PART ONE THE EMERGENCE OF MODERN ECONOMIC SOCIETYC SOCIETY CHAPTER 1 THE ECONOMIC PROBLEM

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1 CONTENTS INTRODUCTION 1 PART ONE THE EMERGENCE OF MODERN ECONOMIC SOCIETYC SOCIETY CHAPTER 1 THE ECONOMIC PROBLEM 7 The individual and society 8 División of labor 9 Economics and scarcity 10 The tasks of economic society 10 Production and distribution problems 11 Mobilizing effort 11 Allocating effort 12 Distributing output 12 The three solutions to the economic problem 13 Tradition 14 The cost of tradition 15 Command 16 The impact of command 17 The market 18 Economics and the market system 19 CHAPTER 2 THE PRE-MARKET ECONOMY 23 The economic organization of antiquity 24 Agricultural foundation of ancient societies 25 Economic life of the cities 27 Slavery 28 The social surplus 28 Wealth and power 29 "Economics" and social justice in antiquity 30 Economic society in the middle ages 32 Manorial organization of society 34 Economics of manorial life 36 Town and fair 36 Guilds 37 Medieval economics 39 Prerequisites of change 42 CHAPTER 3 THE EMERGENCE OF THE MARKET SOCIETY 47 The itinerant merchant 47 Urbanization 49 The crusades 50 Growth of national power 51 Exploration 52 Change in religious climate 53 Breakdown of the manorial system 56 Appearance of the economic aspect of life 58 Labor, land, and capital come into being 58 Enclosures 59 Factors of production 61 Property in men 62 Economics and the market society 62 Rise of the "profit motive" 63 The invention of economics 63 The "philosophy" of trade 64 The growing wealth of nations 64 Adam Smith's growth model 65 The dynamics of the system 66

2 The market mechanism 67 The market and allocation 67 The self-regulating system 68 The market system and the rise of capitalism 68 CHAPTER 4 THE INDUSTRIAL REVOLUTION 72 Pace of technical change 73 England in Rise of the new men 76 The industrial entrepreneur 78 Industrial and social repercussions 80 Early capitalism and social justice 83 The industrial revolution in the perspective of theory 85 Capital and productivity 86 Capital and saving 88 Growth in early capitalism 89 Incentives for growth 90 The market as a capital-building mechanism 91 CHAPTER 5 THE IMPACT OF INDUSTRIAL TECHNOLOGY 95 Impact of one invention 96 The general impact of technology 98 Urbanization 98 Interdependence 99 Work and its discontents 99 Alienation 100 Distribution of the labor forcé 100 The rise of unionism 101 Industrial unionism 102 Mass production 104 Economies of large-scale production 105 The great entrepreneurs 106 CHAPTER 6 THE CHANGE IN MARKET STRUCTURE 111 Change in competition 112 Limitation of competition 113 Trusts and mergers 114 Threat of economic feudalism 115 Rise of antitrust legislation 116 Structure of the national market: periphery and center 118 Mergers 120 Conglomérates and the marketplace 120 Stability of market shares 121 Causes of stabilization: antitrust 122 The new corporate executive 123 Oligopoly and market behavior 124 Challenge to consumer sovereignty 126 Pressure on prices 127 Power and responsibility 128 Remaining possibilities 132 Power: the unresolved problem 133 CHAPTER 7 THE GREAT DEPRESSION América in The great crash 139 The great depression 140 Causes of the depression: speculation 141 Weakness on the farm 141

