Commons
The commons is the cultural and natural resources accessible to all members of a society, including natural materials such as air, a habitable earth. These resources are held in common, not owned privately. Commons can be understood as natural resources that groups of people manage for individual and collective benefit. Characteristically, this involves a variety of informal norms and values employed for a governance mechanism. Commons can be defined as a social practice of governing a resource not by state or market but by a community of users that self-governs the resource through institutions that it creates; the Digital Library of the Commons defines "commons" as "a general term for shared resources in which each stakeholder has an equal interest". The term "commons" derives from the traditional English legal term for common land, which are known as "commons", was popularised in the modern sense as a shared resource term by the ecologist Garrett Hardin in an influential 1968 article called The Tragedy of the Commons.
As Frank van Laerhoven and Elinor Ostrom have stated. The precision of this distinction is not always maintained; the use of "commons" for natural resources has its roots in European intellectual history, where it referred to shared agricultural fields, grazing lands and forests that were, over a period of several hundred years, claimed as private property for private use. In European political texts, the common wealth was the totality of the material riches of the world, such as the air, the water, the soil and the seed, all nature's bounty regarded as the inheritance of humanity as a whole, to be shared together. In this context, one may go back further, to the Roman legal category res communis, applied to things common to all to be used and enjoyed by everyone, as opposed to res publica, applied to public property managed by the government; the examples below illustrate types of environmental commons. In medieval England the common was an integral part of the manor, was thus part of the estate in land owned by the lord of the manor, but over which certain classes of manorial tenants and others held certain rights.
By extension, the term "commons" has come to be applied to other resources which a community has rights or access to. The older texts use the word "common" to denote any such right, but more modern usage is to refer to particular rights of common, to reserve the name "common" for the land over which the rights are exercised. A person who has a right in, or over, common land jointly with another or others is called a commoner. In middle Europe, commons were kept, till the present; some studies have compared the German and English dealings with the commons between late medieval times and the agrarian reforms of the 18th and 19th centuries. The UK was quite radical in doing away with and enclosing former commons, while southwestern Germany had the most advanced commons structures, were more inclined to keep them; the Lower Rhine region took an intermediate position. However, the UK and the former dominions have till today a large amount of Crown land, used for community or conservation purposes.
Based on a research project by the Environmental and Cultural Conservation in Inner Asia from 1992 to 1995, satellite images were used to compare the amount of land degradation due to livestock grazing in the regions of Mongolia and China. In Mongolia, where shepherds were permitted to move collectively between seasonal grazing pastures, degradation remained low at 9%. Comparatively and China, which mandated state-owned pastures involving immobile settlements and in some cases privatization by household, had much higher degradation, at around 75% and 33% respectively. A collaborative effort on the part of Mongolians proved much more efficient in preserving grazing land. Widespread success of the Maine lobster industry is attributed to the willingness of Maine's lobstermen to uphold and support lobster conservation rules; these rules include harbor territories not recognized by the state, informal trap limits, laws imposed by the state of Maine. The lobstermen collaborate without much government intervention to sustain their common-pool resource.
In the late 1980s, Nepal chose to decentralize government control over forests. Community forest programs work by giving local areas a financial stake in nearby woodlands, thereby increasing the incentive to protect them from overuse. Local institutions regulate harvesting and selling of timber and land, must use any profit towards community development and preservation of the forests. In twenty years, locals have noticed a visible increase in the number of trees. Community forestry may contribute to community development in rural areas – for instance school construction and drinking water channel construction, road construction. Community forestry has proven conducive to democratic practices at grass roots level. Acequia is a method of collective responsibility and management for irrigation systems in desert areas. In New Mexico, a community-run organization known as Acequia Associations
Social market economy
The social market economy called Rhine capitalism, is a socioeconomic model combining a free market capitalist economic system alongside social policies that establish both fair competition within the market and a welfare state. It is sometimes classified as a coordinated market economy; the social market economy was promoted and implemented in West Germany by the Christian Democratic Union under Chancellor Konrad Adenauer in 1949. Its origins can be traced to the interwar Freiburg school of economic thought; the social market economy was designed to be a third way between laissez-faire economic liberalism and socialist economics. It was inspired by ordoliberalism, social democratic ideas and the political ideology of Christian democracy, or more the tradition of Christian ethics; the social market economy refrains from attempts to plan and guide production, the workforce, or sales, but it does support planned efforts to influence the economy through the organic means of a comprehensive economic policy coupled with flexible adaptation to market studies.
