The market economy as a social system

Hiroto Tsukada The Market Economy as a Social System The Market Economy as a Social System Hiroto Tsukada The Market Economy as a Social System 123 Hiroto Tsukada (emeritus) Faculty of Economics Yamaguchi University Yamaguchi, Japan ISBN 978-981-13-1836-8 ISBN 978-981-13-1837-5 https://doi.org/10.1007/978-981-13-1837-5 (eBook) Library of Congress Control Number: 2018950830 © Springer Nature Singapore Pte Ltd 2018 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Preface Reforming society is the social sciences’ raison d’être What is society? Society can be considered to be a means by which human beings strive to create better lives Humans are driven by the need to fulfill wants, such as the acquisition of people (for example, heterosexual families), materials (food, clothing, etc.), and human relations (for example, satisfactory cooperation in production) How to acquire people can be considered to be a personal issue and is not dealt with here Therefore, it can be stated that humans need goods to live; in order to obtain them, humans cooperate In other words, human relationships emerge from the need to engage in cooperative activities to better fulfill needs, which leads to the creation of society This type of cooperation is distributive behavior, i.e., the sharing of labor and the resultant products Through such methods, humans obtain satisfaction from the product and the cooperative relationships developed to obtain it The cumulative total of this satisfaction represents the degree of satisfaction with a human society, and its magnitude determines the necessity of social reform This book studies the market economy as a social system Most countries today have economies that mix features of a market economy with those of a public economy Market economies appeared first, and gradually, to complement them, the public economy emerged This book focuses on the market economy and its concomitant basic rules and structures It asks how the market economy and society as a whole function, what problems exist with its basic rules and structures, and how these problems can be solved Thus, this book deals with the basic structure and problems of the market economy The natural place to start, then, is by asking the following question: what is its basic structure? The fundamental task of a market economy is the production and distribution of goods, i.e., the distribution of labor and its outcome or product Here, we focus on the principles or rules underlying the distribution of productive factors and products Later chapters identify fairness and kindness as being important criteria in these underlying principles; hence, these aspects are the focus of the discussion there Fairness and kindness are motives in the social dimension, and they seem to originate from deeper motives residing in the personal dimension, v vi Preface namely, self-interest and human fellowship Fairness is related to self-interest, and kindness is related to human fellowship Thus, these elements are also addressed The necessity of dealing with these deeper motives is amply demonstrated by the numerous incidents of unstable economic fluctuation that many countries have experienced in recent years, which also raise questions regarding the whole structure of society and our deeper motives for participating in society One example of such instability is that experienced by Japan.1 In the late 1990s, after an economic crisis in 1990–91 and an unprecedentedly long economic downturn in the following years, serious dissatisfaction emerged regarding human relationships The persistent economic depression and low rate of economic growth continuing through the late 2010s seemed to spur people to seek a new state of society People today seem to desire not only economic recovery but also a country in which they could feel secure despite the changing economic and social environment under economic globalization and attendant problems for a welfare state, an example of which is Japan’s decreasing and aging population that threatens the stability of the pension system in Japan.2 The Asian economic crisis occurred in the late 1990s, and in the late 2000s, most countries faced simultaneous recession originating from the US “subprime shock.” This global economic crisis caused widespread, serious dissatisfaction and anxiety Despite the recent moderate economic improvements, with global economic change as the backdrop, such discontent has not completely waned as evidenced by the “99% vs 1%” movements in some countries Such continuing discontent and anxiety serve as evidence that the problem does not simply stem from short-term economic fluctuations but rather originates from instability inside society itself, probably much more on the distribution side, which therefore needs some kind of restructuring If we now live in such a period of substantial transition, we need to tackle the problem from a broader perspective than ever because as the questions raised until now indicate, the whole structure of our society itself, both the production part and the distribution part, is implicated in creating this situation and therefore needs to be reconsidered To approach this subject, as it seems to be much related to instability in economies, it is useful, accordingly, to focus on society’s economic structure Given that almost every country’s society is centered on the market economy mechanism, it will be useful to tackle this instability problem above by first asking the following question: what is the structure of the market mechanism and its Today, there seems to be substantial dissatisfaction with human relationships Let us take the example of Japan Dissatisfactions with cooperative relationships between humans have generally manifested as interpersonal hostile actions as in the case of bullying among children or in the antisocial behaviors