Human beings are inherently economic beings in the sense that they day in day out seek to satisfy their needs and wants by the way of producing, distributing, exchanging, and consuming goods and services. In fact, complexities of human behavior in the production, distribution, exchange, and consumption of goods and services in the society is the subject matter of the discipline known to us as economics Brickley, Smith and Zimmerman (2009). It is important to note that time and place do not and can not take away this inborn human characteristic such that whether an individual human being is free, enslaved, or imprisoned, he or she will definitely seek to gratify his or her needs and wants by whatever possible means. This task seeks to provide a reflection on Radford’s article titled “The economic organization of a Prisoner of War Camp” with a view to finding how it applies to contracting costs and the role of middlemen and money in an economic setup.
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The accuracy and reasonableness of costs in a business agreement or contract is important to not only the client but also the contractor. Though Radford’s article does not have a perfect example of a contract the operations of the shop and the restaurant can help in shedding some light on the concept of contracting costs. In practice, a contract is usually a business activity out which all the parties must come out fairly so as to avoid unnecessary disagreements.
Role of Middlemen
It is common knowledge that not unless goods and services reach the consumers at the right time they are useless, as such middlemen otherwise known as brokers play an important role in linking the producers and the consumers and in the long run make a profit along the distribution chain of a given market. In his, article Radford asserts that the middlemen in this simple economy either traded on their own account or for a commission Radford, (1945). He further adds that they were protective of their strongholds. Now, this is common and universal in all societies whereby middlemen trade on their own to make a profit either as distributors or retailers or trade on behalf of other traders for a commission upon the sales made. Thus this article is applicable in deriving the role of middlemen in a distribution chain of which is universally applicable.
Role of Money
Trading has been a common characteristic for all human societies since the humble beginnings of humanity. Individuals, as well as communities in the initial stages of human civilization, exchanged what they had in surplus for what they did not have from others. In other words, there was a rudimental exchange of goods and services in the form of barter trade whereby goods were exchanged for goods. However, due to the many inconveniences associated with barter trade an acceptable medium of exchange was needed and goods such as salt, cowries’ shells, iron. Silver and copper were first used as currencies before the emergence of the money (note and coins) economy.
Generally, money is used as first and foremost a medium of exchange, a measure of value, a store of value, and a measure of wealth in a typical currency economy. The P.O.W camp in Radford’s article provides us with a perfect example of a simple economy from which we can derive the role of money in an economy (Radford 1945, p190). An example is a cigarette which was used as a currency within the article, Radford argues that it performed all the functions of a metallic currency mentioned above Radford (1945). He further provides that it shared most of the characteristics of metallic currency.
Brickley, J, Smith, C, & Zimmerman, J. (2009).Managerial Economics and Organizational Architecture (5th Ed.).New York: McGraw Hill.
Radford, R.A. (1945). “The Economic Organization of a P.O.W Camp,” Economica, Vol.12, No.48. p189-201.
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