Neither did Keynes. Keynes argued for counter cyclic spending to balance cycles and flexible forms of money. The levels of debt we have would horrify him.
There are endlessly many more who are similar. Much of what we think Marx said actually came from Lenin. Ayn Rand was not a conservative. And so on…
Keynes argued for all sorts of things at different points in time. He never observed any sort of Keynesian doctrine or orthodoxy himself. Also, the actual money system was very varied across his career, so prescriptions differ. The current monetary order wasn't something he dealt with at a large scale.
In any case, I'm pretty sure Keynes would have called bullshit on the way public debt is quantified or defined today. IE, the sum of money "owed" by Germany or Italy to the ECB would not have worried Keynes... though I think he would have been very interested.
Just to be clear, the a priori conservative hypothesis was that 2022 levels of debt are not just morally bad... they're an economic impossibility. Well...
Which is far less important than the fact that she and Objectivism are not even coherent.
Its lack of coherence is what got us to 2016 and beyond on both sides of the pond, and explains the tech industry's obsession with profit-maximising billionaires who are so uncommitted to progress that they are building survival boltholes in New Zealand.
She would have been amazed, admiring and horrified all at once; it's the purest moment for her terrible, terrible nonsense, and its consequences play out for everyone to see.
There is one billionaire I can think of who is "building a survival bolthole" in NZ, and that's Peter Thiel. Who is eccentric even as far as billionaires go, and who doesn't really have a "survival bolthole" there, just a normal extravagant mansion.
But it's also a reference to preppers generally among the billionaire classes -- "buying somewhere in New Zealand" is sort of billionaire nudge-wink-speak for a wider trend (according to Reid Hoffman who is quoted below).
Basically, the Randian supermen maximising their happiness are so fully aware of the downside risk of being super-rich that they are now fearfully planning to maximise their happiness somewhere a gang of poor people with guns can be fended off.
This is an actual observable trend. It just doesn't always specifically involve New Zealand.
> Basically, the Randian supermen maximising their happiness are so fully aware of the downside risk of being super-rich that they are now fearfully planning to maximise their happiness somewhere a gang of poor people with guns can be fended off.
Don't forget the seasteading! No national laws in international waters, solves all your tax problems!
Still, it does occur to me. Does the non-Randian prole do terribly differently in proportion to their means? When most people select somewhere to live, their odds of being robbed or being able to safely let their kids roam free are pretty high on the list of concerns. And even the upper middle class sometimes jurisdiction-hops to more favourable tax levels.
But not specifically government debt, which I can't recall him caring about. The balance of payments, yes. That's what the bancor was for, but it was sabotaged by a high-level US representative that also turned out to be a Soviet informant.
Reading primary sources is always illuminating. Big Names are often a lot more sophisticated in their thinking than their bullet-point summaries let on.
Yeah, I need to push myself to do this more I think.
Relatedly: before I read 1984 I thought I wouldn't get much out of it. I kinda thought "yeah I'm sure this was incredibly eye-opening at the time it was written, but these ideas are pretty mainstream in the cultural zeitgeist now, there's not much that's going to be illuminating in it to me".
But I was so wrong; Orwell does a phenomenal job of painting an incredibly vivid and unsettling picture of what that society would look like. The "bullet points" that came from general cultural awareness don't come close to the experience the book conveys.
The thing I remember most was how "stuck" everything felt. Like it really sank into you that the 1984 society had reached some tipping point of shutting down conversation that it didn't feel like it was possible to recover. All parts of the system all throughout the stack were keeping everything in check, and you got the sense that it wouldn't be possible for people to break out of it even if a lot of the people in power wanted to.
But the main point is that I'm not Orwell, so nothing I write about what I took from the book could substitute for hearing it from Orwell directly.
I had the same reaction when I read 1984. I went into it with all these preconceived notions about what the book was about. Of course, those topics and themes were present in the book, but what struck me the most was how beautiful the writing was.
> He raised a point that we might at least consider: is our globalization just a new mercantilism?
No, and it’s interesting that the article doesn’t actually say what Mercantilism was, to avoid making it obvious that it isn’t.
Actually much of what the article says about Smith is accurate and yes he is often misrepresented in the way they described, but their attempt to paint globalisation as mercantilist is bogus.
The primary concern of Mercantilism was to maximise exports and minimise imports, because mercantilists believed that trade was a zero sum game. If one side of a trade is benefiting, the other side must be losing. Interestingly Marx thought in exactly the same way, which is why he came to such ludicrously misconceived conclusions about the nature of value.
