Review Mill: the Harm Principle Review Locke: Labor is the Key to property Rights • The Survival Argument • Labor-Mixing Argument • The Value-Added Argument • The Justice Argument Critique…..

• The fruits of labor might have been deserved, but the land would have been there anyway • Should land continue to be yours even if you stop working on it? The “commons”

Before the Industrial revolution, It referred to a pasture that belonged collectively to a village

Or a piece of land owned by one person, but over which other people could exercise certain traditional rights, such as allowing their livestock to graze upon it The Problem with Collective Rationality • The Commons Dilemma – The Community is a group of individuals using individual rationality; self interest is at odds with the General Will • Tragedy of the commons: Enclosures: The Case for Private Property Tragedy of the global commons

• Water - Water pollution, Water crisis of over-extraction of groundwater and wasting water due to overirrigation leading to global water shortage • Forests - Frontier logging of old growth forest and slash and burn exacerbating climate change • The Oceans: Food and Energy Resources: Resource depletion • Climate Change- Burning of fossil fuels and consequential global warming and resource depletion

Modern Privatization of the Commons: New Enclosures • convert commons into private property?

• Are there some parts of the commons that can’t be privatized? Wall Street Protests Locke and Mill: What is the purpose of the state and how much power should it have? • “On what grounds may the state interfere to prohibit people from acting as they wish, or force them to act against their wishes?.

• Government may not interfere with individual liberty…..with freedom of the press or freedom of speech in its effort to mould beliefs and behaviour.

• And where do Mill’s views leave community? Explaining the The rise of the Market and Capitalism

Why do we accumulate? How did the Market come to dominate political economy? How do Market Rules define how we treat each other? Polanyi attacks this causal chain of economic liberal thought • Departure from the usual format! • From pure theory to theory in historical context: how we moved from a world where the preservation of community dominated theories of political economy to a world where individual freedom and property rights became cornerstones of the dominant theories of political economy----and remain so until this day.

Material conditions give rise to theories of political economy • Famine • Agricultural life • Rise in State power Polanyi’s argument

• Theoretical descriptions are “fictitious” • Modern capitalism is historically unique but came to define the rules by which we treat each other….. – Not “natural” (even though we think they are) – New definitions of value and accumulation beyond subsistence were Imposed by the state! – Through a process of ripping markets out of social institutions Review: Pre-Market Societies

•No Private Property

•No Money economy • If the market economy is so new, what came earlier? • Reciprocity and/or redistribution-based economic systems •No “possessive • Example: Trobriand Islanders of Western Melanesia. Individualism Families provide for their own, redistribution takes place through feasts • Mercantilism: pursuit of national security & power limits •No Markets international cooperation/trade Embeddedness of the Economy in Society

• Society – Family

– Clan Economy – Village – perish Before the Market

Community norms shape econ. life • Mutual obligations • Self-sufficiency Economy • Land is a gift from God •Minimal • Guilds profits, competition • Values: do what keeps the community •Just price Together, Justice

What had to Change? Forces of change: a commercial revolution • The Itinerant Merchant • Urbanization • The Black Plague • The Absolutist State

• Population growth and inflation • Mercantilism

The Result? Society is now embedded in the Market Economy

Market Norms gobble up and break apart community Free labor Money Exchange value Price determined By supply and Community • Economy demand solidarity People see declines: themselves as church, lords, individuals old norms

Market Economy

Markets—not natural to human nature– had to be created by states

From the Commercial revolution to the Industrial Revolution: The origins of Capitalism

• The importance of accumulation and savings • What does it mean to industrialize? • Industrialization and Capital • What is Capitalism? – Private property – Where does capital come from? – Savings and investment • Why? – The State – Culture The origin of accumulation and saving: The Protestant Ethic • A new value • Luther and Protestantism – The individual – Individual power and freedom • Calvin: achievement + savings = capital accumulation – Predestination and its challenge as a guide to behavior – Diligence, thrift, and a new kind of guilt: Protestant Ethic – The Protestant Ethic and the Industrial Revolution • Problems with the Argument