of groups that even indulged in mass murder in recent decades To counter these problems, various social phenomena appeared, often in the form of words such as “fairness,” “compassion,” and “real wealth.” They are words that have come to be widely discussed under the concept of “stable” growth since the 1970s in Japan, although they were invisible under high postwar growth However, once again, these words seem to threaten to disappear behind the voices of “global competition,” with two decades of the twenty-first century having passed Tsukada, 2002, discusses such social pathological phenomena in US, UK, Japan, and Sweden Preface vii related elements? Thus, this work aims to delineate the structure of the market mechanism and therefore the related part of our society, its problems, and hopefully, the solutions The relationship between efficiency and fairness is worth noting here Competition among companies in the market, which is the fundamental driving force of the market economy system, often accompanies economic fluctuation as mentioned above And given that we will suffer the outcomes of this serious defect if we dare to adopt this system, there must be an overwhelming countervailing merit The basic function of the market mechanism is usually expected to be the efficient distribution of labor and the fair distribution of products, the latter of which is an important question of this book Efficiency in production is a substantial factor that can even restructure society itself, such as from a feudal type to a market mechanism one But in restructuring society, fairness in production is also important In the aforementioned transition from a feudal to a market mechanism economic system, the most important factor for the revolutionary change was, probably, the unfairness that people felt within society and particularly class structure To review our society from such a perspective will be—even when given the overall dissatisfaction regarding income distribution worldwide—more useful today Addressing social instability today from such a perspective is the subject of this book For this goal, we try to grasp the main “framework” or “basic structure” of economy and society Here using the words of economy and society together represents, first, the importance of economy or economic cooperation Because it supports our physical existence itself, it is the most important part of society and so describing these two words together shows the understanding that in dealing with the large-scale problems described above, we should always consider the economy to be the core of society We may use the word “socioeconomy” for economy and society when necessary This book thus places emphasis on “wholeness.” When we encounter such large-scale problems as the “health,” “fairness,” and “efficiency” of a society, as described above, we need to hold a broad enough view, a bird’s-eye view, to tackle them Given that human society is initially formed by individuals seeking their own interest in light of the efficiency obtained from cooperative production, to maintain this cooperation, we need consensus on cooperative manners, e.g., what justice is or how human fellowship works, particularly in the distribution of products When two people find an apple on a tree or when hundreds of people are set to divide the sum total of their sales, they are often eager to obtain a larger portion regardless of other people This can be termed self-interest, which here only means a situation where people try to obtain as much as possible regardless of other people However, this definition does not consider for whom or what purpose a person wishes to acquire this larger portion, i.e., it does not encompass motivation They may want to eat the apple personally or give it to their children or poor neighbors But here, as a first approach, it is supposed that irrespective of the circumstances, they think they need to take the maximum share, believing in the significance and probably the superiority of their own motivation and utility when compared with those of other people This question of “for whom” is a very important question, and in this book, viii Preface is discussed in Chap 9, with reference to key concepts such as self-interest and human fellowship In considering those aspects, the spotlight will be placed on how these two motives function in both production and distribution environments, where such key words as justice, fairness, and kindness are dealt with Of course I owe much to ancient and contemporary scholars Here, I would like to refer to John Rawls Rawls emphasized that a critical factor underlying the cooperation in every society lies in the distributive rules of products and income Posing this distributive question as a core problem in social rules should be highly evaluated He described it from the viewpoint of a confrontation between utilitarianism and social contract theory His theory appealed to many people and drew a large number of people into this research field One thing to note here is that utilitarianism is a rule of conduct that proposes certain modes of conduct; however, social contract theory is in its most general form a way of thinking about how to form a society Being common at this point, various forms can be born from it However, all of them have the same understanding that a society gains its validity and authority by consent, which is a social contract among the members of that society Thus depending on the characteristics of the people, and other conditions at the starting point, the resulting society would be different, and it could even be utilitarian if the people at the starting point prefer utilitarianism, the maximum happiness of the people In this sense, social contract theory tells us how we choose and how utilitarianism could be what we choose Because this book is in a sense an attempt at developing on the