Combining monetary, trade, customs and social policies as well as other measures, this type of economic policy aims to create an economy that serves the welfare and needs of the entire population, thereby fulfilling its ultimate goal. The "social" segment is wrongly confused with socialism and democratic socialism and although aspects were inspired by the latter the social market approach rejects the socialist ideas of replacing private property and markets with social ownership and economic planning; the "social" element to the model instead refers to support for the provision of equal opportunity and protection of those unable to enter the free market labor force because of old-age, disability, or unemployment. Some authors use the term "social capitalism" with the same meaning as social market economy, it is called "Rhine capitalism" when contrasting it with the Anglo-Saxon model of capitalism. Rather than see it as an antithesis, some authors describe Rhine capitalism as a successful synthesis of the Anglo-American model with social democracy.
The German model is contrasted and compared with other economic models, some of which are described as "third ways" or regional forms of capitalism, including Tony Blair's Third Way, French dirigisme, the Dutch polder model, the Nordic model, Japanese corporate capitalism and the contemporary Chinese model. A 2012 comparative politics textbook distinguishes between the "conservative-corporatist welfare state" and the "labor-led social democratic welfare state"; the concept of the model has since been expanded upon into the idea of an eco-social market economy as not only taking into account the social responsibility of humanity, but the sustainable use and protection of natural resources. Social market economies aims to combine free initiative and social welfare on the basis of a competitive economy; the social market economy is opposed to laissez-faire policies and to socialist economic systems and combines private enterprise with regulation and state intervention to establish fair competition, maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, social welfare and public services.
The term "social" was established by Adenauer to prevent further reference to Christian socialism, used in the early party agenda Ahlener Programm in 1947. Although the social market economy model evolved from ordoliberalism, this concept was not identical with the conception of the Freiburg School as it emphasized the state's responsibility to improve the market condition and to pursue a social balance. In contrast to Walter Eucken, who sought an answer to the social question by establishing a functioning competitive order within a constitutional framework, Alfred Müller-Armack conceived the social market economy as a regulatory policy idea aiming to combine free enterprise with a social programme, underpinned by market economic performance. In putting social policy on par with economic policy, Müller-Armack's concept was more emphatic regarding socio-political aims than the ordoliberal economic concept; this dual principle appeared in the name of the model. Although the adjective "social" attracted criticism as a decorative fig leaf or conversely as a gateway for antiliberal interventionism, it meant more than distinguishing the concept from that of laissez-faire capitalism on the one side and of ordoliberal conceptions on the other.
In drawing on Wilhelm Röpke's anthropo-sociological approach of an economic humanism leading to a Civitas Humana, Müller-Armack pursued a "Social Humanism" or "Social Irenics"—the notion "irenics" derives from the Greek word εἰρήνη, which means being conducive to or working toward peace, moderation or conciliation—to overcome existing differences in society. Therefore, the social market economy as an extension of neoliberal thought was not a defined economic order, but a holistic conception pursuing a complete humanistic societal order as a synthesis of conflicting objectives, namely economic freedom and social security; this socio-economic imperative managed by a strong state—in contrast to the ordoliberal minimal state safeguarding the economic order—is labelled by the ambiguous but historical term Der Dritte Weg. The concept of the social market economy received fundamental impulses from reflection and critique of historical economic and social orders, namely Smithian laissez-faire liberalism on the one hand and Marxian socialism on the other.
