27.10.2019 2, 27.10.2019 3, 27.10.2019 1. Intro 5 Content / Objective Schedule Theory: Institutional Economics 13 2 Group Exercise: Create good institutions for the market of taxi services Theory: Institutional economics aims to define rules that make markets Form groups (Polish & Swiss students) 2 sustainable. Every member watches a video sequence 10 Case study: “Uber” as archetype of “Uberization” and the “Gig Economy” Members relate their sequence to the group 10 Objective: Group Discussion 10 What would be good rules for this market? Prepare a common position and illustrate it on paper 8 Larger objective: 3. Present it to the class 12 Should a market economy freely evolve or be «crafted»? Plenary discussion 15 Feedback on the workshop 5 5, 27.10.2019 4, 27.10.2019 Michael Derrer, Hochschule Luzern
27.10.2019 Institutional Economics Sociological view on institutions What are institutions? Interventionist tradition Include the categories and logic of how people think: = the «rules of the game» in a society • German Historical School 19 th century • What is a company? • Original Institutional Economics in U.S. (John Commons) • What is an employee? formal: informal: • Economic Sociology • What is a binding agreement? laws, regulations, routines, conventions, • “Marketcraft” contracts, bylaws, • What is (acceptable) competition? habits, customs, norms standards Not to be confounded with New Institutionalist Economics, • What is fairness? even if they partially overlap. 7, 27.10.2019 8, 27.10.2019 9, 27.10.2019 Political stance of institutionalists Find specific solutions Mental models and convictions accross the spectrum: conservative, moderate liberal or left views Institutional frame of the economy There isn’t one best way of doing things Uniting element: Need for pragmatic political intervention to Incentive structure create good institutions Details in policies lead to significant changes Organisations No believe in an “invisible hand”: Improve capitalism through continuous reform Context ‐ dependent: regulation has to fit into a cultural, Strategies It is the good rules that make markets work to the benefit of all political, economic environment Results Promote socially desirable behavior, better living standards, equality Institutions function differently in different countries (Douglass North) 10, 27.10.2019 11, 27.10.2019 12, 27.10.2019 Michael Derrer, Hochschule Luzern
27.10.2019 «Marketcraft» (Steven Vogel 2018) Positive effects of UBER Against free market ideology Break up taxi https://www.youtube.com/watch?v=n0yLhlQ6kCQ 7:43 a core function of government Economy made up of power relations (bargaining power) monopolies Advantages for https://www.youtube.com/watch?v=jZYZrU0cTk8 5:56 Markets are an instrument, not a goal in itself Non ‐ action is also an action: consumers Always certain actors are advantaged. “Government versus market” : A false dichotomy. Work opportunities https://www.youtube.com/watch?v=9abrZwnPThE 5:03 Recognize the multidimensionality of market governance. Not all regulations are good: Find good rules that are not impeding, but enhancing “Once you’v got competition, the state can withdraw.” Disruptive, https://www.youtube.com/watch?v=t2LMEJgXE84 5:31 the market. entrepreneurial at Wrong. More market requires a strong government. technological frontier 13, 27.10.2019 14, 27.10.2019 15, 27.10.2019 Negative Issues with UBER Opposing positions Type of intervention No minimum wage https://www.youtube.com/watch?v=HUXHMsqj2Go 7:31 • Contract law • Standards «Austrian» https://youtu.be/qvsPXKJe05Q 2:59 Undermining security https://www.youtube.com/watch?v=NTs2uBp9yVY 10:56 • Labor law standards • Property rights: Capital investment outsourced, profits Workers’ rights https://www.youtube.com/watch?v=YIvB1ND1H0s 8:21 «Radical» https://youtu.be/jyP8zReDlX4 2:16 centralized. “Give shares to drivers”? • Monopoly law: Should small companies be treated differently from large ones? www.youtube.com/watch?v=2eViwgKGJJg Unfair toward 7:00 ‐ competitors 16:25 ‐ …other? 16, 27.10.2019 17, 27.10.2019 18, 27.10.2019 Michael Derrer, Hochschule Luzern
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