theory of justice by John Rawls, I would like to offer a short account of related discussion on his theories and my own comments on it The first aspect of Rawls to be discussed is his characterization of the people who make the contract Rawls grounds his social contract theory by characterizing the people at the starting point as interested mostly in themselves, meaning that they behave to obtain as much of the product as possible in distribution after cooperation in production This does not mean that these individuals dislike or hate other people but merely that they seek to gain as much as possible as a priority and then utilize it for themselves or for other people The final purposive subject, or object subject, may be other people; however, they first attempt to obtain the maximum amount of the product for themselves We can ask ourselves to imagine a case in which people’s demand consists of one part to benefit themselves and another for others However, empirically, our kindness is unstable and depends on many factors, one of which is our state of mind regarding others, and therefore, it cannot be said with certainty that kindness operates as a stable motive Thus, Rawls’ idea above can be accepted as a realistic presumption, which leads to a situation in which as everyone tries to get more than everyone else, conflict breaks out The second element of Rawls’ theory to be mentioned here is the creating process of contract, which is related to the conflict question above How should society deal with these inevitable conflicts? If left unaddressed, they could harm the efficiency and need for cooperation that drove people together in the first place Rawls posits the need for society to create a device to escape conflict and reach unanimous consent: the veil of ignorance, which is defined as veiled rule-making Preface ix that permits people to see who they are but not distinguish themselves from all other members of society This idea is very unique to his argument However, this book approaches it from a different perspective, and the process of making a social contract is discussed with a focus on the actual process of ameliorating conflicts so as to reach broader consensus through historical cases of trial and error, which are discussed in Chaps and The third element is the development of Rawls’ theory According to my study on Rawls’ theory, the next questions to be asked are regarding the manner in which actual rules function in a real society, the kinds of problems that arise from them, and how they can be solved This is neither Rawls’ primary nor direct interest that is hardly discussed in his study, but dealing with it is inevitable if one is to apply his basic theory to reality To deal with these questions, we first adopt a bird’s-eye view of the structure of modern civil society that uses a market mechanism By thus preparing the blueprint of the social structure, we then deal with the respective issues in each of its parts We pick up supposedly the most important and pressing problems of politics, land distribution, education burden, fair share of profit, and balance between self-interest and human fellowship Such discussions are an extension and development of the above fundamental question left by Rawls Regarding the question of the manner in which people choose or make social rules nowadays, we, as independent people, usually choose to establish a contract among us Therefore, most of us are currently living under some form of social contract But how we choose the form of contract? In answering this question, related factors should also be considered Generally, the more the factors involved, the more difficult such a choice becomes In the modern era, however, the scale of modern societies makes reaching consensus very difficult The fact that people tend to change their mind over time further complicates the process However, given that the choice of rules depends on people’s assumption regarding the conditions surrounding the choice, considering such conditions is important and inevitable when examining this choice What we seem to lack today in our discussions of fairness or justice or when we seek to address the tension between efficiency and equity or consider these kinds of big social issues and find better rules is this consideration of the conditions underlying the choice situation Essentially, the questions here are what we want and what tools we have at our disposal to attain those desires In terms of answering this question of fundamental social agreement, social contract theory emerged historically after the abolition of the unequal social structures that existed during the feudal age When we look back at human history, it can be observed that the social rules changed in line with changes in our understanding of what we want and what we are allowed to want as well as what tools we have and what tools we are allowed to have Human beings have much more flexibility in shaping social cooperation than other animals, and new ideas for social reformation are born when we notice new possibilities for ourselves or new desires emerge Thus, considering these two factors, possibilities and desires, is very important when discussing how we choose our social rules x Preface Thus, thinking about the concrete questions mentioned earlier is important From this perspective, a weakness with Rawls’ argument emerges He proposed one type of person in terms of the “what we want” question and one type of condition for the “what tool we have” question However, in retrospect, these remain rather abstract when compared with what we need today He focused on the questions of justice and fairness and tried to describe the people, what they want, and the tools they have according to modern industrialized society However, these aspects nonetheless remained abstract His argument on the problem setting, the people, definitions