Furthermore, various Third Way conceptions prepared the g
Robinson Crusoe economy
A Robinson Crusoe economy is a simple framework used to study some fundamental issues in economics. It assumes an economy with one producer and two goods; the title "Robinson Crusoe" is a reference to the novel of the same name authored by Daniel Defoe in 1719. As a thought experiment in economics, many international trade economists have found this simplified and idealized version of the story important due to its ability to simplify the complexities of the real world; the implicit assumption is that the study of a one agent economy will provide useful insights into the functioning of a real world economy with many economic agents. This article pertains to the study of consumer behaviour, producer behaviour and equilibrium as a part of microeconomics. In other fields of economics, the Robinson Crusoe economy framework is used for the same thing. For example, in public finance the Robinson Crusoe economy is used to study the various types of public goods and certain aspects of collective benefits.
It is used in growth economics to develop growth models for underdeveloped or developing countries to embark upon a steady growth path using techniques of savings and investment. In the Robinson Crusoe economy, there is only one individual – Robinson Crusoe himself, he acts both as a producer to maximise profits, as well as consumer to maximise his utility. The possibility of trade can be introduced by adding another person to the economy; this person is Man Friday. Although in the novel he plays the role of Crusoe's servant, in the Robinson Crusoe economy he is considered as another actor with equal decision making abilities as Crusoe. Along with this, conditions of Pareto Efficiency can be analysed by bringing in the concept of the Edgeworth box; the basic assumptions of the Robinson Crusoe economy are as follows: The island is cut off from the rest of the world There is only a single economic agent All commodities on the island have to be produced or found from existing stocks Robinson Crusoe is assumed to be shipwrecked on a deserted island.
Similar to the choices that households face, Crusoe has only two activities to participate in – earn income or pass his time in leisure. The income generating activity in this case is gathering coconuts; as usual, the more time he spends in leisure, the less food he has to eat, conversely, the more time he spends gathering coconuts, the less time he has for leisure. This is depicted in figure 1. Crusoe's indifference curves depict his preferences for leisure and coconuts while the production function depicts the technological relationship between how much he works and how many coconuts he gathers. If the axes depicting coconut collection and leisure are reversed and plotted with Crusoe's indifference map and production function, figure 2 can be drawn: The production function is concave in two dimensions and quasi-convex in three dimensions; this means. But due to diminishing marginal returns of labour, the additional number of coconuts he gets from every additional hour of labour is declining.
The point at which Crusoe will reach an equilibrium between the number of hours he works and relaxes can be found out when the highest indifference curve is tangent to the production function. This will be Crusoe's most preferred point provided the technology constraint is given and cannot be changed. At this equilibrium point, the slope of the highest indifference curve must equal the slope of the production function. Recall that the Marginal rate of substitution is the rate at which a consumer is ready to give up one good in exchange for another good while maintaining the same level of utility. Additionally, an input's marginal product is the extra output that can be produced by using one more unit of the input, assuming that the quantities of no other inputs to production change. MPL = MRSLeisure, Coconuts where, MPL = Marginal Product of Labour, MRSLeisure, Coconuts = Marginal rate of substitution between Leisure and Coconuts Suppose Crusoe decides to stop being a producer and consumer simultaneously.
He decides he will consume the next. His two roles of consumer and producer are being split up and studied separately to understand the elementary form of consumer theory and producer theory in microeconomics. For dividing his time between being a consumer and producer, he must set up two collectively exhaustive markets, the coconut market and the labour market, he sets up a firm, of which he becomes the sole shareholder. The firm will want to maximise profits by deciding how much labour to hire and how many coconuts to produce according to their prices; as a worker of the firm, Crusoe will collect wages, as a shareholder, he will collect profits and as a consumer, he will decide how much of the firm's output to purchase according to his income and the prevailing market prices. Let's assume. For simplicity, assume that PriceCoconuts = $1.00. This assumption is made to make the calculations in the numerical example easy because the inclusion of prices will not alter the result of the analysis. For more details, refer to Numéraire commodities.
