Memorable Quotes:
"In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and shew them that it is for their own advantage to do for him what he requires of them."
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantage. Nobody but a beggar [chooses] to depend chiefly upon the benevolence of his fellow-citizens."
"[T]he 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 the 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."
The Basic Point:
The division of labor arises from a propensity in human nature to exchange. This propensity is found in man alone. It is encouraged by self-interest and leads to division of labor, thus giving rise to differences of talent more important than the natural differences, and rendering those differences useful.
Reflections:
Well, beyond what I would consider over-generalizations about the animal kingdom, I'd say that he's about right that the propensity to trade is found chiefly, if not exclusively, in human beings. However, that trade is the natural foundation of economic activity doesn't necessarily mean that it is the only behavior of economic activity, nor of social activity. It may be shown that it is the only appropriate foundation for economic behavior, but Smith hasn't demonstrated it to be so yet. Furthermore, I'm not sure that I agree with his observations regarding the differences between people. Such an opinion of human equality was certainly prevalent in the intellectual work of his time, but I think that there are important differences in people's potentials even when they're very young. Those differences may not be readily discernible, but I really do not believe that education alone can make anyone as skilled as someone who couples that education with a natural proclivity. This is the very problem our economy is facing right now - with the level of globalization we're experiencing, the simple jobs are being outsourced. This requires that the US develop a workforce which is almost exclusively founded on intellectual services, which requires a fairly high degree of education. However, not everybody is cut out for that degree of education nor of specialization. In fact, a large amount of people aren't cut out for it. So the challenge facing us is, where do these people fit into our economic system?
Wednesday, November 16, 2011
Saturday, November 12, 2011
The Wealth of Nations: Book I Chapter 1
Memorable Quotes:
"The division of labor ... as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour."
"It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people."
"[T]he accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages."
The Basic Idea:
Division of labor is the great cause of its [labor's] increased powers, as may be better understood from a particular example, such as pin-making. The effect is similar in all trades and also in the division of employments.The advantage is due to three circumstances: 1) improved dexterity [ability]; 2) saving of time; and 3) application of machinery, invented by workmen, or by machine-makers, or by philosophers. Hence, the universal opulence of a well-governed society, even the day-laborer's coat being the produce of a vast number of workmen.
Reflections:
Well, the basic idea is simple enough. Specialization allows for greater productivity as well as greater innovation, which in turn provides for greater specialization and productivity and further innovation. This process is supposed to result in greater material well-being of everyone in society. We should be very clear that this is a book about the material well-being of society. There very well may be many other values which must be balanced with material well-being, but Adam Smith does not purport to address those issues, at least not here. Therefore, we should bear in mind as we proceed that Smith is not providing a complete picture of how society should function. Furthermore, he asserts that even the poorest in society are benefited by the general economic progress of society. This claim may or may not be true, but he certainly has not provided enough evidence in Book I Chapter 1. It is commonly said that a rising tide lifts all boats. This is true enough, at least until those boats which happen to be moored become overwhelmed and sink.
"The division of labor ... as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour."
"It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people."
"[T]he accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages."
The Basic Idea:
Division of labor is the great cause of its [labor's] increased powers, as may be better understood from a particular example, such as pin-making. The effect is similar in all trades and also in the division of employments.The advantage is due to three circumstances: 1) improved dexterity [ability]; 2) saving of time; and 3) application of machinery, invented by workmen, or by machine-makers, or by philosophers. Hence, the universal opulence of a well-governed society, even the day-laborer's coat being the produce of a vast number of workmen.
Reflections:
Well, the basic idea is simple enough. Specialization allows for greater productivity as well as greater innovation, which in turn provides for greater specialization and productivity and further innovation. This process is supposed to result in greater material well-being of everyone in society. We should be very clear that this is a book about the material well-being of society. There very well may be many other values which must be balanced with material well-being, but Adam Smith does not purport to address those issues, at least not here. Therefore, we should bear in mind as we proceed that Smith is not providing a complete picture of how society should function. Furthermore, he asserts that even the poorest in society are benefited by the general economic progress of society. This claim may or may not be true, but he certainly has not provided enough evidence in Book I Chapter 1. It is commonly said that a rising tide lifts all boats. This is true enough, at least until those boats which happen to be moored become overwhelmed and sink.
Reading Reviews
So, I've decided to share overviews of and reflections on some choice books on my list. First up, The Wealth of Nations.
Friday, November 11, 2011
Egalite
Equality is a troubled concept in American politics. In a literal sense, Equality is the absence of differences. However, such a concept is highly unappealing to me, and I suspect to the vast majority of Americans. What then is meant when we idealize Equality? One clear interpretation is equality in opportunity. While this is never really achievable because only one person can be in any given place at a time, thereby limiting others from the opportunities open to them, the idea is to abolish social stratification and allow those with talent and with good work ethics to excel. The French rose up against the social stratification imposed upon them by King and Church. Similarly, while I believe that Capitalism is the most feasible economic system, social stratification based on capital should be abhorred. This is the threat that Karl Marx highlights and with which Capitalism will always struggle. Those who are successful accumulate capital, eventually to such an extent that those who might have a better product, greater talent, and exceptional work ethics are kept from competing because of the power of accumulated capital in the hands of the previously successful. Capital begins to operate purely as power, and those who accumulate it no longer need to earn their market share, but simply to keep others out. While I am not proposing any solution to this problem at this point, I merely mean to demonstrate the intended meaning of Equality - the destruction of any and all social stratification.
There are those who contend that Equality is meant to be understood in economic results. I sympathize with this impulse (especially since how can the down-trodden be said to have the same opportunities of the wealthy?), the problem is that such equality needs to be achieved through hard work and social improvement, not through shortcuts. Simply taking from the rich and giving to the poor so as to equalize economic results will not do. This approach tends to empower the undisciplined and irresponsible. Once they waste the power given them, economic equality demands a new redistribution of wealth so as to empower them once again. This is the approach of shortcuts, and what can be its end but economic devastation? To achieve true economic equality, it seems to me that the economic system must be so structured as to encourage hard work and innovative contribution, while at the same time destroying any tendencies toward social stratification. Finally, we would need public policies which encourage the development of healthy, responsible members of society, such as an adequate system of education which truly informs people about how to operate successfully in society and a social safety net which requires that those who are aided provide something of value back to society.
There are those who contend that Equality is meant to be understood in economic results. I sympathize with this impulse (especially since how can the down-trodden be said to have the same opportunities of the wealthy?), the problem is that such equality needs to be achieved through hard work and social improvement, not through shortcuts. Simply taking from the rich and giving to the poor so as to equalize economic results will not do. This approach tends to empower the undisciplined and irresponsible. Once they waste the power given them, economic equality demands a new redistribution of wealth so as to empower them once again. This is the approach of shortcuts, and what can be its end but economic devastation? To achieve true economic equality, it seems to me that the economic system must be so structured as to encourage hard work and innovative contribution, while at the same time destroying any tendencies toward social stratification. Finally, we would need public policies which encourage the development of healthy, responsible members of society, such as an adequate system of education which truly informs people about how to operate successfully in society and a social safety net which requires that those who are aided provide something of value back to society.
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