of equal and reasonable, and tools all reflect modern, highly capitalistic market society However, in terms of the development of problems of economic fluctuation or dissent at income disparities in the late twentieth and early twenty-first century, we notice that we need to deal with the two factors at a much more concrete level and in specific terms Rawls pointed out the importance of the distribution of economic goods and then proceeded to the question of how to reach social consent over distributive rules However, in dealing with this question, the aforementioned two questions, desires and tools, have not been sufficiently dealt with In thinking about this question at a certain abstract level, he may have known the scope of his theory Of course, notwithstanding this shortcoming, his work proposed that this distributive question should be considered as a core problem when deciding upon social rules Here, we need to make clear where we are to start in terms of his approach We need to elaborate on “what we want” and “what tools we have” at a more concrete level for us to be able to answer more clearly the big economic and social problems at hand To improve our rules, we first need to know where we are In this task, Rawls’ main framework was attractive However, to construct a real foundation, we also need more detailed frameworks The veil of ignorance is a solution when discussing the problem at his abstract level; however, it needs to be developed further to solve concrete questions When considering social structure, we encounter a serious difficulty, namely, needing to deal with the substantial issues of social image that stretch across space and time This is the same as asking the meaning of the basic structure of modern society or the “market economy system.” Because economy and economics are related to the entire social structure, reexamining the former inevitably encompasses considering the latter Thus, in trying to elucidate a desirable social state by considering efficiency in production along with fairness and human fellowship in distributing the burden and the product in total, the most fundamental aspect of the economic and social system must be considered This task is difficult, but as social systems are created by human beings, we can evaluate and consider them on two grounds: purpose and means What purpose does it have? Has the purpose changed between past and present? Is the existing system the optimum means and method for that purpose? 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Abingdon: Routledge https://is.muni.cz/el/1423/podzim2013/SOC571E/um/_Routledge_Classics _ Max_Weber-The_Protestant_Ethic_and_the_Spirit_of_Capitalism Routledge_Classics_Routledge 2001_.pdf Accessed May 25, 2018 Wilson, E O (1978) On human nature Cambridge, Mass.: Harvard University Press Yano, M (1996) Economic analysis of and policy for higher education Tokyo: Tamagawa University Publishing Department (Japanese) Index A Ability principle, 131 Abolition of violence, 129 Abstinence, 71 Abstract conception, 42 Abstract dimension, 36 Acceptable minimum standard of living, 25 Acceptance, 47 A certain conception of justice, 34 Actual characteristics, 175 Actual market, 154 Actual rules, ix Additional education, 102 Afterward treatment, 157 Aggregate utility of society, 67 Allied nations, the, 108 A long-term historical perspective, 123 Altruism, 46, 91, 182, 183, 191 Altruistic, 19 Altruistic motivation, 22 Ambassador plenipotentiary, 181 Anxiety, vi, 62 Arrow, K J., 16 Asian economic crisis, vi Assured standard of living, 25 Average amount, 144 Average cost, 153 Average principle, 154 Average productivity, 142 Average revenue, 151 Average revenue line, 153 Average view, 155 B Balance between self-interest and human fellowship, 10 Balance of forces, 47 Balance with private universities, 111 Bargaining power, 17, 66, 70, 137, 142, 144, 155, 157 Bargaining power principle, 146 Basic Act on Education, the, 110 Basic liberties, 176 Basic rules and structures, v Basis for equality, 173 Bates Clark, John, 140 Bearable amount, 116 Bearable disadvantages, 40 Behavioral norm, 62 Beneficence, 166 Beneficiary burden, 117 Beneficiary rate, 104 “Beneficiary to pay” principle, 106, 115 Benefit and burden, 172 Benefit of peace, 122 Benefit rate, 114 Benefits and burdens, 35 Benefits of society, 55 Benefit to society, 149 Benevolence, 162, 164, 166, 170 Benevolent distribution, 194 Bentham, Jeremy, 56 Better self-survival, 51 Birth circumstances, Blueprint of the social structure, ix © Springer Nature Singapore Pte Ltd 2018 H Tsukada, The Market Economy as a Social System, https://doi.org/10.1007/978-981-13-1837-5 207 208 Bottom valuations, 50 Bourgeoisie, 25 Broadness, Buddhism, 19 Budgetary constraints, 111 Budget deficit issues, 114 Builders of peace, 110 Bullying, 163 C Calvin, John, 93 Capabilities, 76 Capability to function, 76 Capital accumulation, 129 Capital and labor, 129 Capital gains, 21 Capitalist ownership, 23 Capitalist regime, 128 Capitalists, 69 Cascade of decisions, 186 Central Education Council, 115, 116, 118 Certain extent of equality, 14, 18 Certain level of equality, 19 Certain treatment of people, 168 Changing surrounding conditions, 187 Childrearing activities, 123 China, 108 Christianity, 19 Civil revolution, 32 Civil society, 1, Class conflict, 42 Class structure, vii, 23, 69 Closer ties, 31 Collective action, 37 Collective behavior, 35, 41 Collective means, 18 Collective-oriented personality, 41 Collective selfishness, 59, 60, 67 Collisions over distribution, 56 Colonization, 108 Combined productivity, 141 Commercial crises, 26 Commitment, 80 Committee on Foreign Affairs, House of Representatives, the, 111 Commodity economy, 92 Commonalities of human beings, 20, 31 Commonality of the species, 20 Common good, 148, 190 Common human nature, 181 Common interest groups, 14 Common ownership, 94 Communal