Assume that when the firm produces C amount of total coconuts, Π represents its profit level. Assume that when the wage rate at which the firm employs labour is w, L amount of labour will be employed. Π = C − w L C = Π + w L The above function describes iso-profit lines (the locus of combinations between labour and coconuts
Black market
A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by some form of noncompliant behavior with an institutional set of rules. If the rule defines the set of goods and services whose production and distribution is prohibited by law, non-compliance with the rule constitutes a black market trade since the transaction itself is illegal. Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. Examples include the drug trade, illegal currency transactions and human trafficking. Violations of the tax code involving income tax evasion constitute membership in the unreported economy; because tax evasion or participation in a black market activity is illegal, participants will attempt to hide their behavior from the government or regulatory authority. Cash usage is the preferred medium of exchange in illegal transactions since cash usage does not leave a footprint.
Common motives for operating in black markets are to trade contraband, avoid taxes and regulations, or skirt price controls or rationing. The totality of such activity is referred to with the definite article as a complement to the official economies, by market for such goods and services, e.g. "the black market in bush meat". The black market is distinct from the grey market, in which commodities are distributed through channels that, while legal, are unofficial, unauthorized, or unintended by the original manufacturer, the white market, in which trade is legal and official. Black money is the proceeds of an illegal transaction, on which income and other taxes have not been paid, which can only be legitimised by some form of money laundering; because of the clandestine nature of the black economy it is not possible to determine its size and scope. The literature on the black market has not established a common terminology and has instead offered many synonyms including: subterranean. There is no single underground economy.
These underground economies are omnipresent, existing in market oriented as well as in centrally planned nations, be they developed or developing. Those engaged in underground activities circumvent, escape or are excluded from the institutional system of rules, rights and enforcement penalties that govern formal agents engaged in production and exchange. Different types of underground activities are distinguished according to the particular institutional rules that they violate. Four major underground economies can be identified: the illegal economy the unreported economy the unrecorded economy the informal economyThe "illegal economy" consists of the income produced by those economic activities pursued in violation of legal statutes defining the scope of legitimate forms of commerce. Illegal economy participants engage in the production and distribution of prohibited goods and services, such as drug trafficking, arms trafficking, prostitution; the "unreported economy" consists of those economic activities that circumvent or evade the institutionally established fiscal rules as codified in the tax code.
A summary measure of the unreported economy is the amount of income that should be reported to the tax authority but is not so reported. A complementary measure of the unreported economy is the "tax gap", namely the difference between the amount of tax revenues due the fiscal authority and the amount of tax revenue collected. In the U. S. unreported income is estimated to be $2 trillion resulting in a "tax gap" of $450–$600 billion. The "unrecorded economy" consists of those economic activities that circumvent the institutional rules that define the reporting requirements of government statistical agencies. A summary measure of the unrecorded economy is the amount of unrecorded income, namely the amount of income that should be recorded in national accounting systems but is not. Unrecorded income is a particular problem in transition countries that switched from a socialist accounting system to UN standard national accounting. New methods have been proposed for estimating the size of the unrecorded economy.
But there is still little consensus concerning the size of the unreported economies of transition countries. The "informal economy" comprises those economic activities that circumvent the costs and are excluded from the benefits and rights incorporated in the laws and administrative rules covering property relationships, commercial licensing, labor contracts, financial credit and social security systems. A summary measure of the informal economy is the income generated by economic agents that operate informally; the informal sector is defined as the part of an economy, not taxed, monitored by any form of government, or included in any gross national product, unlike the formal economy. In developed countries the informal sector is characterized by unreported employment; this is hidden from the state for tax, social security or labour law purposes but is legal in all other aspects. On the other hand, the term black market can be used in reference to a specific part of the economy in which contraband is traded.