Globalisation is simply about goods and services being provided by the nations best positioned to provide them. Some countries excel at financial services, others at manufacturing, still others at providing natural resources.
Yes of course you can put any layer of economic policy you like on top of that, and many countries go. Some apply mercantilist policies, others are more free market, etc. so Mexico is pretty Mercantilist, but the UK isn’t at all because our main deal is services (with a side order of North Sea Oil). Although there was a Mercantilist streak in the Brexit agenda, we’ll see how that plays out. Trumps trade policy was heavily Mercantilist, and anti globalisation.
People always cite global national trade, but there are even trade barriers, organizations, and economic zones which are provincial/state based, and in some places, even city based!
An example in Canada is a province with differing legislation for, say, farmers, which may aid the farmer in some way. Then said product is essentially more competitive, so another province may restrict trade in some way. An alternate, is where it becomes more difficult for a farmer, thus local pricing is higher.
Lastly, even minimum wage laws, which are provincially controlled, and access to temporary immigrants, which can be eased, makes a difference on the bottom line.
Just look at the cost of living in, say, Utah vs California. May as well be entirely different countries, economically.
These are the same issues with international trade, yet all people seem to discuss is just that. International.
Globization seems to have been a semi-falied policy due to all its baggage, and maybe some manufacturing will return home, so national trade issues may re-express themselves....
The primary concern of Mercantilism was to maximise exports and minimise imports..
I disagree. Rather, I think this is a common but bad reduction. Mercantilism as Smith described it isn't just protectionism. Protectionism is just a feature. There are as many parallels between modern globalisation and mercantilism as there are with 20th century protectionist economic regimes or schools of thought.
Modern conservative economic rhetoric worries about trade balances and the debt. The first is explicitly a mercantilist trait. The latter is arguably one, considering that public debt is the basis of our money like gold was in Smith's day.
Many on both the left and the right fret about trade balances, and much of the concern about debt is performative. A glance at a graph of public debt in the USA alongside presidential terms is illuminating.
Of course there is protectionism and there are subsidies in the modern economic landscape. All the political parties in every country have their special interests and exceptions. Globalisation is the general trend towards reducing and eventually eliminating these through institutions like the WTO and treaties or associations such as NAFTA/USMCA and the European Union.
Correct. Arguably, Smith shows his remarkable understanding of globalization when he talks about the manufacturing of a woollen coat. He rightly observes that a huge number of people must have worked jointly on the production of even such a simple item, and some of the materials made use of, such as dyes, might have come from the remotest corners of the world. This is in the very first book and chapter of WoN.
>Some countries excel at financial services, others at manufacturing, still others at providing natural resources.
I think this could reasonably be considered as a racist take. There is nothing inherently in financial services that should make any country better at it. Reasonably it is all about first mover advantage, incupetentcy and lower regulatory environment allowing possibly harmful actions.
I wonder if we see the model failing eventually in future, or will the current winners focus even harder to keep anyone new down just so they can extract wealth in an other way than imperialism...
You can make a serious of arguments about how the nature of industry in a country ultimately derives from historical and geological factors which can be causally divorced from genetic traits.
I don't think any critical theorists would consider the statement 'industrial comparative advantages exist across countries' to be racist - or even something like neo-imperialist.
You could claim that capitalism is flawed due to the way it distributes labor against these historical differences (many of which were propogated along racial lines due to colonialism), but I don't think the analytical claim _under_ capitalism holds any normative merit.
Capitalism was built on these racist systems like colonialism and chattel slavery. You can try to separate them, but fundamentally the GP is entirely right that the reason financial services are "suited" to britain is because of centuries of brutal exploitation of countries that are "suited" to resource extraction. Neither of these things are inherently true of the people or the places, they are direct consequences of particular political structures and violent intervention.
In the end, it's extremely profitable under capitalism for some people to be considered sub-human. That's not an accident, it's the game. Capitalism has never existed independent of this premise.
> Capitalism was built on these racist systems like colonialism and chattel slavery ... centuries of brutal exploitation of countries that are "suited" to resource extraction.
Daron Acemoglu's Why Nations Fail handily disproves that argument. Latin America, and Spanish colonization in general, was built on those exact same things to a far greater extent and for a longer span of time; and today it is, by and large, a thoroughly anti-capitalist economic basket-case. The two are only loosely related to each other, and the correlation might easily be in the negative.