elements, 54 Comparability of utility, 49 Index Compassion, 19, 39, 64, 166, 189 Compensation for risk taking, 139 Competition among firms, Competitive mechanism, 193 Components of profit, 137 Comprehensive doctrines, 166 Compulsion, 15 Conception, 168 Concept of fairness, 47 Concept of justice, 168 Conditional unequal distribution of wealth, 74 Conflict, viii Conflict and negotiation, 44 Conflicting way, 38 Conflict of interests, 35 Consensus-building agents, 46 Consensus formation, 52 Consent, 15, 36 Conservative individualism, 66 Constant exchange, 135 Constitution Investigation Committee, the, 97 Constitution of Japan, the, 110 Consumer demand, 146 Consumption demand, 187 Contemporary empathy, 19 Contingent benefit, 94 Contingent primary value, 185 Contract, 155 Contracting entity, 34 Contracting subjects, 30 Contract principle, the, 132 Contribution, 129, 132, 149 Contribution or power, 147 Contribution principle, 89, 132, 136, 146, 147, 157, 158 Contribution standard, 194 Conventional selfish utilitarianism, 68 Convention of reciprocation, 184 Corporate society, 150, 152 Cooperative ability, 125 Cooperative behavior, 124 Cooperative outcome distribution, 189 Cooperative production, vii Cooperative project, 108 Cooperative relationships, 88 Correct contribution amount, 156 Correct share, 156 Countrywide fellowship, 21 Creation of society, v Criterion, 186 D Dawkins, Richard, 182 Death from overwork, 163 Index Deciding, 186 Deciding manner, 14, 15 Deciding subject, 14, 33, 35 Decision-making body, 42 Decision-making process, 59 Decision-making subjects, 30 Decisive factor, 143 Declining birthrate, 103 Deductive approach, 176 Demand curve, 151 Democracy, 29 Democratically contrived eugenics, 185 Democratic cooperative rules, 31 Democratic decision-making process, 15 Democratic egalitarianism, 66 Democratic power relationship, 52 Democratic society, 33 Democratic system, 39 Demonstrable fairness, 153 Dependable enough indication, 121 Deservingness, 172 Design of society, Desirable civil society, 79 Detailed framework, x Difference principle, 33, 37, 74, 166 Different men, 164 Different merchants, 164 Different types of rulemaking, 37 Difficulty in quantifying emotion’, 121 Dignity, 105 Diminishing birthrate, 105 Disadvantaged people, 91 Disadvantaged workers, 72 Discontent and anxiety, 187 Dissatisfaction, vi Dissatisfactions with cooperative relationships, vi Distant people, 183 Distillation method, 133 Distinguishable product, 143 Distribution, 188 Distribution according to contribution, 19, 24, 130 Distribution based on contribution, 128 Distribution by contract, 128 Distribution by contribution, 14, 187 Distribution of goods, v Distribution of labor, v Distribution of outcomes, Distribution process, 143 Distribution to contribution, 140 Distributive difference, 178 Distributive justice, 12 Distributive objects, 16 209 Distributive relationships, 13 Distributive rule, viii, 30, 40, 148 Distributive structure, 11 Diversity among individuals, 181 Diversity in the gene pool, 184 Diversity of genes, 185 Division of advantages, 35 Division of labor, 14, 18, 134 Dollar shock, 117 Dominance relationship, 32 Dominant group, 48 Dominant power, 60 Dominant rule of life, 144 Donations, 107 E Earning ability, 125 Economic and social structures, 29 Economic and social system, x Economy and society, vii Economic benefit, 116 Economic cooperation, 157 Economic cycles, 24 Economic destitution, 51 Economic distributive rules, xi, 12 Economic globalization, vi Economic growth, 12 Economic philosophy, 81 Edo feudal era, 108 Educational costs, 101 Educational expenses, 101 Educational opportunities, 119 Educational principles, 115 Education as profit seeking, 109 Education expenses, Effective demand, 73 Efficiency, vii, 9, 45, 131 Efficiency, fairness, and human fellowship, 81 Efficiency in production, 159 Efficiency of production, 188 Efforts of entrepreneurs, 137 Egoism, 54 Egotists, 169 Employee’s labor, 136 Employer, 24 Employment relationships, 98 Enclosure movement, 93 Enemy of civilization, 184 Engels, Frederick, 25 Entire gene pool, 185 Entire human species, 184 Entrepreneur, 24 Entrepreneurial labor, 136, 138, 149 Entrepreneurial work, 137 210 Entrepreneurs’ contributions, 139 Entrepreneur’s effort, 137 Entrepreneur’s repressive power, 157 Environmental protection, 73 Envy, 165, 171 Equal and reasonable, x Equal distribution rule, 75 Equal freedom, 33, 37, 74 Equal human rights, 97 Equality, 18 Equality of opportunity, 72, 179 Equality of opportunity and incomes, 148 Equality of strength, 32 Equality principle, 131 Equal opportunities, 118 Equal opportunity for education, 101 Equal-power relationships, 60 Equal right, 39, 59 Equal right to life, 65 Equal rights to survival, 91 Equilibrium point, 61, 75 Equity, 148 Equivalent value, 71 Eugenics, 185 Evolved selfishness, 58 Exchange rate, 134 Existence of others, 20 Expanded self, 19 Expansion of self, 14, 19 Exploitation, 24, 70, 128 “Exploitation” period, 70 Exploitation theory, 128 External effect of economic activities, 139 Extinction of humankind, 21 F Fair contribution first society, 156 Fair distribution, 70 Fair distribution rules, 88 Fair market exchange, 71 Fairness, v, 10, 45, 79, 102, 131 Fairness and kindness, 68 Fairness as acceptability, 46 Fairness in distribution], 159 Fairness of distribution, 187 Fairness of exchange, 70 Fairness of opportunity, 54 Fair or unfair, 147 Fair rule, 46 Fair shares, 67 Family and class origins, 175 Feudalistic oppressive governance, 131 Financial situation, 112 Index Firm convictions, 178 Firm-type producer, 136 First occupation, 92 Fiscal System Council, 115, 117 Fixed capital, 141 Fixed permanent rent, 94 Flexible labor abilities, 135 Form of survival, 13 Fortune, For whom, vii Fraternity, 80, 162, 166, 175, 179, 190, 194 Free and equal, 34, 37, 165 Free contract, 130, 131, 136 Free contract first society, 156 