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Thread: Did Adam Smith really accomplish anything of substance?

  1. #46

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    Quote Originally Posted by skipster View Post
    But I can see that you haven't read Smith because he does not speak of brith and death rates within a nation's borders. He speaks of birth rates and death rates globally, not nationally. He also makes no judgment as to the appropriateness of wages. One hallmark of Smith was his refusal to make subjective judgments. Whether a wage is appropriate is totally subjective -- what you think is an appropriate wage may not be the same as my version of an appropriate wage. Smith does not deal with subjectives.

    To focus on the birth and death rate section of the Wealth of Nations is to declare that 890 pages of the 900 page piece are mere details and filler. You're missing the point. You are swatting mosquitoes while the elephants are running over you.
    Big has never read "The Wealth of Nations"

  2. #47
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    I have never read the Wealth of Nations itself but I trust the guy that wrote the book I am reading. He gives many examples from the book and states the main points. The guy made a fortune with the book. I believe what he has to say.

    And yes, Smith did talk about the wages and said they are determined by the market forces. Wages were very important in capitalism according to Smith.

  3. #48
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    Here is the guy's bio and the book I am reading was his most successful. He sold 4 million copies. I think the guy is pretty credible.

    http://en.wikipedia.org/wiki/Robert_Heilbroner

  4. #49

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    Quote Originally Posted by Big View Post
    I have never read the Wealth of Nations itself but I trust the guy that wrote the book I am reading. He gives many examples from the book and states the main points. The guy made a fortune with the book. I believe what he has to say.

    And yes, Smith did talk about the wages and said they are determined by the market forces. Wages were very important in capitalism according to Smith.
    I totally agree that Smith talked about wages. Wages are very important in the free market. A wage is basically the price for labor, right? You sell your labor for a price, which is your wage, so it is as important a factor in decision making as price is for many of the products we buy every day.

    It's been a while since I've read it, but I don't recall Smith making any remarks about the "appropriateness" of a wage. He leaves that judgement up to the individual. Perhaps I think that $4/hr is acceptable for mopping floors, so I take that job, but you don't think that amount is appropriate, so you pass on the job. I think that we're talking about the same thing, just in a different way.

    What I think is coolest about The Wealth of Nations is that it is as much a philosophical discussion about decision making and human behavior as it is about economics. People make decisions and behave in predictable ways. The premise for the direction of the slope of the demand curve is that lower quantities will be demanded at higher prices, but higher quantities will be demanded at lower prices. This seems logical enough and is a good fit for many of the things that we buy today.

    I guess it's cool to read this somewhat cryptic stuff and see just hopw much of it is presonally applicable and true.

  5. #50
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    It's been a while since I've read it, but I don't recall Smith making any remarks about the "appropriateness" of a wage. He leaves that judgement up to the individual. Perhaps I think that $4/hr is acceptable for mopping floors, so I take that job, but you don't think that amount is appropriate, so you pass on the job. I think that we're talking about the same thing, just in a different way.

    And yet Smith says the wage for mopping floors will be set by how many workers are needed vs. how many workers are available.. If not enough workers are available to mop the floors then the wages have to be raised to attract more workers. BUT NEVER does Smith state you just have some illegal bastards from Mexico come and mop the floor if no Americans want to do it. In Smith's mind that would break the cycle of the market where availability of workers determines what wage the employer has to pay.

    Smith believed the whole economy and the market system revolves around the consumer and the common man, to benefit the common man, and NOT to make life easier for the employers.

  6. #51

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    I see what you're getting at now. Smith did not advocate bringing in slave labor. He also did not advocate breaking laws, so bringing in illegal workers is not part of capitalism -- not because they ruin some aspect of the system, but because it would be against the law. But, if those people are present and available for work, the wages may decrease because more availablae bodies can work. Also, wages are set by more than worker availability. Since a wage is a value judgment on product, the employer may not value floor mopping above a particular wage, regardless of scarcity of workers. He may decide the benefit of clean floors does not trump the benefit of the next best thing that can be gained with the wage amount. Opportunity cost is alive and well.

    I also see a couple of trends that are common to all your posts on this subject. The first one is a concern for the "common man." Because the concept of the "common man" is subjective and sets one group apart in terms of rights and subjectives (needs, etc), it is not addressed by Adam Smith. He does not make distinctions between commen men and employers. To Smith, we are all the SAME! We are all sellers because we sell our labor or goods and we are all buyers because we all buy things. We are all employers because we pay people for things (food, shoes, etc) and we are all workers because we do things to earn money. In capitalism, we are ALL common men. Trying to make capitalism about classes may be a result of your education in a communist country.

    The second theme I see running through your posts is that you seem to regard capitalism as a man-made creation, like marxism, etc. But, nothing could be further from the truth. Capitalism just happens. It is nothing more than human behavior when people are free. Adam Smith did not invent capitalism, nor did he invent or was responsible for parts of it. He merely characterized it -- reported on it.

    We had a thread some months ago about how your parents fixed or sold cars in some sort of underground market (hidden from the government) in order to make some extra money. This is a perfect example of how capitalism is natural in human life -- it is just how people naturally behave when free. Capitalism is not invented and has few rules. People are allowed to behave as they see fit.

    In conclusion, I would conted that Smith did NOT believe that the economy revolved around the common man -- he thought the economy revolved around those who produce -- those who do something of value. Smith even said himself that "goods and services are produced for those who produce." Thus, the market does not revolve around any one group. It revolves around everyoen who is willing and able to participate, rich and poor alike.

  7. #52
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    skipster,

    Whatever things my parents did to make extra money away from the government is no different than what millions of people do in America. Any time someone fixes something for somebody for money regularly, or provides any kind of service and doesn't claim it as a taxable business (And millions of people do this in America), it is no different than any kind of black market.

    This is not a capitalist human Nature. This is the urge to cheat and bite off a bigger piece.

    Also, I guess the guy that wrote the book I am reading is wrong and you are right because everything I posted is in this book and the reference to common man is there as well. However, you tend to claim it wrong.

  8. #53

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    I'm glad to see that you have knowledge of free markets from your childhood in the USSR. My point with that illustration is that people will tend to freedom at every chance. The part about the business being conducted under the table in the US doesn't have any bearing in this conversation. The point is that people in a socialist system shunned their own economic system and adopted free market qualities. It is not against the theory of capitalism to have a business under the table -- it is still freedom and still agrees with the concept that free individuals can best manage goods and services. In socialism, private enterprises (like changing someone's tire for money) was not part of the system -- it was opposed to the idea that the government could best manage goods and services. Since people do it at every chance they get, I guess it is human nature.

    As for the guy who wrote the book, he is merely applying his own biases, just like I am applying my own biases and you are applying your biases. We may also be interpreting things differently. I believe on thing is certain, though. Thiat is that class does not have a place in capitalism. Everyone is considered the same in capitalism. We are all buyers and sellers.

  9. #54
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    Doing things "Under the table" wasn't against the law in Soviet Union. In fact, whereas in America you can get arrested by IRA for it, in Soviet Union you were just fine as long as you didn't claim it an official business. Similar to the gay policy in American military.

    So, in Soviet Union my father could perfectly legally give a ride to someone for money in his car (people stood on the streets and waved to any car that would give them a ride). It was perfectly legal to go and fix something for someone for money as long as you didn't claim it an official business. When we went on vacations, many local farmers stood along the highway and sold fruits and other goods privately. During vacations we paid rent privately to homeowners in local villages. In this respect Soviet government gave more freedom to people than USA.
    Last edited by Big; 05-01-2007 at 03:05 PM.

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