The 'Real' vs the 'Symbol' Economy

Topics: Economics, Economy, Capital Pages: 5 (1507 words) Published: May 24, 2012
TOPIC: Distinguish between the ‘real’ economy and the ‘symbol’ economy, drawing on two examples from the current global political economy.

“Underlying most arguments against the free market is a lack of belief in freedom itself”, the quote is attributed to Milton Friedman noted academic and economist. It is this lack of belief in freedom, freedom to question and interrogate by the individual, which has led to the unfortunate demonising and vilifying of a system that when well run can offer rewards to those who wish to participate. It was in the Biblical city of Jericho, a centre for salt trade, where free trade flourished during the seventh millennium B.C. providing a place, resources and exchange to take place in what can be simply described as an economy. This essay will seek to establish the basis upon which the economy is structured by examining the ‘real’ economy and the ‘symbol’ economy, distinguishing between them and drawing examples from the current global political economy. CONTENDING THEORETICAL APPROACHES

Given the present sophistication of the current global economic construct, emphasis has been placed on the relationship of the actors within the previously mentioned walls of Jericho. It is therefore important for the economy to be expressed acknowledging the contending views. The neoclassical economic interpretation is that the economy is a market or a collection of markets composed of impersonal economic forces over which individual actors, including states, corporations and consumers, have little or no control. Former New York Times economic commentator Leonard Silk described it as: “For economists the economy is nothing more than a collection of flexible wages, prices, interest rates, and similar forces that move up and down allocating resources to their profitable use as buyers and sellers rationally pursue their own interests. Such an economic universe is a self-regulating and self-contained system composed solely of changing prices and quantities to which individual economic actors respond.” Gilpin (2001) holds a countervailing view to the sterile, abstract definition given by Silk, he posits a political economy interpretation defining the economy as a socio-political system composed of powerful economic actors or institutions such as giant firms, powerful labour unions, and large agribusinesses that are competing with each another to formulate government policies on taxes, tariffs, and other matters in ways that advance their own interests. It must also be noted the most important of these powerful actors are national governments. Given the contending views offered by Gilpin and Silk it is clear that the economy although known cannot be easily defined or can it? On the one hand the players are seen as rational buyers and sellers pursuing their own self interest, on the other, powerful economic actors, firms and businesses lobbying government to advance their own cause. The definitions need not be contending but serve as a demarcation of two very influential economic forces. (Kenneth Boulding 1971) offers further clarity and defines the economy as that part of (his) three-part total social system comprising the benevolent, the malevolent and the integrative sub-systems in which is organized, through exchange, deals with exchangeables. The economy is such a total social system in which ‘symbol’/money and ‘real’/factor economies link cogently to determine the stable circular interrelationships between these. THE REAL ECONOMY

The ‘real’ economy, thus, is the means with which the state is able to achieve employment resulting in a greater distribution of wealth and overall growth. This is achieved by the establishment of the firm and it is within the construct of the firm that the combining of the factors of production take place. In economics the creation of the firm can be based on neoclassical institutionalism. This theory...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Japan vs Uk Economy Essay
  • Market Economy vs Planned Economy Essay
  • Economy Essay
  • Command vs Market Economy Essay
  • Market vs Demand Economy Essay
  • Pakistan vs India Economy Essay
  • Keynesian vs Monetarist Economy Essay
  • Essay about Command Economy vs Free Market Economy

Become a StudyMode Member

Sign Up - It's Free