Proprietary Scarcity

(interesting from a p2p/commons point of view because this is about a pluralistic understanding of value)

Discussion

About the concept in the economic work of institutional economist John R. Commons, by Hiroyuki Uni :

"In the 1927 manuscript, for the first time, Commons named a concept himself: namely, “proprietary scarcity.” The origin of “proprietary scarcity” is “scarcity of proprietors.”

For Adam Smith, scarcity was psychological and subjective, based on human pleasure and pain. David Ricardo (1817) explained scarcity based on the strength of nature’s resistance to human beings, as shown in the unproductiveness of land. His scarcity was objective natural scarcity (Commons 1927, ch.7, 98). However, while Commons’s scarcity is also objective, it is defined by the relationship between the supply and demand in a particular society at a particular time. Commons emphasized that, in the case of both general commodities and labor power, the ability of sellers to limit or withhold supply has been authorized and strengthened historically by the development of institutions of ownership and labor rights. Therefore, proprietary scarcity is closely related to custom and sovereignty.

...

Although the term “proprietary scarcity” first appeared in the 1927 manuscript, Commons’s idea regarding the cause and regulator of value was constructed over many years following the publication of his first theoretical book, The Distribution of Wealth, in 1893. In it, Commons analyzed the behavior of suppliers, who profit by withholding supply, and criticized the profit theory of Eugen Böhm-Bawerk from this perspective. Moreover, Commons considered such supplier behavior led to wages that exceeded subsistence levels, and criticized the wage theory of classical economists as it could not explain the wages exceeding subsistence levels. However, Commons (1893) did not clearly distinguish between reasonable and unreasonable monopoly privileges. In Legal Foundations of Capitalism (1924), through analyses of historical changes in customs and laws regarding rent bargain, price bargain and wage bargain, Commons distinguished between goodwill and privileges based on whether any public purpose was served by suppliers’ withholding supply.

However, in neither of these books did Commons use the term “proprietary scarcity,” or any other expression that combined these two words. “Proprietary scarcity” was a term Commons coined in the 1927 manuscript to clarify his criticism of Smith’s subjective scarcity and Ricardo’s natural scarcity. This is the first contribution of the 1927 manuscript, and the concept of “proprietary scarcity” would become a key concept in Commons’s Institutional Economics." (https://doi.org/10.1080/00213624.2018.1469886)

Source

• Uni Hiroyuki (2018) John R. Commons’s Criticism of Classical Economics,

Journal of Economic Issues, 52:2, 396-404, DOI: 10.1080/00213624.2018.1469886

To link to this article: https://doi.org/10.1080/00213624.2018.1469886

More information

Commons, John. R. The Distribution of Wealth. New York, NY: Macmillan, 1893. ———. The Legal Foundations of Capitalism. New York, NY: Macmillan, 1924. ———. Reasonable Value. Madison, WI: Edwards Brothers, 1925. ———. Reasonable Value: A Theory of Volitional Economics. Manuscript, 1927. (Collection of the Kyoto Prefectural Library. Call mark: /331.04/C85/, Material code: 1102508007). ———. Institutional Economics: Its Place in Political Economy. New York, NY: Macmillan, 1934. ———. The Economics of Collective Action. New York, NY: Macmillan, 1950