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A Model of Dynamic Balance among the Three Spheres of Society – Markets, Governments, and Communities – Applied to Understanding the Relative Importance of Social Capital and Social Goods

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  • Wicks, Rick

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

This paper revisits old questions of the proper subject and bounds of economics: Does economics study “provisioning”? or markets? or a method of reasoning, self-interested rational optimization? A variety of scholars and others in many fields make use of a taxonomy of society consisting of three “spheres”: markets, governments, and communities. It is argued here that this tripartite taxonomy of society is fundamental and exhaustive. A variety of ways of understanding this taxonomy are explored, especially Fiske’s (1991, 2004) Relational Models theory. Then – after communities and their products, social goods, are defined more thoroughly – a visual model of interactions among the three spheres is presented. The model is first used briefly to understand the historical development of markets. The model is then applied to understanding how economic thinking and market ideology, including the notion of social capital, can be destructive of communities and their production of social goods (and their production of social capital as well). It’s not possible to measure these effects monetarily, so calculating precisely “how this affects results” in a standard economic model is impossible. Nevertheless we could better prepare students for real-world analysis, and better serve our clients, including the public, if – whenever relevant, such as in textbook introductions and in benefit/cost analyses – we made them aware of the limitations of economic analysis with respect to communities and social goods. The three-spheres model offered here, based on Fiske’s Relational Models theory, facilitates this awareness.

Suggested Citation

  • Wicks, Rick, 2008. "A Model of Dynamic Balance among the Three Spheres of Society – Markets, Governments, and Communities – Applied to Understanding the Relative Importance of Social Capital and Social Goods," Working Papers in Economics 292, University of Gothenburg, Department of Economics, revised 01 Jan 2009.
    • Handle: RePEc:hhs:gunwpe:0292
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    File URL: http://hdl.handle.net/2077/9680
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    Cited by:

    1. Rick Wicks, 2011. "Markets, Governments—," Challenge, Taylor & Francis Journals, vol. 54(4), pages 65-96.
    2. Wicks, Rick, 2011. "Assumption without representation: the unacknowledged abstraction from communities and social goods," MPRA Paper 51674, University Library of Munich, Germany.
    3. Wolfgang Grassl, 2011. "Hybrid Forms of Business: The Logic of Gift in the Commercial World," Journal of Business Ethics, Springer, vol. 100(1), pages 109-123, March.
    4. Rick Wicks, 2012. "Assumption Without Representation: The Unacknowledged Abstraction from Communities and Social Goods," The American Economist, Sage Publications, vol. 57(1), pages 78-95, May.

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    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D20 - Microeconomics - - Production and Organizations - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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