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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

  • Wicks, Rick


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

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.

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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 292.

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Length: 45 pages
Date of creation: 10 Mar 2008
Date of revision: 01 Jan 2009
Publication status: Published in International Journal of Social Economics, 2009, pages 535-65.
Handle: RePEc:hhs:gunwpe:0292
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
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