Maybe it does but if so you haven't conveyed it very well. Are you arguing that Latin America is not exploited for its resources under the global system of capitalism? Because that's a pretty absurd position to take. You might even imagine how that exploitation could lead to revolutionary politics and the current state of affairs there.
But even if we take that as a given, "it didn't work uniformly in all directions in the same way" is not an argument that the relationship doesn't exist.
My assertion is that capitalism has always coexisted with systems that treat some people as sub-human, so can't be completely disentangled from them. You're going to have to work a lot harder to "disprove that argument," imo.
The earlier comment in this thread was arguing that "the global system of capitalism" could explain why Britain and its colonies are uniquely suited to providing highly-developed financial services. Now you're saying that the same "global system of capitalism" explains extractive systems in Latin American colonies. These are polar opposites in terms of outcomes, how can they possibly be explained by the same factor? Why Nations Fail tackles the same stylized facts in a far more nuanced manner, examining local policy choices (often exploitive ones) as often more relevant than fuzzy global "systems".
You aren't characterizing either of my posts in a way that I recognize as anything like what I'm asserting. I'll boil it down:
- Britain is not "inherently suited" to providing financial services, it built that suitability through violence and extracting wealth through colonialism and racist systems like slavery (which, though abolished in britain itself, it still remained a central figure in financially supporting the trade long after).
- Countries "suited to" resource extraction are so suited because of brutal campaigns by colonial systems. The character of how this campaign was undertaken is somewhat different in Africa, the Americas, and the middle and far easts, but the overall nature of it was roughly the same.
- Capitalism emerged in the aftermath and continued exploitation of this relationship, through to today, for its entire existence.
I do not say that "capitalism explains" anything. I say that "capitalism was born from these things, and they are inextricably intertwined". Not necessarily in a causal relationship (though in many complicated ways there's plenty of blame to be leveled), but simply because it has never existed without the existence of classes considered, in some way, to be sub-human (though the ways we degrade people to this state now are more nuanced than they were in the explicit chattel slavery days).
> it has never existed without the existence of classes considered, in some way, to be sub-human (though the ways we degrade people to this state now are more nuanced than they were in the explicit chattel slavery days).
You could easily apply that sentence to human history as a whole - the word "capitalism" is doing no work there. Even Russian kulaks, Chinese "counter-revolutionaries" and Cambodian intellectuals were considered sub-human; no human social system has ever fully escaped that pitfall.
Sure. And if you want to analyze those systems, I would hope you would also not try to pretend that that othering played no part in those systems either. I'm not the one trying to pull them apart like string cheese.
You're thinking of Mercantilism, which was pretty much the established economic model at the time of Adam Smith. As I explained in my post, Mercantilism subscribed to a zero sum view of trade and economic activity. For one side of a transaction to gain the other side must lose, which fits with the master/slave relationship perfectly.
Capitalism is basically what Smith was promoting. The idea that individuals owning their own property, exercising those property rights through buying and selling their property, associating freely in commercial enterprises (companies) and trading with each other freely could benefit each other economically. This was radical at the time. It's no accident that the ascendency of this concept of individuals trading freely coincided with the abolitionist movement and eventually British outlawry and suppression of the Atlantic slave trade.
Proto-Capitalists like Smith were vehemently against the monopolistic nationalised trading companies that operated imperial colonies as extractive enterprises. Smith himself, aside from opposing slavery on moral grounds, believed that slave labour would always be more expensive than free labour because a slave has no incentive to increase their productivity.
You are quite right to criticise colonialism as abusive and extractive, but that wasn't Capitalism.
I can assure you I'm not. I'm not really very interested in mercantilism, since it's not the system we live under today.
> You are quite right to criticise colonialism as abusive and extractive, but that wasn't Capitalism.
Colonialism never ended (in spite of the existence of an academic field called "post-colonialism"). The extractive relationships still exist, and are reflected in capitalist relationships. You can't just go "London's a great place to do finance!" and pretend there's nothing behind that. It's a great place to do finance because for hundreds of years, both before and after the emergence of the system we call capitalism, a significant portion of the entire world's wealth was syphoned by force into London. There's no way to abstract that away without becoming trite.
Right and that forceful siphoning of wealth was a result of mercantilist policies. Capitalism is simply taking the world as it existed and building on that. It didn’t create it though.
If the British Empire had actually been a true economically liberal capitalist system from the start it wouldn’t look anything like it does now. The USA would be part of the commonwealth because the mercantilist monopolistic constraint on the tea trade wouldn’t have happened, so no Boston Tea Party. India would have been hugely more developed and industrialised. The fact that it was prevented from doing so was a clearly mercantilist policy, restraining the free development of the domestic Indian economy along capitalist lines, sometimes by force. Adam Smith would have been appalled.
