Market institutions

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Chapter 7 in The Economics of Prosperity, 2023, pp 158-178 from Edward Elgar Publishing

Abstract: Economic progress is a process within the economic order in which the sources of development complement one another. Extending the market division of labor requires investment in capital accumulation and maintenance. At the same time capital accumulation benefits significantly from the social division of labor. The productivity of the capital good is constrained by the level of technology it embodies. The level and specific form of technology available for production is greatly affected by the extent of the division of labor, the quantity of capital, and effective entrepreneurial judgement. At the same time, technology cannot be discovered, made practical, and utilized in production without capital. For the division of labor to be an economic order enjoying economic prosperity, wise judgment and actions of entrepreneurs must coordinate market activity and allocate capital to is most valued uses. Economic progress is not monocausal. The real key to unlocking economic progress is to discover the institutions that allow the sources of prosperity to function together. All require the institution of private property. Sound money is a corollary of private property that is necessary for economic calculation used by entrepreneurs to coordinate market activity. Indeed, economic history documents a certain and direct correlation between economic freedom and prosperity.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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