Free contract principle, 158 Free education, 106 Free market economies, 127 Free private enterprise system, 72 Free tuition fees, 107 Free will, 1, 155 Free world, 108 Free, rational, and equal, 173 Freedom and wealth, 74 Freedom, justice and peace, 105 Freedom of contract, 51, 131, 132, 176 Fujii, Y., 131 Full employment, 64 Full self-recognition, 37 Functionings, 77 Fundamental aspect, x Fundamental behavioral motive, 182 Fundamental causes, 158 Fundamental freedoms, 105 Fundamental motives, 12 Fundamental right, 96 G Generality, 167 General productivity effect, 122 Genes, 182 Genuine contribution, 139 Genuine profit, 140 George, Henry, 93 George, Victor, 55 Global competition, vi Global economic competition, 124 Globalization, 193 Globalizing world, Global warming, 21, 73 Good acts, 166 Government assistance, 107 Great Depression, 72 Greater central planning, 69 Index 211 Greatest benefit, 120 Group conflicts, 40 Group formation, 35 Group members, 37 Group-oriented personality, 40 Group-oriented subject, 30 Growth of the “self”, 59 Guiding rule, 182 Human rights, 105 Human species, 190 Human survival, 194 Humane considerations, 165 Humanities students, 114 Humanity, 164 Humanity’s future, 184 Humanity’s happiness, 190 H Hanayama, 86 Handicapped people, 77 Harada, 87 Hard-core altruism, 184 Harmonized society, 55 Harsh competitive, 163 Harsh domination by capitalists, 130 Harsh economic race, 129 Harsh employment contract, 158 Harsher competitiveness, 191 Hate crimes, 163 Hayek, 165 “Health,” “fairness,” and “efficiency” of a society, vii Heterogeneity, 46 Higher productivity, 121 Higher-ability people, 75 Higher-income countries, 73 High precision, 16 High spatial and social mobilization, 98 Hishimura, 113 Historical cultural standard, 13 Historical evolution of progress, 26 Historical experience, 75 Historical role, 24 Hobbesian equality, 18, 57, 59, 93, 96 Hobbes, Thomas, 18 Homogeneity, 46 Hooker, Richard, 165 Human ability, 2, 119 Human capabilities, 26 Human casualties, 121 Human community, 167 Human cooperation, 157 Human fellowship, vi, 10, 12, 79, 131, 162, 165–167, 169, 181, 190, 194 Human kindness, 190 Human nature, 12 Human personality, 105 Human race, 128 Human relationships, v, 3, 121 I Ibuka, Y., 122 Ichii, S., 172 Identity of interests, 35 Igasaki, A., 107 Imaginary experiment, 174 Imbalanced power relationship, 129 Imperial universities, 109 Implicit factors, 138 Inamoto, 87 Income difference, 171 Income disparity, 72 Increased globalism, 73 Increasing contact, 14 Increasing total utility, 65 Independent producer’s society, 151 Independent sovereign citizens, 108 Independent spirit, 110 Individual behaviors, 170 Individual equality, 67 Individual self-interest, 41 Individual selfishness, 58 Inductive approach, 176 Inequality, 177 Inevitability of democracy, 40 Inference process, 180 Initial conditions, 172 Initial inequality, 42 Initial situation, 35 Innate repugnance, 189 Instability, 187 Interest groups, 61 International Covenant on Economic, Social and Cultural Rights, the, 105 International Covenants on Human Rights, the, 105 Interpersonal feelings, 165 Intrinsic common ownership, 92 Intrinsic rights, 95 Intuitive conviction, 167 Intuitive judgment, 79, 121 Inviolability, 167 212 Invisible hand of God, 54 Isolated individuals, 33, 35, 37 Isolated means, 18 J Japan Economic Research Institute, 115 Job opportunities, 73 Joint cooperative activities, 165 Joint endeavor, 123 Just distribution, 194 Justice, vii, 91, 162, 183, 190 Justice as fairness, 34 Justice in distribution, 156 K Kamata, Eikichi, 87, 109 Kant, 165 Kato, Hirotaka, 162 Kato, Kazutoshi, 16 Kaya, 112 Kayo, 113 Keynesian policy, the, 17 Keynes, J M., 11, 66, 187 Kindness, v, 10, 166, 183 Kin relationships, 15 Kin selection, 183 Kumon, Shunpei, 117 Kunitoshi, Onishi, 97 L Labor, 134 Labor-based rights, 94 Labor costs, 130 Labor investment, 92 Labor laws, 159 Labor market, 130 Labor movements, 17, 130 Labor theory of value, 131 Labor value theory, 133 Lack of fairness, 157 Laissez-faire, 176 Laissez-faire market mechanism, 72 Land, Land distribution, 9, 11 Land inheritance tax, 95 Land Labor League, the, 96 Landless people, 93 Landlord group, 69 Landowner–tenant relationship, 87 Land Nationalization Society, the, 96 Land Policy Study Group of Land Agency, 97 Land redistribution, 16 Land reforms, 87 Land Tenures Reform Association, the, 96 Index Larger benefits, 119 Larger welfare systems, 69 Lateran Council of 1179, the, 107 Law of one price, 143 Laws of Nature, the, 18 Legal punishment, 167 Legitimate profits, 128 Legitimate succession, 66 Legitimate wages, 127 Lending system, 110 Less fortunate, 179 Level of conflict, 174 Liberty, 165 Life cycle, Life opportunities, 172 Life prospect, 36, 42 Lifetime opportunities, Locke, John, 11, 165 Love, 19, 169, 170 Love of self, 189 Lower-ability people, 75 Lower-income countries, 73 M Mainstream economics, 89 Majority decision, Majority decision principle, 38 Majority-first society, 61 Majority rule, 37, 38, 47 Majority’s welfare, 90 Mammonism, 162 Marginal cost, 153 Marginal cost curve, 151 Marginal output for entrepreneur, 142 Marginal principle, 154 Marginal private net product, 139 Marginal-product concept, 147 Marginal production amount, 144 Marginal productivity, 89, 132 Marginal productivity theory, 128, 131, 137, 140, 159 Marginal revenue, 151, 153 Marginal social net product, 139 Marginal view, 154 Market economy, v, 9, 65 Market mechanism, 70, 157 Market rule of conduct, 62 Market transactions, 142 Maruyama, 87 Marx, Karl, 11, 23, 92, 128, 131 Material wealth, 128 Maximum happiness of the greatest number, 57 Maximum profit, 159 Maximum utility, 134 Index Maximum working hours, 136 Meaning of fairness, 45 Measuring instrument, 159 Meiji era, 109 Merit, 172 Merit principle, 131 Metamorphosis of freedom into exploitation, 24 Military powers, 65 Mill, J S., 46, 96 Milton and