Through the Broken Window: Economic Systems

Wednesday, August 16, 2006

Economic Systems

Here's a list of Economic Systems.

Since it is wikipedia, each section is not a complete entry yet... It is interesting that they do not mention the household or socialist economies.

Here is one that caught my eye:

Slave labour was a key element in the development of many countries; most notably the United States of America. It can be considered an economic system because it fulfills the needs of the society, albeit in a very unjust way. The slave-owners want to produce a certain commodity, and they do it through the cheapest way they can. They buy slaves and use them to produce their commodity, giving them just enough to survive (food, clothing and shelter). In this way, they become extremely rich while the slaves live on subistence level.

Most notably the United States? This must have been writing by an America, because two hundred years does not compare to the thousands of years of other nations and states.

The slave-owners want to produce a certain commodity, and they do it through the cheapest way they can.

The cheapest way they can? How does that differ from normal "free" labor? Should regular laborers feel like slaves since their time at work has been 'bought' and they are 'forced' to be productive. Seems like a poor explanation, especially since it doesn't into account the slave owner's incentive to treat their best workers extremely well in order for them to be more productive.

It appears to resemble a Marxist approach of explaining the plight of the proletariat working for slave wages, rather than understanding and explaining an economic system based on slave labour.

# posted by Chris @ 8:08 AM

Comments:

Well, i think the Wiki-writer is on the right track. His only problem is that his explaination is incomplete.

You're right that profit maximizing describes the behavior of slave-labor and free-labor firms. So what is missing? Why don't all firms use slave-labor?

Well, the biggest factor to consider is that slave-labor isn't free. Even though you aren't paying these slaves wages, you do have to pay for their food/housing/general up-keep, not to mention to the cost of keeping them enslaved.

So, realizing this, we would only expect to see slave labor in situations where the costs of enslaving individuals were less than the costs of hiring them on the open market.

So the question we should be trying to ask is when, why, and where is slavery cheap enough to pursue? In the Americas 200 years ago, slaves were easy to keep enslaved because they a different color than everyone else and they didn't know the territory that well. Not to mention the fact there were no legal or social barriers to holding slaves.

My guess would be we would find similar conditions in other slave situations. Jews in Babylon? They didn't know the language or the territory. They were relativey easy to keep track of.

You will also notice that slavery is mostly concentrated on performing simple manual tasks like picking cotton. This makes it easy to monitor each slaves work and doesn't demand much in terms of quality.

My guess would be that since the slave isn't given a wage he has more incentive to shirk during work. That's why you wouldn't want a slave programer. The costs of monitoring his progress would be prohibitive.

So, to make a long story short, the question isn't whether firms try to maximize profits (we assume that they do). The question is how these firms balance the costs using slave labor and the costs of purchasing labor on an open market.

# posted by

Anonymous : 10:11 AM

I don't think it was written by an American. Notice the spelling: "Slave labour.

British spelling persists throughout the article.

So, unless the writer is cleverly disguising his/her provenance, I'd say he/she is British.

# posted by