Putting Jurisprudence Back Into Economics by David Ellerman
Author:David Ellerman
Language: eng
Format: epub
ISBN: 9783030760960
Publisher: Springer International Publishing
This view is also standard today in neoclassical Economics, e.g., therights of authority at the firm level are defined by the ownership of assets, tangible (machines or money) or intangible (goodwill or reputation). (Holmstrom and Tirole 1989, p. 123)
In addition to swallowing the fundamental myth whole (and ignoring the role of the employer-employee contract in determining the ârights of authority at the firm level,â the cavalier inclusion of âgoodwillâ in âthe ownership of assetsâ by two winners of the Nobel Prize in Economics is all too typical of the superficial treatment of property rights in the neoclassical Economics literature.9
It is conceptually trivial to see that in the current market system, the product and governance rights are not part and parcel of the ownership of capital. Human beings are not the only rentable inputs in the current system; capital may also be rented. The party who hired in the capital and paid for all the other used-up inputs would have the legally defensible first claim on the produced output, not the owner of the capital asset.
The fundamental myth often hides behind misconceptions about corporations: âAre you saying a corporationâs ownership of its product is a myth?â Of course, a corporation owns âits productâ (by definition of âits productâ) but what determines whether or not the product produced using, say, a corporationâs factory building is âits productâ? For instance, must the Chrysler Corporation own the car-bodies that rolled off the assembly line in the factory owned by Chrysler? If Chrysler at one point leased its Conner Avenue plant to another automobile company such as Studebaker-Packard, it is easy to see that the answer is actually âNo.â Those car-bodies would be owned by the other company who was making the lease payments and paying for all the other inputs in production and who thus would have the defensible claim on the produced car-bodies. Neoclassical economists, Nobel laureates or not, should at least be able to cross the pons asinorum by understanding those conceptual implications of capital goods also being rentable like persons.
The grip of the fundamental myth in one form or another seems to account for the failure to even formulate the question of the appropriation of the assets and liabilities that are created in normal production activities. The professional defenders of the human rental system are only too happy to accept Marxâs Gift , the fundamental-myth characterization of the system as being based on the âprivate ownership of capitalâ and thus also the misnomer of calling the human rental system âcapitalism.âThe common understanding in Marxist and well as non-Marxist theories of the relation between power in the production process and market economy has no logical underpinning. ... Contrary to Marxian thoughts, it is the nature of the hiring contract, not the market economy as such, that entails power in a market-based production process. (Rothstein 2011, 208 fn. 3)
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