- Creating efficient institutions
--> Effective traditions of hard work, honesty and integrity which lower costs of transaction
--> Low cost of information -> ideas easily spread
- Role of state
--> Ensure contracs made in society are kept
--> 3 levels - 1st party (self), 2nd party (retaliation from others), 3rd party (public loss of face and law)
--> Danger of enforcer inflation -> increased costs within economy
--> Need for governmental and intergovernmental enforcement in large economy -> require global govt?

David Pearce
- Sustainability
- Opportunity cost in environmental decision making
- Different forms of capital : Man-made, Human, Natural, Social
- Rising/constant capital rule as condition for sustainable development
- Weak and strong sustainability - weak = total not reduced, strong = components not reduced
- Measuring sustainability - Saving + Appreciation(Human) > Depreciation(man-made + env + social)
- Critical Natural Capital: eg ozone layer
- Equity: inter and intragenerational equity
- Trade offs via valuation of environmental resources so better choices can be made
- Valuing the environment: makes case for preserving environment
- Paying for harm to environment via taxes
- Total econ value = actual use value + option value + existence value
- Precautionary principle as basis for environmental policy making

Amartya Sen
- Social choice theory ??
- Poverty and Famines
-->Entitlement-endowment approach
-->If price of food rises but not income -> famine
-->Famine arises when growth disproportionately benefits one section of population over others -> pull on prices
- Role of women in development
- Freedom and development
-->Capability approach -> emphasize capability, rather than the actual product
-->Increase in capability -> increases freedom -> development

Anthony Giddens
- Third way: Combine market with govenment steering influence, in democratic society with a commitment to community goals
- Self and social structure
- Class structuration and reshaping them by providing greater opportunity
- Individualism to create solidarity within communities
- Globalisation: Use individuality to build new democracies based on community values to counter globalisation
- Third way values: :Equality, Protection of vulnerable, Freedom as autonomy, No rights without responsibilities, No authority without democracy, Cosmopolitan pluralism, Philosophic conservatism

Jose Bove
- Anti capitalist globalisation
- Technology stripping meaning from life
- Emphasis on free trade, capitalist growth models fails to understand and meet needs of ordinary people
- Popular protest vs neatly constructed ideological theories
- Free trade in agriculture destroy power of small farmers, making them subserviant to capitalist agribusinesses.
- Countries no longer choose own food policies
- Alternative institutions for world trading
--> Right to impose own tariffs
--> Prevention of multinational food producers from dumping cheap produce in local markets
--> Abolish right of multinationals to patent on living things
- Critique of malbouffe, junk food.