Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

The May Day

 

May Day celebrated on May 1 every year has two different associations. The first one has pagan origins later adopted by the Church and is a traditional spring festival in many parts of Europe. The more famous and better know is about the International Workers Day and celebrated as a holiday in a number of countries. In fact, the May Day was perhaps the most important of the holidays in Communist countries like the erstwhile Soviet Union, Maoist China or even present day North Korea. It represents the worker’s efforts in seeking to improve the conditions for workers. Its origin goes back to 1889 when the Second International decided to adopt the same. In fact, the US adopted the Labour Day to be celebrated on the second Monday of September and predated the Second International’s adoption by a few years. In fact by 1894, it had become an official holiday in the United States.

 

Aside of United States, the celebrations were reserved for the first day of May. The seventeenth century was an age of industrialization. The industrial revolution transformed the global agrarian society into an industrialised one. This was perhaps one of the most significant moments of human history since the mankind moved from a nomadic existence to a settled agrarian life some 5-10 thousand years ago. Yet, the industrial revolution brought with itself numerous shortcomings and negative externalities. The working conditions were poor. In fact the novels of Charles Dickens as also the poems of William Blake among others poignantly depict the changes in the life of an ordinary Englishman or woman during the period. One form of feudalism replaced another form of feudalism. One set of serfs gave way to another set. In fact, landlords gave way to new set of lords, the lords who owned physical capital. It was the ownership of capital that seemed to matter and the labour contribution was deemed to have neglected. It was the excesses of capitalism that brought in the works of Marx. It must be reiterated that Marx did not evolve in a vacuum. Marxian thoughts and practices were a reaction to the capitalist practices that skewed against the workers. The workers had to slog it out for innumerable hours with no holiday. This was the context in which the demand for eight hour work was raised.

 

In April 1856, the stonemasons in Victoria Australia undertook a mass stoppage in demand for better working conditions including the eight hour work day. With passage of time, it became an annual event. The news soon spread to the United States where the workers decided to follow suit. In 1886, beginning May 1, there was a general strike in Chicago demanding the eight hour day. On the fourth of May, there was a bomb that was thrown at the police which made the latter act harshly. The police cracked down on the protestors and fired at them. This led to the death of seven police officers along with at least thirty eight civilians. Many more were injured. It became known as the Haymarket affair. Many workers were arrested and sent to trial that was highly publicized. Eight of those leaders were convicted and sentenced to death, four of whom were eventually sent to the gallows. Many accounts described it as miscarriage of justice. Many historians describe the event as possibly the most influential event in American labour history. In fact the American labour movement and policy trace tremendous influence to this Haymarket affair and its consequences. Incidentally, the build up for the movement had been on for quite a few years and traces its origins to the slowdown that US faced in the first half of the decade of 1880s. Most of the labour force had revolved around the German paper in Chicago.

 

The Haymarket affair was picked by the Second International in its first Congress in 1889. It was held in Paris and a trade unionist Raymond Lavigne put forth the proposal. It was meant to commemorate the Haymarket killings and thus the first of May in 1890 would be observed as May Day. The day saw demonstrations across the United States and Europe besides a few countries in Latin America. It was officially recognized in 1891. In 1894, the riots on the May Day ensured that ten years later, the International Workers Congress called for demonstrations on May 1 to demand the eight hour working day apart from the other demands of the proletariat. The riots themselves were an outcome of the events in 1893 which led to the recession in the US economy. On May 1, 1894, there were violent demonstrations in Cleveland Ohio where the economic impact of the crisis was severe. In fact, the workers seemed to have been possessed by strong desire to resist work on that day. Cleveland of course witnessed further riots on the May Day a quarter a century later. The demands for proletariat for better working conditions was a long drawn affair in which the Worker’s Congress had a role direct or implicit. The May Day emerged as a consequence of these events.

 

There is of course a strong point of view in defence of capital and the fact that the riots were essentially hijacked by anarchists. There is no doubt a strong view that exists on the communist rise and its long term detrimental impact on the society. Yet, it must be recognized that the communism did not arise in a vacuum. Communism was a reaction to the capitalist models that were yielding diminishing returns. As the Industrial Revolution gained momentum, there was widespread growth. Yet at the same time, there was a transformation and the transformation of social and economic life came with its own costs. The costs were borne by those at the base of the pyramid. There was redistribution of wealth from the landlords to those who own the capital. This too set off a set of imbalances in power and thus the losers had interests in ensuring a backlash against the capital. Therefore as one observes the trajectories of labour movement, it was evident that that backlash was bound to happen. The consequences were severe. The workers rule or at least that was pretended to be in the Soviet Union or Maoist China was even catastrophic. In the genesis of these movements lie the present May Day celebrations.

 

 

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