It was precisely the transition of the British Empire from a mercantilist to a liberal free trade capitalist economy that made the imperial system untenable and unnecessary.
I’m not in any way denying the head start imperialism gave us, but imperialism and capitalism are not the same thing, and were frequently at odds with each other. In fact the Whig and Tory political struggle of the time was in some ways one between pro capitalist (liberal) and pro imperial forces.
This is all still extremely irrelevant to the question of if capitalism is in some way disconnected from, or apart from, racist systems. "Who started it" is just completely academic and not at all interesting.
Also, colonialism and imperialism are not the same thing. I get the feeling you read "imperialism" in place of "colonialism" in my post, but I did not even mention imperialism.
You're quite right on your point about the distinction between imperialism and colonialism. I meant colonialism.
Something can exist alongside or in tandem with a system without being identical to or necessarily dependent on it. A great example is capitalism in China. Politically it is communist, yet it also has a huge capitalist economic sector. The capitalist economic system in China has raised hundreds of millions of people out of poverty, a feat no other economic system has even approached.
Japan is capitalist, is it also colonialist or based on racist exploitation? What about Sweden, or Germany, or South Korea? There are many capitalist countries that never had any significant empires or colonies, and certainly reaped extremely few economic benefits from them if any, that have done extremely well. What made them wealthy was industrialisation and capitalist economics.
Even the USA had barely any colonial presence, and any that it has had made almost no impact on it's economy which throughout it's history has been almost entirely driven by internal demand, and most of it's trade was with developed countries, not colonies. Yes it had mass slavery, but in fact ending slavery was hugely economically beneficial by allowing former slaves to emigrate north and take up jobs in the industrial belt.
Look, I'm not in any way denying that colonialist abuses were appalling, that we benefited from them, that there are lingering historical injustices that need to be faced up to. All of that is true. It's just got nothing to do with capitalist economics, which if anything actively contributed to the downfall of that system.
> Japan is capitalist, is it also colonialist or based on racist exploitation? What about Sweden, or Germany, or South Korea?
Yes to all of these, which have at some point in history had colonial holdings, except perhaps South Korea which has largely been a victim of colonial (and imperial) systems, even if they currently thrive under American protection.
As for the US, it is itself a colony, and the exploitation of people and resources on the continent built its wealth. That it managed to wrest away control of itself after much of the genocide undertaken to build it up was already done doesn't change that it was built on extraction of resources from the 'new' world to the 'old'. Some of them moved there and didn't want to send their money home anymore, but like... there were people on the island of Manhattan before it became the center of the finance world, and they're all but erased from history now.
And all of these countries continue to benefit from wealth taken from the global south today. The tools of coercion that keep this system going have changed, but they're still in effect.
Capitalism was built on wealth extracted through colonialism. There's no getting around that.
Or you could read Adam Smith's Wealth of Nations yourself as it is available for free from multiple sources. You should his book The Theory of Moral Sentiments first. It helps with the understanding of the later material.
It gives you a primer on his thought process and views which is useful to understand the later work. Understanding an author's beliefs can help interpretation of works.
“ The Theory of Moral Sentiments is a 1759 book by Adam Smith.[1][2][3] It provided the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including The Wealth of Nations (1776), Essays on Philosophical Subjects (1795), and Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896).”
> "your eye" has public merit, credentials, arguments.
I'm not convinced Wikipedia has that either.
Some things it gets factually correct, granted. The subjectivity that is selected by wikipedia editors to characterize, is always in question.
Obviously a lot is lost in translation from Glaswegian Scottish to
English but, yes, he is widely misappropriated by economists and
misinterpreted to serve modern conceits that occlude his humanistic
and compassionate writing that is on a level with Rousseau or Fromm.
Smith had an extraordinarily optimistic view of humans and had a
similar idea to Aristotle that while people brood and intellectualise
over "sordid and selfish" thoughts, when it comes to action we are
instinctively "generous and so noble".
I was speaking once to a Dutch acquaintence, who told me that in his economics class at Uni, they were taught Smith was in favour of large State subsidies...!
I don't specifically remember that form Wealth of Nations, I know he argued against some cases, but he did argue for all kinds of other intervention for sure.
"It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue but something more than in that proportion."
