The Significance of “Power” in Exchanges

By Alberto Banterle

The field of study of this paper is the analysis of the exchange between two subjects. Circumscribed to the micro dimension, it is however expanded with respect to standard economic theory by introducing both the dimension of power and the motivation to exchange.
The basic reference is made by the reflections of those economists, preeminently John Kenneth Galbraith, who criticize the removal from the neoclassical economy of the “power” dimension. We have also referred to the criticism that Galbraith, among others, makes to the assumption of neoclassical economists that the “motivation” in exchanges is solely linked to the reward, to the money obtained in the exchange. In the construction of a mathematical model we paid great attention to its usability in field testing.

• Language: English
• Publisher: Tangram Edizioni Scientifiche Trento
• Release date: Aug 3, 2022
• ISBN: 9788864589381

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Alberto Banterle

The Significance of Power in Exchanges

Copyright © 2020 Tangram Edizioni Scientifiche

Gruppo Editoriale Tangram Srl

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Collana Orizzonti – NIC 59

Prima edizione digitale: dicembre 2020

ISBN 978-88-6458-208-5 (Print)

ISBN 978-88-6458-938-1 (e-book)

In copertina: Foto di Peter H, Pixabay.com

The book

The field of study of this paper is the analysis of the exchange between two subjects. Circumscribed to the micro dimension, it is however expanded with respect to standard economic theory by introducing both the dimension of power and the motivation to exchange.

The basic reference is made by the reflections of those economists, preeminently John Kenneth Galbraith, who criticize the removal from the neoclassical economy of the power dimension. We have also referred to the criticism that Galbraith, among others, makes to the assumption of neoclassical economists that the motivation in exchanges is solely linked to the reward, to the money obtained in the exchange. In the construction of a mathematical model we paid great attention to its usability in field testing.

The Author

Alberto Banterle was born in Verona on 12-12-1940. He attended school in Milan, obtaining a degree in Electrical Engineering at the Milan Polytechnic. He worked for many years in the field of telecommunications, mainly in the organization of Human Resource Management. Since 1999, he has been a contract professor at the University of Trieste for the course of Business Statistics in the Faculty of Economics, now the Department of Mathematical Economics and Statistics. In these years he has been the coordinator of first level Masters degrees in e-Business and e-Government to which the Faculties of Engineering, Economics and Psychology have contributed. He has also coordinated a Master in Technological Transfer for Eastern Europe with the Italian Trade and Investment Agency.

I give my warmest thanks to Pier Carlo Ravazzi and Emilio Bartezzaghi for the variations and additions that they kindly suggested. I also wish to thank my wife Clara Busana and my son Niccolò for the constant support they have given me throughout the writing of the text.

The Significance of Power in Exchanges

Foreword

The short essay that follows does not claim to be a rigorous academic work. It questions concepts such as power, motivation and welfare functions behind which there is a vast literature in sociology, psychology and economics, which is largely unexplored by the author.

Nevertheless, in the hope of providing some meaningful suggestions, a formal elaboration of the mechanism that governs exchanges in simple situations that involve only two individuals is proposed below.

The market has been theorized to overcome the direct exchange between two people, but many of these exchanges are not realized through the market, but just between two subjects.

Attention is focused on cases in which there is an "imbalance of power" between the contracting parties. There are many such cases, particularly in those situations where authority prevails in its violent forms: blackmail and corruption.

A meaningful example is the assignment of a contract by a public body to a private company, without resorting – by necessity or political opportunity – to tenders or auctions to choose