Goods and services acquired illegally and/or transacted for in an illegal manner may exchange above or below the price of legal market transactions: They may be cheaper than legal market prices. The supplier taxes; this is the case in the underground economy. Criminals steal goods and sell them below the legal market price, but there is no receipt, so for
Public good
In economics, a public good is a good, both non-excludable and non-rivalrous in that individuals cannot be excluded from use or could be enjoyed without paying for it, where use by one individual does not reduce availability to others or the goods can be consumed by more than one person. This is in contrast to a common good, non-excludable but is rivalrous to a certain degree. Public goods include knowledge, official statistics, national security, common language, flood control systems and street lighting. Public goods that are available everywhere are sometimes referred to as global public goods. Examples of public good knowledge is mens and youth health awareness, environmental issues, maintaining biodiversity and interpreting contemporary history with a cultural lexicon about protected cultural heritage sites and monuments and entertaining tourist attractions and universities. Many public goods may at times be subject to excessive use resulting in negative externalities affecting all users.
Public goods problems are closely related to the "free-rider" problem, in which people not paying for the good may continue to access it. Thus, the good may be overused or degraded. Public goods may become subject to restrictions on access and may be considered to be club goods. There is a good deal of debate and literature on how to measure the significance of public goods problems in an economy, to identify the best remedies. There is an important conceptual difference between the sense of "a" public good, or public "goods" in economics, the more generalized idea of "the public good", "a shorthand signal for shared benefit at a societal level". In a non-economic sense, the term is used to describe something, useful for the public such as education, although this is not a "public good" in the economic sense. However, services like education exhibit jointness of supply, i.e. the situation in which the cost of supplying a good to many users is the same, or nearly the same, as supplying it to one user.
Public goods exhibit jointness of supply, albeit with no diminishment of the benefits with increased consumption. Paul A. Samuelson is credited as the first economist to develop the theory of public goods. In his classic 1954 paper The Pure Theory of Public Expenditure, he defined a public good, or as he called it in the paper a "collective consumption good", as follows: which all enjoy in common in the sense that each individual's consumption of such a good leads to no subtractions from any other individual's consumption of that good... This is the property. A pure public good exhibits a second property called non-excludability: that is, it is impossible to exclude any individuals from consuming the good. However, many goods may satisfy the two public good conditions only to a certain extent or only some of the time; these goods are known as impure public goods. The opposite of a public good is a private good. A loaf of bread, for example, is a private good. A good, rivalrous but non-excludable is sometimes called a common-pool resource.
Such goods raise similar issues to public goods: the mirror to the public goods problem for this case is the'tragedy of the commons'. For example, it is so difficult to enforce restrictions on deep-sea fishing that the world's fish stocks can be seen as a non-excludable resource, but one, finite and diminishing. Elinor Ostrom proposed additional modifications to the classification of goods to identify fundamental differences that affect the incentives facing individuals Replacing the term "rivalry of consumption" with "subtractability of use". Conceptualizing subtractability of use and excludability to vary from low to high rather than characterizing them as either present or absent. Overtly adding a important fourth type of good—common-pool resources—that shares the attribute of subtractability with private goods and difficulty of exclusion with public goods. Forests, water systems and the global atmosphere are all common-pool resources of immense importance for the survival of humans on this earth.
Changing the name of a "club" good to a "toll" good since many goods that share these characteristics are provided by small scale public as well as private associations. The definition of non-excludability states that it is impossible to exclude individuals from consumption. Technology now allows radio or TV broadcasts to be encrypted such that persons without a special decoder are excluded from the broadcast. Many forms of information goods have characteristics of public goods. For example, a poem can be read by many people without reducing the consumption of that good by others; the information in most patents can be used by any party without reducing consumption of that good by others. Official statistics provide a clear example of information goods that are public goods, since they are created to be non-excludable. Creative works may be excludable in some circumstances, however: the individual who wrote the poem may decline to share it with others by not publishing it. Copyrights and patents both encourage the creation of such non-rival goods by providing temporary monopolies, or, in the terminology of public goods, providing a legal mechanism to enforce
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