Lany Anderson
BUS 1050—004
The Economic Revolution
Robert L. Heilbroner wrote The Economic Revolution in 1953. The passage of
reading is about the economic revolution, which includes the switch from
traditionally based control and command to the free market-system. Revolution can
be defined as, “a sudden, extreme, or complete change in the way people live, work,
etc.” (www.merriam-webster.com) The change from custom and command to a
market-system is exactly that, therefore it can be classified as a revolution.
The Economic Revolution was written to explain the complete change of how the
economy ran to how society has developed the new economic system that industry
runs on today. Heilbroner introduces three economic methods that societies use to
avoid collapse: traditional, control and command, and a free-market economy.
The first method used is the traditional-based platform that industries use to run on.
Heilbroner describes a traditionally based economy as, “Handing down the varied
necessary tasks from generation to generation according to custom and usage…”
(Heilbroner, Pg. 66) A tradition-based society is when each son’s profession is that
of his father’s, and so on and so forth. Attempting to climb the social ladder was
penalized with ostracism. Personal gain or making a profit on a transaction was
shunned, because it was often considered a sin to exploit buyers. In the Middle Ages,
peoples’ lives were dictated by their religion; that is why a market-system was not
even a fathomable thought.
The second method mentioned by Heilbroner is control and command. “It can use
the whip of authoritarian rule to see that its tasks get done.” (Heilbroner, Pg. 66) An
example of control and command is in ancient Babylonian times, when the price of
each commodity was placed in the middle of the market-square, with the penalties a
merchant would face if they charged more than the price displayed. When control
and command is no longer in place, the “dirty work” still gets done because there
are incentives. An example of an incentive is higher wages for those that do the dirty
work. Also, the people that have no other option will do the dirty work because they
need an income to survive.
The third and final method that industries run on is a free-market economy, which
Heilbroner explains as “ … society assured its own continuance by allowing each
individual to do exactly as he saw fit…” (Pg. 66) A free-market system implies that
each merchant can price their commodities at whatever price they see fit, and the
buyers can choose to buy at the given prices or not. The price at which the
transaction is made is the equilibrium. The market-system is driven by the incentive
to make a profit.
Heilbroner’s, The Economic Revolution, intends to explain the economic revolution,
which consisted of a change in economic methods. These methods include, a
traditional-based economy, control and command economy, and a free-market
economy. Heilbroner’s text implies that industries’ economic methods evolved from
traditionally based control and command to the free-market economy.