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Institutional Economics Essay Example

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Institutional Economics

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Institutional Economics. The elements that are the result of the development of capitalist economies include a product, money, and labor. A product, commonly known as a commodity, is a good that comes under production for trade in the marketplace. Products are of two types; capital goods and consumer goods. Consumer goods that are the finished product are the result that comes from capital goods, which are the sources such as raw materials, machines, transport means, and factories. On the other hand, the currency that is the mode of payment determines the worth of the goods, which always comes under measurement with a standard set of values and this is worth (Lippit, 2005).The forms of currencies have evolved through years and so has the meaning of producing/making goods.

In addition, improvement and advancement in the capital have come under a major affection by imposing of taxes, tax collection and the concept of banking. With the advancement of technologies and growing demands of tax payments, economies were becoming multifaceted as it endured the currency to progress and made its role more vital and crucial for the whole world. Regardless of all the factors of the past, the fact still exists, that money emblematizes significance. Through ages, the role of money has not changed and today still, money has the same functionality, but nowadays it not only exemplifies material goods but services are also charged. ”Acquiring money is not the same thing as creating value” (Lau, 2000). This statement gives a clear view that money and finished goods are directly proportionate to each other. It means that profit generation cannot always lead to the production of goods in a valuable manner. The best example that explains the statement is currency traders. These people make money by bartering of currencies (that is buying and selling), thus. they are not in the process of making any value in the good/product. On the other hand, an example of painting symbolizes that not only the money comes under collection but also the value of the good has come under deportation (Lau, 2000). Institutional Economics.

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