Shrinking capitalism
The problem with the single blue line is not what is there – markets and governments will remain essential – as what is entirely missing. From a descriptive standpoint this includes the essential role of the private market, exercise of power and of social norms in undergirding a modern economy.
Shrinking Capitalism
Authors: Samuel Bowles, Wendy Carlin
From: Santa Fe Institute, UCL
A price-and-norms based model
Michael Richter and Ariel Rubinstein show that markets can clear in different ways, some of which rely entirely on social norms. These social norms specify what is allowed and what is forbidden and are so deeply embedded psychologically that no outside authority is needed to enforce them.
[A]s economists we are used to thinking about prices as the central mechanism for balancing between conflicting desires in the economy. In the absence of externalities we are amazed by the “positive features” of the price mechanism. Our grand vision is to divert attention to other social institutions which can (and do) bring harmony into a society.
The permissible and the forbidden
Authors: Michael Richter, Ariel Rubinstein
From: University of London, New York University
