Traditionally, economic analysis treats the economic system as one of the givens. The term "design" in the title is meant to stress that the structure of the economic system is to be regarded as an unknown. An unknown in what problem? Typically that of finding a system that would be, in a sense to be specified, superior to the existing one. The idea of searching for a better system is at least as ancient as Plato's Republic, but it is only recently that tools have become available for a systematic, analytical approach to such search procedures. This new approach refuses to accept the institutional status quo of a particular time and place as the only legitimate object of interest and yet recognizes constraints that disqualify naive Utopias.
Leonid HurwiczRelated topics
approach idea interest mean place problem search sense stress superior unknown yetRelated quotes
Writers after Coase have referred to the authority structure of the firm as a "visible hand" that works in combination with Smith's invisible hand. The everyday fact that employers exercise power over their employees - not news to most employees - had been a central theme in Marx's economics, but it was (and generally continues to be) overlooked by most neoclassical economists. Early in his studies Coase noted the similarity between the hierarchical organization of capitalist firms, with their reliance on command relations, and the then-existing system of centralized economic planning in the Communist countries, where production was carried out in accordance with orders from higher authorities and where market competition played little role.
Samuel Bowles
Fights between individuals, as well as governments and nations, invariably result from misunderstandings in the broadest interpretation of this term. Misunderstandings are always caused by the inability of appreciating one another's point of view. This again is due to the ignorance of those concerned, not so much in their own, as in their mutual fields. The peril of a clash is aggravated by a more or less predominant sense of combativeness, posed by every human being. To resist this inherent fighting tendency the best way is to dispel ignorance of the doings of others by a systematic spread of general knowledge. With this object in view, it is most important to aid exchange of thought and intercourse.
Nikola Tesla
When we approach the study of business cycle with the intention of carrying through an analysis that is truly dynamic and determinate in the above sense, we are naturally led to distinguish between two types of analyses: the micro-dynamic and the macro-dynamic types. The micro-dynamic analysis is an analysis by which we try to explain in some detail the behaviour of a certain section of the huge economic mechanism, taking for granted that certain general parameters are given. Obviously it may well be that we obtain more or less cyclical fluctuations in such sub-systems, even though the general parameters are given. The essence of this type of analysis is to show the details of the evolution of a given specific market, the behaviour of a given type of consumers, and so on.
Ragnar Frisch
First of all, no one knows his place in society, his class position or social status; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like. Nor, again, does anyone know his conception of the good, the particulars of his rational plan of life, or even the special features of psychology such as his aversion to risk or liability to optimism or pessimism. More than this, I assume that the parties do not know the particular circumstances of their own society. That is, they do not know its particular economic or political situation, or the level of civilization and culture it has been able to achieve. The persons in the original position have no information as to which generation they belong.
John Rawls
If they are unwilling to give, they should at least lend with all readiness and alacrity, not with the prospect of receiving anything back except the principal. ... In place of the interest which they determine not to accept they receive a further bonus of the fairest and most precious things that human life has to give, mercy neighborliness, charity, magnanimity, a good report and good fame. And what acquisition can rival these? Nay, even the great king will appear as the poorest of men if compared with a single virtue. For his wealth is soulless, buried deep in store-houses and recesses of the earth, but the wealth of virtue lies in the sovereign part of the soul, and the purest part of existence.
Philo