We know from experience that Smith's system is not complete unto itself. In fact, Smith himself would probably have admitted this. His references to ancient history and political philosophy would seem to show not only that he accepted that the territory of "statecraft" is not entirely contained within the borders of classical economics but also that he accepted the State's place alongside the Market as a fundamental, primordial feature of social existence.
That much being said, Smith deserves credit for several revolutionary discoveries. Most importantly, his emphasis on the control and cultivation of markets -- and not territory [as the physiocrats claimed:] or gold [as the mercantilists claimed:] -- as the proper objective of macroeconomic policy ranks as a major breakthrough. His use of market-analysis to explain the collapse of the Spanish colonization of the New World and the success of the Enlgish is a powerful, and clearly true, demonstration of the fundamental effectiveness of his model, even if subsequent events have shown that cases do exist in which market considerations should not be the primary ones in the decision making process.
His elucidation of the labor theory of value as the foundation of a real price of a commodity is both accessible and convincing, and it is a considerable advance beyond the original iteration of the theory by Locke. His distinction between the real price and the market price of a commodity raises the question of the role that the market should play in determining prices, and that, again, remains one of the most important questions in the history of political thought. Like most applications of the Doctrine of a Self-Correcting Market, Smith's faith in the tendency of the market price of commodities to remain, over time, faithful to the real price has to be viewed as more of an ideal than a reality. But his description of the law of supply and demand as a means of calculating market price from the underlying real price seems irrefutable.
Smith's criticisms of Corporations ["joint stock companies" in the language of his day:] as opposed to LLCs are also very welcome and at least as topical in this historical moment as they were in his own. In general, his criticism of the investor-class and of corporate monopolism remain one of the most important messages to be found in the entire body of social science literature. As a result, he will remain, probably forever, a victim a the worst kind of distortion from those who most loudly claim adherence to his ideas. ]]>
bookshelves: currently-reading
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bookshelves: currently-reading
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Dan
read and liked
Kman's
review of Two Treatises of Government:
"Those of us living in liberal democracies owe tremendous intellectual debt to John Locke. His "Second Treatise" in particular helped lay the foundation for a political system that emphasized "life, liberty, and property." The Firs...more "
"Those of us living in liberal democracies owe tremendous intellectual debt to John Locke. His "Second Treatise" in particular helped lay the foundation for a political system that emphasized "life, liberty, and property." The Firs...more "
In this study, Jones attempts to trace the outlines of Athenian society along modern historiographic lines. The book presents five essays, which include economic and demographic analyses of Athens during the classical period. He also attempts to answer the question, which can only be addressed conjecutrally, of the extent to which the Athenian economy was based on slave labor. In general, Jones provides the most reasonable hypotheses that I have seen about the total population, the distribution of wealth, the class structure and other vital statistics of classical Athens. In some cases, as in his discussion of trade balance at the end of the fourth chapter, he moves in the direction of conclusions that the evidence might not really warrant, but these instances are limited and do not affect the overall reliability of the book.
Most useful is his third chapter, entitled "The Critics." It is a commonplace that the Athenians practiced democracy without theorizing about it. Those philosophers whose writings survive to us almost exclusively represent the oligarchic perspective. Jones provides a plausible reconstruction of how the large majority of citizens and politicians who believed in, worked and bled for Athenian democracy would have answered the intellectual elites who invented political philosophy, had those citizens thought it worth their while to do so. ]]>
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