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Nobody concerned with political economy can neglect the history of economic doctrines. Structural changes in the economy and society influence economic thinking and, conversely, innovative thought structures and attitudes have almost always forced economic institutions and modes of behaviour to adjust. We learn from the history of economic doctrines how a particular theory emerged and whether, and in which environment, it could take root. We can see how a school evolves out of a common methodological perception and similar techniques of analysis, and how it has to establish itself. The interaction between unresolved problems on the one hand, and the search for better solutions or explanations on the other, leads to a change in paradigma and to the formation of new lines of reasoning. As long as the real world is subject to progress and change scientific search for explanation must out of necessity continue.

Political changes in the countries of Central and Eastern Europe have created both the preconditions as well as the need for the transition from the old to a new economic order. In the absence of any ready substitute, the institutional vacuum which arose plunged the majority of these countries into economic chaos and anarchy. A way of arresting this continuing drift towards chaos and political discontent is not to be found by striving for the reintroduction of laissez‐faire. A new stable economic order can be established only on the precepts of a just society. Suggests two alternatives delegating decision making in the sphere of economics to groups and formations outside parliament, or establishing a socially reponsible free market economy. The transition process probably would go through the phases: from plan to anarchy to group control to legally constrained market control.

Economics, as one of the cultural and historical sciences, is responsible for the investigation of the meaningful relation between the whole and the parts, based on organic linking and not on the mechanical‐causal relationship. The relevant contributions of the leading holistic school of thought – universalism – is thus described, focusing on the fundamental concepts and methods of understanding and on their possible application in economics. The article aims to aid present methodologists of economics and other social sciences, disenchanted with the individualistic and disjointed approaches of their respective disciplines, in building up a body of integrated theory and in suggesting new areas of research.

Property is considered paramount to one’s existence, as a natural, absolute and inalienable right. Occupancy is required for man to secure what his thoughts have already made his. Property is realized in use but the right of occupancy and the status of res nullius are not established by the absence of use only, but in addition there must be also the absence of will of original owners. Arguing that appropriation precedes production dismisses the assertion that property is the fruit of labour. In contrast to the followers of the “state of nature” point of view, it is argued that common property is not natural and as such it is only transitory. Private property is at the root of man’s universality because it is common to all and individuals recognize each other only as owners. To base the origin of property in a social contract is erroneous because any contract must be based on the mutual recognition of parties involved who are already property owners. It is necessary that everybody have property not only in his or her persons but also to provide for subsistence. This would be regarded by natural law as just. Justice does not require the equality of property. Perpetual inequalities in property rights are not natural but the result of man‐made institutions which would not in themselves be right and would not have the obligatory power in virtue of their rightness. As such they would not be morally binding. Society that systematically consigns whole classes to conditions of poverty undermines the rationality of the ethical order and as such heads towards self‐destruction. Today, people are generally convinced that a person’s happiness depends on the satisfaction of that person’s actual desires. Property in things and enjoyment of one’s possessions, is often perceived as prerequisites for happiness. Individual happiness as an outcome derived from the distribution of property rights should be demoted from its status as the final good in preference to freedom.

Identifies certain commonalities in the bases of the moral philosophies of Rand (individualist/capitalist/egoist) and Marx (collectivist/socialist/altruist), such as a man’s natural rights and materialism. Examines their philosophies from an ethical viewpoint, looking at the origins and content of morality, moral laws, the principles of ethics and realistically reflects the nature of man, as man can be neither wholly altruistic nor wholly individualistic but is rather a combination of both, with man’s self‐development depending on interaction with other haman beings. Concludes that neither doctrine presents a viable model of social organization.

Attempts to trace the evolution of the major ideas of the natural law and in this way shed some light on the ethical contents of economics. Asks the reader to ponder some of the perennial questions such as: What is primary, ego or social association? Is man a social animal by nature? Is man a political animal? Is the justification for human existence to be found in the individual alone or in the social whole? Is society a synthesis of individuals, or does it contain something more than the simple totality of individuals?

Claims that the process of transition of former socialist countries has been misguided. The reform of the economic system is but part of the overall process of social transformation, and it is argued that at the root of the disappointing results has been the fact that instead of focusing on moral redemption, the moral decay of these societies has even been enhanced by the infusion of economic egoism. The present transition can be seen as a process of transformation from primitive socialism to primitive capitalism. Without the sanctity of law and order rooted in the value system of the cultural heritage of Judeo‐Christian ethics, the privatization of state industries and public utilities including the commercialization of education, health, the arts and sciences has been creating conditions for a place far removed from an environment conducive to social peace, political stability and economic growth.

The law of value performs its regulatory function in the capitalist system where the private ownership of means of production and commodity production prevail. Under the centrally directed system of socialism, the economic process must be determined by plans and valuations of the central authority to maintain the consistency of the system′s internal co‐ordinating mechanism. In theory, the process of building socialism is a process of the withering away of the operation of the law of value. Recognition of the law of value as a permanent feature of the socialist economic system means conceding either a lack of understanding of the fundamental differences between capitalism and socialism, or the failure of the Marxist‐Leninist dogma. It also acknowledges that the Soviet system of socialism was exposed to increasing contamination by elements incompatible with socialism and was gradually transformed into its opposite – a form of centrally regulated exchange economy where a new ruling class, grown from the Party, was (and temporarily still is) in control of public ownership of means of production, as well as of all markets. The evolution of Soviet socialism from the October Revolution to its disintegration can be characterized by its passage through distinct “official” attitudes towards the role of the law of value. Its denial under the totally centralized economy of War Communism was followed by its temporary reintroduction under the New Economic Policy, then the recognition of its restricted functioning during the transitory phase from socialism to communism, then its recognition as a permanent feature of socialism, and finally its abandonment together with the rest of the Marxist‐Leninist dogma following both the doctrinal and economic crises in the 1990s.

Throughout history, social philosophers have justified titles of possession by the right of occupation, labour, and social contract, while the economic justification rests on efficiency grounds. Subscribing to the extremely contestable argument that there is a connection between private property rights and the performance and prosperity of capitalism, de‐socialization of ownership was to become the backbone for market oriented reforms in post‐communist society. The absence of clearly defined property rights, their capricious enforcement, widespread cronyism and criminal activity, in combination with a lack of resolution to terminate the quasi‐property rights of the former ruling elite, and imperfect markets have created a situation where, in the final analysis, the original foundation of most rights to property and wealth would hardly survive the test of justice and be validated in any socially responsible society. Moral precepts aside, given these circumstances, it would be hard for an economist to argue that the present process of re‐allocation of rights could be explained on efficiency grounds.

John E. Elliott has been a professor of economics at the University of Southern California in Los Angeles since 1956 when he graduated from Harvard University with a doctorate in economics. In that position at USC, John has distinguished himself not only as a scholar and prolific writer but also as an outstanding teacher. He has received every teaching honour which USC has within its power to bestow. Moreover, John has distinguished himself for his contribution to the wellbeing of the faculty and to the advancement of its efforts to preserve and extend the concept of academic freedom. John E. Elliott was born in the year 1931 and the essays which comprise this Festschrift are written in celebration of his sixtieth birthday. The numerous awards he has received for the high quality of his teaching, for his creativity and innovation in the dissemination of knowledge, his record of books published, articles contributed to scholarly journals, and book reviews, are to be found in his curriculum vitae printed at the end of this work.