Question 1. What does Heilbroner mean by the ‘economic problem’ and how does ‘tradition’, ‘command’ and ‘the market’ “solve” it? Why does Heilbroner think ‘economics’ is of no use for studying pre-market economies? (chapter 1).
In the first chapter of this book, the author illustrated several concepts. Firstly, ‘economic problem’ was defined as “extraordinary variety of ways in which human communities have wrestled with” (Heilbroner, p.9). Secondly, ‘tradition’ solved the economic problem by customers. For example, a son will do his fathers’ job and run in the family. Thirdly, the ‘Command’ solved the problem by order form above. “It requires an enforcement mechanism different from internalized pressure of socialization” (Heilbroner, p.12). Lastly, the market solved the problem by the system itself, the author illustrated that “it’s just the way people behave. No one runs it” (Heilbroner, p.13).
Question 2. Difference between Capital and Wealth.
Heilbroner illustrated that capital is not wealth. “Capital thus differs from wealth in its intrinsically dynamic characters, continually changing its form from commodity into money and then back again in an endless metamorphosis that already makes clear its integral connection with the changeful nature of capitalism itself” (Heilbroner, p.30).
Question 3. What are the two realms of capitalism?
There are public and private realms. For the public realm, the capital normally holds the upper hand (Heilbroner, p.55). And it cannot perform its accumulative task without the complementary support of the state (Heilbroner, p.55). However, for private sector, government treats it as a business.