Economics Dictionary of Arguments

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I 265
Economic systems/Political economy/Rawls: Political economy deals with the public sector and institutions that influence economic life through taxes, property rights and market structures, etc. An economic system regulates which goods are produced and by which means, who receives them in return for what compensation and what proportion of social resources is spent on the conservation of public goods (e. g. infrastructure).
Public sector/Rawls: has two aspects:
1. Characteristic: relates to the ownership of means of production. Thus, for example, the public sector in socialism is larger than in capitalism. It is smaller in privately organised systems and mainly affects public institutions and transport.
2. Characteristic: relates to the proportion of resources spent on public goods (infrastructure, etc.).
Public goods/Rawls: are above all indivisible and open to the public. (See J. M. Buchananan, The Demand and Supply of Public Goods, Chicago, 1968, ch. IX.) If citizens want to benefit from this, it must be set up in such a way that everyone benefits to the same extent. National defense, for example.
I 267
This means that public goods have to be steered by the political process and not by the market.
I 268
For example, environmental damage is not normally regulated by the market. For example, raw materials may be produced at a much lower cost than their marginal social costs. Here there is a difference between private and social accounting that the market does not register.
In this case, the indivisibility of public goods (e. g. infrastructure, freedoms, etc.) requires the state to take over the scheme. Problem: even in a society of people of justice, the isolation of individual decisions does not lead to the fulfilment of the general interest.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution.
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Rawl I
J. Rawls
A Theory of Justice: Original Edition Oxford 2005

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