Smith very much supported the existence of the state for several purposes. If I recall correctly they are things pretty non controversial like defense, infrastructure, property rights, regulations that enable markets to operate effectively (providing necessary transparency so that people can make informed choices, protections against monopolies and rent seeking behavior). He correctly identifies that while some regulations are necessary, some will seek to use them to protect their own position, ie regulatory capture.
Overall, his message is decidedly pro freedom and against top down economic planning and intervention. People are naturally self interested, and enabling them to voluntarily trade with others as they see fit enhances the life of each partner of the trade. Scale that up and society advances itself with an centralized arbiter to guide it.
As for taxes, the reason he felt that the rich should pay more is because they derive the most benefit from the existence of the state.
Apologies if I came across in any way patronizing, my intent was to add some details for others in the context of Smith's views on the role of the state, which I felt were lacking in the wider thread in general. Your original comment sparked those thoughts for me, which is why I replied there. My comment was not intended for you personally so much as for the wider audience.
If my etiquette was at all inappropriate I apologize.
Large state subsidies in what context? That's a rather critical point. Smith certainly envisioned a significant role for government, even though he was also critical of much government intervention.
I’m not as generous as to assume this is innocent ignorance but think it’s often willful and knowing misrepresentation (then amplified and regurgitated by the ignorant, perhaps).
Is it? It says things like "Smith is critical of government and officialdom, but is no champion of laissez-faire" and "A further theme of The Wealth Of Nations is that competition and free exchange are under threat from the monopolies, tax preferences, controls, and other privileges that producers extract from the government authorities".
I would say that is fairly accurate.
I've noticed that when it comes to Adam Smith there's no shortage of people who try to make out he was some kind of proto-communist while smugly telling off straw man economists for cherry picking him - but it doesn't seem true to me.
The "The role of government" paragraph is more balanced (though IMO still skewed - well, I should admit that I have only skimmed WoN), but the first paragraph is really not.
Minor pedantic note: Adam Smith worked at the University of Glasgow for a time, but he was not Glasgwegian, nor is there much likely to be lost in translation from his spoken scots language to the written page and then to the modern reader, certainly not that isn't dwarfed by the distance in time. This isn't Trainspotting we're talking about.
Smith was born in Kirkcaldy where he also attended school. He began attending Glasgow University at age 14 and subsequently moved to Oxford for a bit and lived in Edinburgh before returning to Glasgow as a professor age 28. Therefore I think it's unlikely he spoke with a Glasgow accent. It's likely he intended to write in the standard English of the day given his position in the top echelon of British academia. Glaswegian Scottish isn't really a thing, at least in that context.
I grew up a few miles from Kirkcaldy, mother taught economics at the college there, so Smith was a strong presence in my childhood.
> He saw the interests of large capitalists as conflicting with those of the public: capitalists seek high profits, which corrupt and impoverish society.
This is rubbish.
WoN is one of my very favourate books.
Smith is absolutely - astoundingly in fact - neutral in his writing. He says what happens, and what happens because of it.
To write as quoted here, to put opinions into what Smith writes, is to be doing exactly what the article begins with, which is arguing that Smith did not say what he is often made to say.
To my recollection, there is in the entire book exactly one time when Smith offers an opinion; he is discussing bounties paid by the English State on exportation of a particular good, then notes that once a particular level is reached, the bounty ceases and is replaced by a penalty, and he opines that it seams improper to encourage people by the bounty to export and so be encourages to get to the point where they will then be penalized.
Whenever I read something in one of these left-wing cultural publications like the Atlantic it always reads like a 12-year old discovering history for the first time, and then they talk as though the stuff they discovered is some kind of amazing gotcha, but which is actually stuff that literally everyone who occasionally reads right-wing cultural publications has heard a thousand times. And then they, invariably, misinterpret their new found knowledge for whatever political end they desire.
Anyway, Adam Smith was from the ruling, landed classes in Britain. He was a natural enemy of the capitalist classes, who were, at the time, fighting to overthrow them and bring classical liberalism and internationalism to the world. It isn't at all surprising that he had bad things to say about capitalists. What is truly interesting about Smith's work is all the good things he had to say about what capitalism was bringing to the world. He was simply describing what he saw at the time, which makes it extremely different to later philosophers who tried to both describe what they saw, and hypothesize some amazing future like seers.
As for this guys claim that today's globalization is like the mercantilism of antiquity, it really is just not a good take. They are almost diametrically opposite. The entire point of free markets and free trade is to put a stop to all the corruption that he mentions in this article. yes some still seeps through but it is a million times worse under mercantilism, as he does rightly recount. Just because some bad things still exist under today's free market economy, doesn't mean mercantilism and free markets are the same thing.
