Understanding Capitalism: Competition, Command, and Change

Understanding Capitalism: Competition, Command, and Change

Understanding Capitalism: Competition, Command, and Change

Understanding Capitalism: Competition, Command, and Change


Understanding Capitalism 3e provides an introduction to economics with extensive attention to the global economy, inequality, the information revolution, the exercise of power, and the historical evolution of economic institutions and individual preferences. Its three-dimensional approach focuses on competition in markets, command in firms, governments and international relations, and change as a permanent feature of a capitalist economy promoted by technical innovation and conflict over the distribution of income.
• Covers standard material from both micro and macro, as well as extensive historical and institutional analysis drawing on anthropology, political science, and sociology
• Third edition is entirely rewritten with four new chapters on the long term history of capitalism, the evolution of preferences and values, inequality, and the future of capitalism
• The three dimensions of economic life-competition, command, and change-provide a unifying framework encompassing recent developments in behavioural economics, information economics, increasing returns, and institutional economicsContents:1. Capitalism Shakes the World2. People, Preferences and Society3. Three-Dimensional Approach to Economics4. Political Economy, Past and Present5. The Surplus Product: Conflict and Change6. Capitalism as an Economic System7. American Capitalism: Accumulation and Change8. Supply and Demand: How Markets Work9. Competition and Co-ordination: The Invisible Hand10. Capitalist Production and Profits11. Competition and Concentration12. Wages and Work13. Technology, Control, and Conflict in the Workplace14. The Mosaic of Inequality15. Progress and Poverty on a World Scale16. Aggregate Demand, Employment and Unemployment17. The Dilemmas of Macroeconomic Policy18. Inflation19. Government and Economy20. The Future of CapitalismIndex


Understanding Capitalism: Competition, Command, and Change is an introduction to economics that explains how capitalism works, why it sometimes does not work as well as we would like, and how over time it not only changes its own function ing but also revolutionizes the world around us. The book does not assume that the reader has any prior knowledge of economics.

The three-dimensional approach to economics offered in this book focuses not just on market competition, as highlighted in conventional economics textbooks, but also on rela tionships of command—the exercise of power in firms, among nations, and between social groups—and on processes of historical change. The approach is multidisciplinary, making extensive use of examples from history, anthropology, and the other behavioral sciences as well as economics.

The core idea uniting the three dimensions of competition, command, and change is the pursuit of profits by firms. Using this central idea, we analyze competition among firms, the search for profits as the driving force of investment and technical change, and profit seeking as a source of conflict among owners, workers, governments, employers, and consumers.

The book covers the standard topics of supply and demand, market competition, imperfect competition, aggregate demand, inflation, and unemployment. In addition, we give special attention to the extraordinary dynamism and material productivity of the capitalist economy, the psychological foundations of human behavior and the importance of Adam Smith's invisible hand, technical change and the new information-based economy, global economic integration and its impact on national economies, and inequality both within and among nations. We also provide a critical evaluation of the tenets of neoclassical economics and a clear introduction to contract theory as well as to new research in behavioral, institutional, and information economics.

We titled the book Understanding Capitalism (rather than, say, Understanding Economics) to stress that our subject matter is a real economic system—not just the ideas and models of economists. Considered in this way, economic theory is a body of knowledge that, along with history, politics, sociology, and the other social sciences, can help us understand capitalism . . .

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