Rose Friedman, 55 Milton Fisk, 41 Minimax principle, 122 Minimum labor, 134 Minimum wage, 136 Ministry of Education, the, 115 Miraculous union, 66, 154 Misumi, 113 Mixed economy, 130, 148 Mizumoto, 86 Modern democratic society, 165 Monopolistic ownership of productive means, 129 Monopolistic profit, 138 Monopoly capital, 128 Moral education, 162 Moral persons, 35 Morosawa, 113 Most basic human relationships, xi Motive of fairness, 70 Motive to change, 27 Motives, v, 10 Movement of producers, 135 Multiplication, 182 Mutual aid, 19 Mutual help systems, Mutually disinterested, 169 Mutual security, 32 Myrdal, Gunnar, 50 N Naito, 112 National Institute of Educational Research, the, 114 National university tuition fees, 103 Natural and social environments, 12 Natural employment, 94 Natural endowments, 175 Natural luck, 173 Natural resource ownership, 87 Natural resources, 16, 194 Natural resources distribution, 189 Natural right, 95, 183 Natural right of possession, 94 213 Natural selection, 182, 186 Natural talent, 179 Necessity, 77 Necessity principle, 131 Negotiation power, 156 Negotiation process among groups, 37 Negotiators, 14 Net incremental increase, 139 Net social increase, 149 Net utility, 135 New dangers, 184 New Japan, 110 New land distribution rules, 97 New target subject view, 68 Nobility, 10, 184 No envy, 171 Nozick, Robert, 165 Nuclear warfare, 184 Nuclear weapons, 65 O Object, 161 Object of distribution, 14, 16 Objective entities of society, 54 Objective entity, 55 Objective factors, 12 Object subject, viii, 68, 186, 190 Object subject view, 13, 14, 18, 31, 41, 47, 74, 168 Object theory, 50 Object view, 13 Ogilvie, William, 92, 94 Oil shock, 117 Okawa, Masazo, 118 Ono, 162 Opportunity costs, 118 Optimal point of distribution, 171 Opulence, 76 Ordinary personal emotions, 182 Original, accessory, and contingent, 94, 97 Original agreement, 34, 74 Original position, 30, 34 Origin of profit, 137 Ota, 123 Other-regarding, 78 Other-regarding behaviors, 182 Other-regarding factor, 22 Other-regarding feelings, 58 Other-regarding tendency, 64 Outside factors, 121 Overall productivity, 125 Overlapping consensus, 166 Overwhelming benefit, 119 Ownership of natural resources, 188 214 P Paine, Thomas, 95 Paradoxical results, 170 Parish possession, 94 Parliamentary democracy, 69 Partial nationalization of land, 94 Partial planning, 130 Passive agreement, 174 Peace and productivity, 120 Peace-creating education, 124 Peace creation, 119 Peace effect, 122 Peaceful state, 110 Pension system in Japan, vi Periodic economic crises, 64 Personal dimension, v Personal motivation, 12 Personal viewpoint, 146 Pigou, Arthur C., 139 Pity, 19, 165, 189 Planned economy, 130 Political decision-making process, Political democracy, 60 Political judgment, 19 Political philosophy, 194 Political repression, 66 Politics field, Popular consensus, Possibilities and desires, ix Possible mobility, 25, 43 Potential achievements, 76 Potential capability, 77 Potential to survive, 185 Power relationships, 52, 61, 67, 75 Precise measurement, 158 Pre-corporate society, 153 Precision, Prerequisite good, 119 Present survival conditions, 175 Presumptive question, 164 Primary social goods, 37, 168 Prime mover, 186 Primitive accumulation theory, 23 Primitive affections, 183 Principle of compensation, 179 Principle of equivalent exchange, 102 Principles of justice, 35 Principles of social justice, 35, 172 Principles underlying the behaviors, 10 Private benefit, 119 Private income effect, 122 Private interests, 54 Private monopoly, 94 Private ownership, 33 Index Private property, 89 Private School Promotion Law, 112 Privileged members, 54 Procedural justice, 173 Production costs, 129 Production function diagram, 151 Production means, 129 Production process, 142 Productive factors, v, Productive power, 18, 70 Productivity, 128, 195 Productivity developments, 26 Productivity growth, 168 Profit-seeking behavior, 107 Profits and losses, 138 Profit versus wages, Proper scale, 71 Proper share of the product, 70 Property rights, 17 Property-owning democracy, 42 Proper wages, 141 Protestantism, 63 Public economy, v Public interests, 54 Public welfare, 17, 54, 60 Purpose and means, x Purpose view, 13 Purposive subject, viii, 35 Pursuit of happiness, 90 Q Qualifying measure, 157 Quantifiable metric, 120 Quasi-average principle, 154 R Rational choices, 49 Rawls, John, viii, 12, 30, 33, 47, 74, 98, 165, 190 Realm of concept, 167 Reasonable desire, 168 Rebellious conduct, 66 Recognition of equality, 32 Redistribution, Reflective equilibrium, 178, 190 Reformed market system, 130 Relative contributions, 136 Relative unfairness, 159 Religious motivations, 19 Renaissance, the, 17 Reproduction, 19 Researcher’s worldview, 50 Research theme, 49 Residential ground, 97 Index Residual income, 141 Residual rent, 147 Rights and duties, 35 Rights and obligations, 172 Rights and responsibilities, 92 Right to a life, 59, 62, 72 Right to survive, 52 Right to vote, 40, 176 Risk-averse, 25 Risk aversion, 176 Risk-bearing labor, 138 Risk burden, 137 Risk burden compensation theory, 138 Robbins, Lionel, 48 Robinson, Joan, 50 Rock, J., 92 Rougher scale, 122 Rousseau, 165, 183 S Saito, 112 Sales revenue, 136 Samuelson, P A., 146 Sato, 97 Scarcity, 78 Science and technology students, 114 Scientific research, 49 Secondary values, 186 Self-awareness, 182 Self-expansion, 19, 91 Self-help, 66 Self-interest, vi, 10, 18, 39, 60, 91, 157, 161, 165, 169, 181, 182, 193, 194 Self-interest motive, 187 Self-interestedness, 180 Selfish, 19 Selfish gene, 10, 162, 191 Selfish gene view, 185 Selfish individual object subject view, 58 Selfish-and-human fellowship view, 185 Selfishness, 46, 56 Selfless altruistic acts, 19 Self-preservation, 189 Self-respect, 177, 178 Self-sacrificing activities, 46 Self-sufficient producer, 136 Self-supporting, 19 Self-supportive stage, 102 Self-survival, 19 Self-understanding, 