Coddington Alan - Theories of the Bargaining Process

Routledge Library Editions

THEORIES OF THE BARGAINING PROCESS

Routledge Library Editions Economics

KEYNESIAN & POST-KEYNESIAN ECONOMICS

In 11 Volumes

THEORIES OF THE BARGAINING PROCESS

ALAN CODDINGTON

First published in 1968

Reprinted in 2003 by

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1968 Routledge

Reprinted with kind permission of the Estate of Alan Coddington

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British Library Cataloguing in Publication Data

A CIP catalogue record for this book is available from the British Library

Theories of the Bargaining Process

ISBN 978-0-415-31369-8 (hbk)

ISBN 978-0-415-60745-2 (pbk)

ISBN 978-0-415-31367-4 (set)

Miniset: Keynesian & Post-Keynesian Economics

Series: Routledge Library Editions Economics

THEORIES OF THE BARGAINING PROCESS

by

Alan Coddington

Queen Mary College, University of London

With a Foreword by Professor G. L. S. Shackle

FIRST PUBLISHED IN 1968

This book is copyright under the Berne Convention. Apart from any fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act, 1956, no portion may be reproduced by any process without written permission. Inquiries should be made to the publishers.

Routledge 1968

IN ON 13PT TIMES TYPE

AT THE PITMAN PRESS, BATH

Foreword

by Professor G. L. S. Shackle

The behaviour of inanimate objects is not governed by their possession or non-possession of conscious knowledge. It follows that in assimilating the behaviour of a society to that of an inanimate system, economists of the mechanistic school have assumed away the problem of what men can and cannot know and the influence on their conduct of the beliefs and assumptions, right or wrong, realisable or inherently self-defeating, with which they complement their knowledge or by which they develop proxies for the unknowable. When a type of situation or process presents itself, whose essence is the exploitation by one party of the ignorance of another, it is plain that mechanistic models, and even the scheme of equilibrium, designed to make conceivable the possession by every man of all the knowledge which the scheme makes useful to him, cannot dissect the heart of things.

Not ignorance and uncertainty merely, but mistakenness, belief in something which in fact is false, and further, the deliberate cultivation of uncertainty and mistakenness by one party in the mind of the other, are of the essence of bargaining. Orthodox economic analysis proceeds by saying: It would pay this individual best, in such-and-such circumstances, did he but know that those are his circumstances, to do so-and-so, let us assume that he does know and that he will do it. Equilibrium is the means of being able, without impediment of logic, to ascribe to him that complete relevant knowledge of his circumstances, without which he cannot demonstrate to himself that one course out of all possible courses is objectively the best. But when our problem, of its nature and by its essential terms, precludes us from rather general and basic considerations. But Dr Coddington has shown that much more can be attained, at a price.

A need is felt by many analysts to escape from the assumption that an achieved optimum is the only thing we can understand. How in detail, by what precise sequence of steps or flow of transformation, is a new such optimum attained when the governing conditions which shaped an earlier one have been destroyed? Is there necessarily a path which inevitably leads to a new adjustment? What can the effect be, when different parts of the system respond with various lags to disequilibrium pressures? Such questions lead to the search for principles determining the path of movement which a system will follow, to the devising of dynamic models characterised by equations which associate with each other events or situations of distinct dates. However, it seems that the determining of an equilibrium situation or state of affairs calls for far fewer arbitrary assumptions than that of a path of movement. The former essentially requires us to assume that people seek to satisfy tastes which are characterised by diminishing marginal rates of substitution, by means of resources which show diminishing marginal productivities; and that they possess all the knowledge of their own responses and the technological powers of their resources, and of each others tastes, powers and intentions, which bears upon their own problems of choice. These are very general and, except the last, very plausible assumptions. But no comparable appeal to the basic qualities of human nature and the basic geometry, as it were, of technology can be invoked to select one particular path of movement out of an infinity of such paths. If such a model as Dr Coddington has constructed is to be worth while, it must show itself capable of illustrating and exemplifying principles much more general than its particular illustration of them, such as could scarcely otherwise be elicited. This, I think, is the claim that Dr Coddingtons model can make.