Monday, September 19, 2011

Weber on Economics


The Concept of Economic Action:

Action will be said to be" economically oriented" so 'far as, according its subjective meaning, it is conceded with the satisfaction of a desire for "utilities". "Economic action" is any peaceful exercise of an actor's control over resources, which is in its main impulse oriented towards economic ends. "Rational economic action" requires instrumental rationality in this orientation, that is, deliberate planning. We will call autocephalous economic action an "economy" and an organized system of continuous economic action an "economic establishment. 

An economic action as such need not be social action:

The definition of economic action must be as general as possible and must bring out the fact that all "economic" processes and objects are characterized as such entirely by the meaning they have for human action in such roles as ends, means, obstacles, and by products. It is not, however, permissible to express this by saying, as is sometimes done, that economic action is a "psychic" phenomenon. The productions of goods, prices, or even t he “subjective valuation” of goods, if they are empirical processes, are far from being merely psychic phenomena. But underlying this misleading phrase is a correct insight. I t is a fact that these phenomena have a peculiar type of subjective meaning. This alone defines t he unity of t he corresponding processes, and this alone makes them accessible to subjective interpretation. The definition of "economic action" must, furthermore, be formulated in such a way as t o include the operation of a modern business enterprise turn for profit. Hence the definition cannot be based directly on "consumption needs" and the "satisfaction" of these needs, but must, rather, start out on the one hand from the fact that there is a desire or demand for utilities (which is true even in the case of orientation to purely monetary gains), and on t he other hand from t he fact that provision is being made to furnish t he supplies to meet this demand which is true even in t he most primitive economy merely "satisfying needs," and regardless of how primitive provisions are.

As distinguished from "economic action" as such, the term "economically oriented action" will be applied to two types; (a) every action which, though primarily oriented to other ends, takes account, in the pursuit of them, of economic considerations; that is, of t he consciously recognized necessity for economic prudence. Or (b) that which is, though primarily oriented to economic ends, makes use of physical force as a, means. It thus includes all primarily non-economic action and all non- peaceful action, which is in influenced by economic considerations. "Economic action", thus is a conscious, primary orientation to economic considerations. I t must be conscious, for what matters is not t he objective necessity of making economic provision, but the belief that it is necessary. Let us rightly laid emphasis on the subjective understandable orientation of action, which makes it economic action.

Every type of action, including t he use of violence, may be economically oriented. This is true, for instance, of warlike action, such as expeditions and trade wars.  We will rightly distinguished "economic" means from "political" means.  It is essential to distinguish the latter from economic action. The use of force is unquestionably very strongly opposed to the spirit of economic acquisition in the usual sense. Hence t he term "economic action" will not be applied to t he direct appropriation of goods by force and the direct coercion of t he other party by threats of force.

Economic exchange is not the only economic means, though it is one of the most important. Further more, the formally peaceful provision for the means and the success of a projected exercise of force, as in the case of armament production and economic organization for war, is just as much economic action as any other.

Every rational course of political action is economically oriented. With respect to provision for the necessary means, and it is always possible for political action to serve the interest of economic ends. Similarly, though it is not necessarily t rue of every economic system, certainly the modern economic order under modern could not continue if its control of resources were not upheld by t he legal compulsion of the state. That is, if its formally "legal" rights were not upheld by t he threat of force.

But the fact that an economic system is thus dependent on protection by force, does not mean t h a t it is itself an example of t he use of force. Ho w entirely untenable it is t o maintain that the economy, however defined, is only a means, by contrast, for instance, with the state, becomes evident from t he fact t h a t it is possible to del1ne t h e state itself only in terms of the means which it today monopolizes, namely, t he use of force.  If anything the most essential aspect of economic action for practical purposes is the prudent choice between ends.  This choice is, however, oriented to t he scarcity of the means which are available or could be procured for these various ends. 

Not every type of action is rational economic or not.  Not every social action has an economic component. Economic is not necessarily technological. Economic is about goals or outcome and technological is about means. Rational requires a choice. This choice has a subjective part that reflects both careful thought and experience. The highest level reflects both logic and thorough empirical research.

Economic actions are generally about meeting needs and desires these include actions concerning such purposes as goals, methods, level of difficulty, and side effects. This goes beyond a subjective evaluation, even though they have deep subjective meaning to the participants. Taking on economic significance even when it is political or social nature, meeting basic human needs is economic in its results.

At some level those involved in economic activity are aware that their actions are economic. This does not mean the motives are the same. Profits and social service at some point may stand in opposition to each other and religious, political, or monetary accumulation may coexist yet at some point they may come in opposition to each other and one motive will take the lead.

Non-economic actions may have an economic component. Thus the term economic orientation is important in understanding the specifics of the activity. Such requires the use of material resources in a way that fulfills the goals of the action. Here motive is very important in using material and social resources that satisfies the rationale and meaning the activity.

Comparative cost:

Comparative costs is a technical term that measures the expenditure of a resource necessary in the production of some good, service, or the attainment of some end. The resource may be labor, money, or materials necessary in achieving a particular goal. It must be assumed some one who has power, in a sociological sense, will make a choice and that some one is at least marginally aware there is at least one other choice. Desirability of the results of making that specific choice will be factored in determining costs. Labor expended, price in money, resources expended may or may not be the critical factor.

In a modern market economy is founded on network of relationships of contracts arranged around a set of connections of power relations. Associations of systems of dealings of bringing together individuals united through the market, fairly or unfairly, through buying and selling what ever they have to offer. This would include some kind of effective distribution of power over the control and disposal of resources including money and labor power.

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