The distinction being that laissez-faire publications are generally flagged and removed here. If we are generally curious about these issues and wish to have a robust discussion, then it would make sense to have both sides.
If it is too inflammatory to hear the opposition, then perhaps the premise shouldn't be advanced.
Re: Monopolies & Cartels. People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
"Mercantilism" is often rendered mostly as "preference for export.." left at that. That's one chapter out of many. If you look at some other chapters describing Mercantilism or "the commercial system," they sometimes seem to be describing modern (post 1980s) western conservatives. (1) Mercs obsess about "trade imbalances" (2) Merc obsess about "gold stock" in domestic circulation^ (3) Merc's trade deals fleece their own home countries... there are a surprising similarities between Smith's complaints about the incumbent Mercantilists and modern complaints against post 1980s conservative economics.
^Roughly equivalent to modern conservative obsession with public debt
Reading Smith has been eye-opening on how much different the moral landscape is nowadays. Making money without working was frought upon in Smith days, even called parasitic by "the inventor of liberalism", while nowadays it's considered good.
Factory workers were paid several times as much as agricultural labourers, that’s why they went to work in factories. Industrialisation also drastically reduced the cost and increased the quality of manufactured goods including basics like dyed cloth, bread, soap, etc making them much more affordable to people.
> What's changed: automation creating value automatically, different from rent-seeking.
In today's inflation-targeting macroeconomic framework, automation causes a decrease in the price of goods and labour, which would have a deflationary impact. To prevent structural deflation, interest rates are reduced, which increases the value of assets such as stocks, bonds, and real estate.
So I think automation can also support rent-seeking, although more indirectly.
Every company out there has, wants, or wishes they could transform their goods or services into recurring revenue. The Apple “cloud” pivot contributed heavily to their market cap growth to and above 1T. Literal rent seeking.
Providing a service is working. Updating maps; upgrading software; enhancing services; improving security; supporting, provisioning and refreshing back end hardware. That’s all work. They have thousands of employees and thousands more contractors working on maps alone, and that’s not even a paid product.
Right and you don’t own anything. Just purchase some amount of service periodically at a steep markup. The mbas saw what was going on in services and wanted to turn everything into a similarly periodic transaction.
I have an iPhone, don't pay a penny in recurring services, and it all works fine. I do have a Backblaze subscription for my desktop, which I'm very happy with. With private relay I'm seriously considering signing up with a paid iCloud account though. I mean how is that abusive, but a paid VPN subscription is considered a leet hacker move for those in the know? It's just snobbery.
> I mean how is that abusive, but a paid VPN subscription is considered a leet hacker move for those in the know?
From what I've seen it's not really those "in the know", but rather those convinced by half-assed explanations of what paid VPN subscriptions do by YouTube sponsorships.
Not at all. The majority of the profit of new-feudal companies come from a dominant position on the market. Same as rent-seeking when you own 80% of a city.
The cost of the work required to provide those services is marginal - as clearly proven by the big profit margins.
Oh and those "free" services are paid by selling your privacy.
I was addressing the actual example given, so yes, ‘at all’. The fact there are other companies that are rent seeking is a separate point. You’re seriously saying Apple specifically, the company called out, sells privacy? Do tell.
As for Market dominance, since when was being popular and making products a lot of people like and value somehow abhorrent?
I am arguing in good faith. The example specifically called out, not by me, was Apple. If the majority of Apples profits come from market abuse, how do you explain the fact that their profit margins now are about the same as they were when they were a small minority player in markets? In fact they still are in most of the markets they compete in.
Surely market abuse should allow them to significantly expand profitability, but it hasn’t. Overall profits yes, but that’s just because they have higher sales now.
There are some companies I would agree do abuse their positions significantly to distort markets. Google and Facebook have been caught explicitly doing so.
I don't think that makes sense. It applies to almost any transaction. Those people will be working and earning regardless, it's just that a higher proportion of their income will be devoted to accommodation.
I am quite sure the discourse on "rent seeking activities" come with a negative connotation in the wealth of nations. (forgive me if I am wrong, it is some years ago I read it)
> As soon as the land of any country has all become private property, the
landlords, like all other men, love to reap where they never sowed, and
demand a rent even for its natural produce.
as well as
> They [landlords] are the only one of the three orders whose revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own.
"Parasitic" can be descriptive? I means roughly someone that takes from a system without giving to or benefiting it.