3 Weakness in the factory 143 Technology and employment 144 Maldistribution of income 145 Critical role of capital formation 146 Effects of falling investment 148 The multiplier 148 CHAPTER 8 THE EVOLUTION OF GUIDED CAPITALISM 151 The new deal 152 The farm problem 153 Farm results 153 The attempt to control markets 154 Countering the depression 155 The economy fails to respond 156 Compensatory government spending 157 Impact of the war 158 Aftermath of the war 159 Instruments of policy 161 Redistribution of income 162 Income and wealth 164 Growth of the government sector 165 Another 1929? 166 The new economics 166. Remaining problems 168 CHAPTER 9 PROBLEMS OF THE MID-1970s 170 Inflation 170 A historical perspective 170 Recent inflationary experience 171 Worldwide inflation 172 The cost of inflation 173 Who has lost? 173 Why is inflation such a problem? 174 Controlling inflation 175 Wage and price controls 176 Incomes policy 177 Inflation as a way of life 177 The roots of inflation 178 A last word 180 The problem of unemployment 180 Forms of unemployment 181 Combatting unemployment 181 The U.S. and European experience 184 The military subeconomy 185 The department of defense 185 The web of military spending 186 Military dependency 187 Conversión possibilities 188 The problem of economic growth 189 Growth and the quality of life 189 Material constraints 191 The exponential problem 192 The technological factor 192.Doomsday? 193 Zero growth? 193 Problems of slow growth 194 Global inequality 194 Stationary capitalism? 194 A spaceship economy 195 PART TWO THE CHALLENGE TO THE MARKET SYSTEM CHAPTER 10 THE DRIFT OF EUROPEAN ECONOMIC HISTORY 201

4 Trials of capitalism abroad 201 European capitalism: feudal heritage and national rivalry 202 Crucial role of European trade 205 Breakdown of international trade 206 European socialism 206 Recovery of European capitalism 207 The Common Market 208 Socialism and modern European capitalism 210 Conservative planning 210 Europe and America 211 Socialist planning in the USSR 212 The drive to total planning 214 The planning mechanism 215 The plan in action 216 Planning and efficiency 217 Plans for reform 219 CHAPTER 11 THE MULTINATIONAL CORPORATION 223 The multinational corporation 223 International direct investment 224 The "American challenge" 225 The international challenge 226 Emergence of multinational production 227 Motives for overseas production 227 Economics of multinational production 228 Political economics of multinational enterprise 230 Creating pan-national enterprises 230 National prerogatives 231 Host and hostage 232 Multinationals and world order 233 Unresolved questions 234. An unwritten ending 235 CHAPTER 12 THE UNDERDEVELOPED WORLD 238 Background to underdevelopment 239 Conditions of backwardness 240 Miniagriculture 241 Lack of capital 241 Social inertia 242 Further problems: population growth 243 Nineteenth-century imperialism 244 Imperialism today 245 The engineering of development 246 The hidden labor surplus 247 Problem of capital equipment 248 Trade problems 249 The great oil crisis 250 Other cartels? 251 Limitations on prívate foreign investment 251 The avenue of foreign aid 252 Economic possibilities for growth 252 The critical balance 253 Economic prospects: the "green revolution" 254 Social and political problems 254 Collectivism and underdevelopment 255 Political implications 255

5 Social stresses 256 The ecological problem 257 CHAPTER 13 THE TRAJECTORY OF ECONOMIC SOCIETY 267 Stages of economic development 261 World map 262 Inception of growth 264 Present vs. past 264 Economies in mid-development 265 Plan vs. market 266 The invisible hand 266 High-consumption economies 267 Convergence of mechanisms 268 Common problems 269 Convergence and history 271 CHAPTER 14 IS CAPITALISM THE PROBLEM? 274 Definitions: what is capitalism? socialism? 274 Ideal types vs. real cases 275 Capitalism and socialism as economic systems 276 Capitalism and socialism as political systems 277 Values and life-styles under capitalism and socialism 279 Problems and solutions 280 American capitalism in crisis 281 Capitalism, or American capitalism? 282 Two hypotheses that fail: size and homogeneity 283 The race problem 283 The tradition of democratic individualism 284 Lack of a social democratic heritage 285 The problem of military power 286 What should be done? 288 The moral challenge 289 INDEX 297