16 Sense of justice, 35, 173 215 Sense of public support, 122 Sense of superiority, 163 Sense of unity, 122 Serfdom, 131 Serfs, 15 Shichita, 112 Shiina, 92 Shinomiya, 96 Shinozawa, 112 Shionoya, Yuichi, 12 Sieyès, Emmanuel Joseph., 93 Similar entities, 43 Similar interest group, 34 Simultaneous equations, 158, 159 Sizable disparity, 77 Slavery, 51, 131 Smallholding owners, 97 Smith, Adam, 11, 54, 63, 69, 122, 131, 164 Social and private benefits, 120 Social behavior, 12 Social benefit from peace, 116 Social benefits, 55 Social choice, 16 Social classes, 42 Social commitment, 165 Social contract, viii, 30, 59, 184 Social contract theory, viii, 62, 74 Social cooperation, 35 Social dimension, v Social distributive structure, Social esteem, 179 Social hierarchy, 39 Social ideal, 167 Social injustices, 42 Social instability, vii Socialist regimes, 69 Socialist society, 129 Social insurance, Social joint project, 103 Social justice, 70, 74 Social legitimacy, 51 Socially acceptable, 46 Socially proper profit, 153 Socially realized rule, 52 Socially vulnerable, 88 Socially vulnerable people, 72 Social net increase, 159 Social net increase theory, 139 Social pathological phenomena, vi Social positions, 172 Social principles, 165 216 Social reform, v Social reformation, ix Social science perspective, 189 Social security, Social security system, 43, 75, 162 Social solidarity, 122 Social structure, Social Structure and Human Circulation, Social transition, 23 Social system, v Social utility, 118 Social viewpoint, 143, 146 Social wealth, 139 Social welfare, 9, 19, 159 Society, v Sociobiological view, 183 Sociobiology, 162 Socioeconomic systems, 193 Soft-core altruism, 184 Sonoda, 112 Sovereign citizens, 107 Species’ feeling of closeness, 20 Spence, Thomas, 92, 94 Stability, 36 Stability of society, 36 Stable society, 39 Standard as contribution, 128 Standard as free contract, 128 Standard of living, 47, 187 State land, State of nature, 34 Stepwise reforms, 25 “Store-up” behavior, 187 Strong pressure, 164 Subjective factors, 12 Subject understanding, 16 Subprime shock, vi Subsidies to private schools, 111 Substantial transition, vi Sufficient persuasiveness, 121 Supererogatory action, 166 Supererogatory actions, 166 Supervising work, 137 Supply and demand, 134 Supply curve, 151 Surplus value theory, 23, 24, 70 Survival conditions, 32 Survival of others, 20 Survival of species, 185 Survival of the fittest, 98 Survival situation, 30 Survival strategy, 18, 25, 48, 62 Index Sustainable social instability, 40 Sympathy, 58, 60, 80, 181 Synthesis of individual selfishness, 58 T Technological innovation, 151 Temporary Administrative Investigation Committee, the, 117 Temporary Administrative Reform Promotion Council, the, 118 Temporary Education Council, the, 118 Territorial bonds, 54 The greatest happiness of the greatest number, 57 Theory of factor pricing, 148 Threat of nuclear war, 21 Tight budgets, 106 Total cost, 151 Total demand, 188 Total income, 151 Totalitarian world, 108 Total profit, 152 Total warfare, 20 Trade of labor, 131 Training and education, 177 Transitional sequence, 24 Treated properly, 46 Trial and errorSee also ix Two class concepts, 43 Two main questions, 68 Two sovereign masters, pain and pleasure, 57 U Ultimate goal, 194 Unanimous consent, 16, 36, 37, 173 Understanding of “nobility”, 189 Unequal exchange, 128 Unequal societies, 33 Uneven bargaining power, 131, 159 Uneven power relationship, 158 Unfair distribution of products, 21 Unfairness, vii Unfairness and inefficiency, 24 Unfair treatment, 163 Unimaginable losses of income, 122 Universal Declaration of Human Rights, the, 105 Universal human rights, 183 Universal standard of pay, 144 Universal suffrage, 40, 75 University entrance rate, 111, 114 University students’ revolt, 113 Index University tuition fees, 101, 188 Unkind society, 163 Unnoticed inconsistency, 154 Unpaid labor, 70 Unseen economic compulsion, 71 Unstable economic conditions, 124 Upper secondary schools, 113 Utilitarian argument, 79 Utilitarian comparison, 78 Utilitarianism, viii, 26, 47, 54, 57, 67 Utilitarian object subject view, 56, 58 Utilitarian principles, 95 Utilitarian rationale, 95 Utilitarian unity, 58 Utilitarian view, 55 Utility, 76, 134 Utility comparisons, 77 Utility value theory, 133 V Value judgment, 47, 50 Various groups, 75 Vector, 53 Veil of ignorance, viii, 30, 34, 35, 37, 74, 171, 173 Vested interests of landlords, 97 Viewpoint of an entrepreneur, 143 Violent resistance, 65 Violent revolution, 69 Violent rule, 129 Voluntary actions, 98 Voluntary contract, 71 Voluntary exchange, 71 Voluntary scheme, 36 Voluntary willingness, 20 217 Voting behavior, 124 Voting system, 65 Vulnerable people, 162 W Wage, 130 Wage-dependent employees, 17 Wage law, 140 Wallace, A R., 96 Wants, v Weaker society members, 81 Wealth distribution, 66 Weather change problems, 184 Wealth generation, 69 Weber, Max, 50, 63 Weimar Constitution, 17, 87 Welfare of all of humanity, 189 Welfare of society, 167 Welfare restraint, 19 Welfare state, vi Well-being, 77 Whole structure of our society, vi Wilding, Paul, 55 Wilson, Edward O., 182 Winstanley, Gerrard, 16 Workers, 69 Workers’ sense of fairness, 70 Work-promoting effect, 72 World of scarcity, 157 Worldly neighbor’s love, 63 World peace, 106 Y Yano, M., 120 .. .The Market Economy as a Social System Hiroto Tsukada The Market Economy as a Social System 123 Hiroto Tsukada (emeritus) Faculty of Economics Yamaguchi University Yamaguchi, Japan ISBN... structure and problems of the market economy The natural place to start, then, is by asking the following question: what is its basic structure? The fundamental task of a market economy is the production... for a welfare state, an example of which is Japan’s decreasing and aging population that threatens the stability of the pension system in Japan.2 The Asian economic crisis occurred in the late