- Capitalism and Alternatives -

The pros and cons of reading Smith

Posted by: Stoller on October 04, 1999 at 18:33:12:

In Reply to: The Pros and Cons of Capitalism posted by Frank on October 03, 1999 at 19:43:29:

: Capitalism is a social system based on Economic Freedom...

Freedom to or freedom from? To posit one freedom is to suggest that all (class) interests are uniform. That would be a mistake.

: As Ayn Rand says in her book...

Rand, that recognized economist!

: ...we should learn about the man who's interpretation of the reality of the Industrial Revolution became the base for a pure capitalist society...

Adam Smith did not live during the Industrial Revolution. But, interestingly enough, he did insist that the '[d]ivision of labor destroys intellectual, social and martial virtues unless government takes pains to prevent it.'(1) Libertarians tactfully omit Smith's scathing critique of both the detail and the social division of labor---the intensification of which was the cornerstone of the Industrial Revolution.

: Since there is a lot of competition in the market for products, companies are forced to come up with better and new technologies to upgrade their products to stay competent.

Once their fixed capital is ready to be replaced, that is, every ten years or so. Let us not forget, the 'paperless office' was held hostage by Xerox for ten years.

: The claim is true: there are inequalities of wealth under capitalism, although they are much less than under other systems. Success in a free market depends in large part on individual effort and ability. Effort and ability are unevenly distributed among human beings.

Spoken like a true believer. 'Individual effort and ability' creates wealth---so why bother to hire any workers? Enjoy making yourself rich yourself on some desert island. BTW, Smith would refute your last line:

The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause as the effect of the division of labor. The difference between most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were perhaps very much alike, and neither their parents nor play-fellows could perceive any remarkable difference. About that age, or soon after, they come to employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance.(2)

The problem with Ayn Rand, if I may be so bold, is that she didn't actually read Adam Smith. Don't make the same mistake.

1. Smith, The Wealth of Nations, Modern Library edition, p. 734.
2. Ibid., pp. 15-16.

Follow Ups:

  • Nice bill October 05 1999 (2)
    • Bill = Red? Nikhil Jaikumar DSA MA, USA October 07 1999 (1)
      • moi? bill October 08 1999 (0)

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