Parasitic does have a fairly strong negative connotation, and Smith doesn't literally use the word, but those two passages do seem to have somewhat of a negative connotation to them, to my reading.
I just don’t think that argument is viable. They provide ongoing highly valued services people choose to pay for. Advertising for Google and Facebook, retail and hosting services for Amazon, physical products and online services for Apple, etc. They employ hundreds of thousands of people, are constantly updating and extending their products and services. That’s all serious work done by actual people.
I’m not justifying everything they do, or all their business practices, but if these companies didn’t provide those services someone else would. There’s a genuine need.
> Making money without working was frought upon in Smith days
So what? Why would it automatically matter if Smith thought x y z? People were wrong about a great many things back then, including in the realm of morality.
Aristotle was wrong about a lot of things. Plato was wrong about a lot of things. They come across as mystical morons in hindsight. Freud was wrong about a lot of things.
Should it be surprising for Smith to be wrong about a lot of things? Of course not.
It's entirely moral to make money off of your money with minimum effort. For example having retirement capital that consists of a low cost S&P 500 index fund. It is not parasitic, even if Adam Smith incorrectly might think so. Were he alive today and were he to believe such to be immoral, his morality would be irrational, anti-human and plainly askew.
The notion of not earning money on your money because it'd be immoral or parasitic, is comically dumb. It's about as regressive as burning witches. It's morally, philosophically and functionally identical to saying you shouldn't repetitively yield from land (ie farming is immoral), that you shouldn't amplify your physical labor with tools, and forbid you repetitively yield from land with heavily automated machinery, much less machinery that you use more than once (it just keeps producing a return on investment from the deployed capital, a horrible sin!). And then there's saving money to buy things in bulk on greater discount. How dare anyone yield additional money from their immoral hoard of existing money.
> It's entirely moral to make money off of your money with minimum effort. For example having retirement capital that consists of a low cost S&P 500 index fund. It is not parasitic, even if Adam Smith incorrectly might think so.
I don't follow -- how does the fact that the money is used for retirement or in a low cost fund make it not parasitic? It seems to me to fit the definition pretty well.
If anything, I think it was likely much, much worse in Smith's time and place. The British class system was incredibly strong and elites were essentially paid to not work.
It's not so much that the elites were paid not to work (though there were giveaway pensions handed out pretty readily at times by the state) as that working was beneath the aristocracy. A gentleman did not work, by definition. This attitude is ancient. (In Rome, Sulla was from a noble and ancient patrician family, but it was much noted, with derision, that his father worked for a living.)
The aristocracy ran estates. And were traditionally exempt from taxes for the most part. Part of the contempt you start to see by the early 19th century is the link to serfdom and slavery and a distaste for inherited social class in general. The man who does not work is the man born rich with serfs or who owns a plantation full of slaves. Suspicion of the idle industrialist extracting wage profit would come to prominence later (but was already nascent, of course).
Before the social mores on that finally snapped (basically around the time of Smith) it led to the paradoxical situation of the aristocracy often being poorer than the new merchant-industrialist class. Land distribution in the 19th century in Britain is governed by a process of ancient estates being unmaintainable and then going bankrupt in the face of rising wage labour costs and sold off to the new industrialists or broken up into sub-units for renting out to tenant farmers and towns for housing. The majority would be gone by 1900, and after social democratic parties came to power and the war taxes of WW I, almost all the rest by 1930. By that point you start seeing government subsidies to keep the few remaining intact pre-industrial estates together for the tourist money. (The aristocracy didn't exactly get ruined, though. Their heirs remain some of the largest landlords in Britain.)
Is it that way (genuinely asking) or is it a consequence of the way we write history being unkind?
I don't doubt for an instant that I work harder than QEII for example, but 2-300 years ago, a ruling class person would have probably worked somewhat hard, much like a CEO works today, since an entire ecosystem depended on the estate.
I doubt very much that a lord didn't understand what was bringing in the money for his estate, and the realities of what it means if the circumstances are not right to fulfil the criteria to bring in money.
(I sound like I'm advocating that this was a good thing or that I think they worked really hard, but I'm just postulating that we could be minimising their contributions based on our modern sensibilities and desire to dislike people of that class, and I include myself in that).
Yeah, I’m slightly skeptical about claims that the head monarch of the UK doesn’t work hard. They have to do a lot of ceremonial things and voluntarily go to a bunch of other more philanthropic/PR/outreach things, even well into retirement age. I am still dubious as the value it provided but it’s definitely a kind of labor, given that it’s essentially expected.
