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of John Gelles
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John Gelles 22-May-07 at 3:04 am
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Benjamin Mitra-Kahn 22-May-07 at 8:17 am
Dear Deirdre (if I may)
In reference to my first comment, I agree with your assessment that Smith put little weight on the term ‘invisible hand’, (which he also used once in his third book, a history of astronomy — posthumously published).
I am not claiming that Smith ‘Admired’ the orthodox Christian doctrines, but I maintain that his work (like all his contemporaries) are based on the notions of ‘natural laws’ and that there is one deity who is maximising the happiness in this the best of all worlds. Schabas’ (1998) book on De-naturalisation of Economics or Denis’ (2005) article on Adam Smith are both good accounts of this side of Adam Smith and the period which is often left out.
As for Heilbrohner and Fleischacker’s claims for Smith’s left-leanings, I seem to recall one professor telling me: ‘quote Smith, you will always find something that backs up your argument’ — and I am sure he has also been claimed for the right (and centre even).
My note on Pareto (and I agree with your assessment) was to compare Smith’s ‘black box’ with that of the Samuelsonians.
My point was to say that if you claim to have covered “Smith’s notion of the market” you should at least include a short box on what his complete (deistic) system did represent — and there was not much egalitarianism — and how the ‘invisible hand’ metaphor was originally introduced. (should not be more than a few hundred words).
In regards to John's (again taking liberties on the name front) argument, there is quite a lot of work in the Post Keynesian tradition on the fact that government expenditure in the modern real world is not funded by tax receipts.
Rather as the sole supplier of liquidity, the government uses the taxes and expenditure as a way to restrict or supply liquidity to the economy. The line of argument is interesting and can be pursued in Nell’s Transformational Growth literature.
All the best
—Benjamin
See:
Schabas, M., 2005, The Natural Origins of Economics, University of Chicago Press.
Denis, A., 2005, “The Invisible Hand of God in Adam Smith” Research in the History of Economic Thought and Methodology 23-A: 1-32.
Nell, E., 2005, The General Theory of Transformational Growth: Keynes After Sraffa, Cambridge Uni. Press
John Gelles 22-May-07 at 7:14 PM
Dear Deirdre and Ben,
Thanks a million for Ben’s comment — he nailed the conventional approach to what I was saying — he wrote: “[John is suggesting ideas from the] Post Keynesian tradition on the fact that government expenditure in the modern real world is not funded by tax receipts.” Then he offered Nell’s new General Theory.I am grateful to Ben for this. I visited Amazon to get a feel for Nell; my particular approach is slightly different from his. Nell sees technology as the driver of growth as the main theme of his general theory. I agree that it is a driver.
But my main theme and hope is for government to regain the votes of people who need its attention. This it can do by refusing to tax the voters except to help prevent threatened hyperinflation.
Reagan and Thatcher defeated FDR's legacy by selling "get government off my back — keep its tax collectors out of my pocket".
We have to prove to voters that democracies can prevent depressions and poverty and win in war when dictators are looking for a bloody fight.
Thus, government can experiment with subsidies by grant or loan to classes of needy people. If such subsidies do not threaten to destroy the motivation to work for money, they can be broadened until we do all the things FDR said we must do — to prevent tyranny and war.Not only could we do this, but so could the EU, Russia, China, India and any rich nation that is still home to pockets of poverty.
When I lived in Japan, 1968-1971, I could find no poverty. Their huge liquidity had financed very high real estate and stock bubbles. (Today these bubbles may mostly be gone.) My point is only that I have left Japan out of the listed nations because they may have already proved the case for low taxes and very low interest rates.
Deirdre — I know I’m into money-crank stuff. But it’s not money-cranking if you read your own description of a market — and ask the key question: Why in the world would anyone think markets developed for barter could work with counter-productive money, tax, and interest systems?
Markets work to a degree. But a great market requires great government to direct our energies to solve existential social and political problems.[Note: The par 9 above is omitted in the moderated original conversation.]
Michel Bauwens 23-May-07 at 2:37 am
Hi,
Are you making anywhere the distinction between markets and capitalism. Though there is obviously a strongly linkage, the latter tends towards monopoly, and also, because it uses interest-based money, has an obligation to grow. But how do grow infinitely between a finite material system? This seems an issue that is unsolvable within capitalism itself.
Hence it would seem important to see how in the future, markets can survive, even if the system in which it is embedded, almost certainly will not.
A number of people have proposed solutions that all aim at disembedding markets from the infinite growth context. Though they still use the moniker capitalism, growth in these reformed systems would only be possible if the same amount of resources is ‘given back’ to the natural system in which the economy is embedded.
See:
1) Natural Capitalism,
http://www.p2pfoundation.net/Natural_Capitalism
(Paul Hawken, David Korten, Peter Barnes, Hazel Henderson, Herman Daly)
2) Markets without Capitalism, http://www.p2pfoundation.net/Non-capitalist_Markets and http://www.p2pfoundation.net/Markets_without_Capitalism
3) Capitalism 3.0 (book by Peter Barnes), at
http://www.p2pfoundation.net/Capitalism_3.0A general problem with the current format for markets, is that the play of supply and demand is embedded in relations of power, which creates weakened predictors and captive consumers.
It seems therefore necessary to counterbalance this play of power, with techniques for ensuring equity. This could be called submitting the play of the market to peer arbitrage: http://www.p2pfoundation.net/Peer_Arbitrage_in_Markets