Spontaneous Order, Robert Sugden Argues That Certain

¶ … Spontaneous Order," Robert Sugden argues that certain patterns of behavior that can lead to certain economic structures or activities can arise spontaneously in communities of individuals. These structures, such as a seemingly random system of driftwood ownership rights in Yorkshire, survive because they are easily replicated, Sugden argues. If this is the case, it would seem that more simplistic economic structures would be more prevalent due to their easier replicability, yet this is not really the case -- an issue Sugden does not deal with sufficiently. Similarly, H. Peyton Young identifies the evolution of conventions as an important economic concept, showing that classical game theory is inadequate in light of human subjectivities. Both of these articles examine the failure of previous modes of thinking in capturing or accurately modeling human behavior when making economic decisions, though Young's more concrete approach is far more convincing. That is, it is relatively easy to understand and agree with Sugden's argument concerning the development of certain spontaneous structures of order and decision-making, but his concept of replicability being the key element in their survival is les clearly rendered.

Response 3

In contrast to the readings immediately prior, Thorstein Veblen in "Why Is Economics Not an Evolutionary Science" argues that economics as practiced during the late nineteenth century was not an evolutionary science. Veblen comes to this conclusion for several reasons, not the least of which is that in practice the theories and classifications of evolutionary sciences simply do not have a great deal to say that is directly on topic. Specifically, Veblen contends that a taxonomic rather than an evolutionary approach to economics has been and remains the most useful grand theoretical framework for this area of human knowledge. At the same time, he sees that knowledge is beginning to be organized in sequence, and thus insists that economics must become evolutionary in order to remain current. The length and complexity of Veblen's argument makes it difficult to determine with any sort of concrete certainty what he is saying, or how the implications of his observations can be brought to bear on further investigations and developments in economic theory and knowledge. Though interesting, Veblen's discussion seems entirely esoteric and ultimately impractical -- something he himself seems to acknowledge at certain points. Ultimately, he seems to be arguing, the evolutionary or non-evolutionary nature of economics as a science is a matter of perspective, and not an issue with direct practical implications, and this is not something that it is at all easy to agree with given the changing knowledge of the past century.

Response 4

In "The Nature of the Firm," Ronald Coase outlines some rather fundamental yet profound phenomena and realities that must be noted in order to make sense of how organizations -- business firms -- form and operate in market systems. As free markets are assumed to be efficient, providing whatever is demanded at the best possible price and timeline combination sought by consumers (whether they are end consumers or other businesses), it would seem to make sense that entrepreneurs would simply contract necessary operations out to the market rather than forming burdensome organizations that are insulated from the efficiency-creating forces of the market. Coase details the transaction costs of such contracting, however, arriving at a market-driven explanation for why firms form, and why organizations are often more efficient at carrying out certain functions than the market would be. Coase also notes the limitations to such internal capabilities in terms of efficiency, however, and is thus able to explain both why organization grow and why they do not internalize all support operations. This is one of the most lucid and compelling economic articles known to the author, and this is likely a reason that this essay has remained influential since it was authored almost a full century ago.

Response 5