In the past they’d not only have to do these tasks but also actually rule. Being a ruler in general sounds like a pretty sweet gig but I’d have to imagine it’s similar to being an upper level manager in that your entire day is filled with meetings and requests for meetings.
Is it? I mean, I'm sure some people think it's good, but since the early 20th century I do think rentier income has increasingly been viewed as parasitic. If anything, I'd have said that the view that people should make their income by working rather than having stuff is much more mainstream now than in Smith's time.
Investors make money because of the money they already had, not based on work that other people do. But investment is often (though not universally) considered good.
Id argue that active investment, seeking out good companies and deploying capital where it can do the most good growing companies and employing people, is valuable work.
Passive investment less so, but I think the remedy for that is decently high death duties and inheritance taxes. The more we close loopholes in those the better.
i argue the opposite - most people are not smart enough to know what investment is going to give the highest return. Passively invest means you let the market decide, and spend your time to improve your own worth and output.
Not to mention how current capitalism encourage competition by all means, while it often leads to less than optimal situations.
Cooperation also matters a lot, but it is seen as some form of socialism or communism. There is a dominant view that survival of the fittest should prevail in economics, but there is no good philosophical reason for it. That's where politicians leave their power to capitalists and marketers.
Even Roosevelt talked about competitive versus cooperation. Both are needed.
Does current capitalism really encourage competition by all means?
One if the most common criticisms of capitalism is that large companies acquire others or merge and corner markets / create monopolies. This seems like too much cooperation rather than too much competition.
As a neo-classical liberal I must admit I still have to read the WoN. However, I have done a quite a lot of research to form my view of economics, which include summaries of the work of Adam Smith. I know already he was wrong about some of the things he believed in (Labor Theory Of Value) - hence the "neo". While I don't know if he actually criticized Capitalism, I find it quite irrelevant for two reasons.
- For a critique to be of any use you must propose a valid, better alternative. I have never heard of Adam Smith proposing any of that (but I might just be unaware of it).
- Even if he actually criticized Capitalism, concluding "hence Capitalism is bad" is the textbook form of the Appeal to Authority fallacy, unless you discuss his critique in a logical argument.
The only fair point of the article, in case that's true, would be that we shouldn't misrepresent his views.
> For a critique to be of any use you must propose a valid, better alternative
It's always nicer when critiques come with solutions, but a critique is valid if all it does is correctly point out an undesirable state of affairs, because recognizing and articulating problems clearly is an important initial step in ameliorating them, including actually coming up with any of those alternatives.
> Even if he actually criticized Capitalism, concluding "hence Capitalism is bad"
The article doesn't seem to argue either "Capitalism is bad" or "Adam Smith thought Capitalism was bad. It does seem to argue "Adam Smith thought Mercantalism was bad" and "Adam Smith's ideas seem to be poorly represented in popular thought, and some of his actual ideas may be only situationally applicable."
[Clippy: You seem to be mounting an ideological defense of whatever you believe Capitalism to be, would you like help with that?]
> The invisible hand promotes the good of society by leading entrepreneurs to invest at home rather than abroad.
IIRC "the invisible hand" was only mentioned once through out the whole Wealth of Nations, and I found it was a passing remark. I'm not sure why everyone focuses on that one sentence like it was a literature device.
And about "investing at home rather than abroad", "protectionism is appropriate", and "Smith was concerned with a third category: mercantilism" from the article, I would say that mercantilism was less of an issue in Wealth of Nations compared to protectionism. In fact, I think Adam Smith was hinting that at the macro scale, protectionism is the opposite of the most important idea of the whole book - the Division of Labor!
The best example he made to show how absurd protectionism was (i.e the Division of Labor at the macro scale):
> The natural advantages which one country has over another, in producing particular commodities, are sometimes so great, that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, hot-beds, and hot-walls, very good grapes can be raised in Scotland, and very good wine, too, can be made of them, at about thirty times the expense for which at least equally good can be brought from foreign countries.
...
As long as the one country has those advantages, and the other wants them, it will always be more advantageous for the latter rather to buy of the former than to make. It is an acquired advantage only, which one artificer has over his neighbour, who exercises another trade; and yet they both find it more advantageous to buy of one another, than to make what does not belong to their particular trades.
Michael Goodwin - Economix (2012)
It also proportionately but categorically deals with the matters of the superficial interpretations about Adam Smith.
A timeline of the history the book covers, drawn by the book illustrator, Dan E. Burr, is available at:
https://economixcomix.com/wp-content/uploads/Econ-Timeline-i...
(as part of the book's website).
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