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John Kozy, your source of judgement, at least does not appear to be a neo-classical economist. But neither does he appear to be fully conversant with economic history or the history of economic thought. Smith did indeed have a very rudimentary, non quantitative, labor theory of value. Ricardo started to quantify the theory and Marx seized on the surplus value of labor, the difference between what the labor cost, customarily based on the minimum cost of  living for the laborers, and the value that the entrepreneur could get for the product, which was determined by the market, or by the entrepreneur if there was a poorly developed market or is the entrepreneur had pricing power.

Kozy almost seems to have re-invented Marx and proceeds to denigrate the contribution of Smith, who was one of the founding figures in economics. Before Smith and the Physiocrats there was very little that could count as economics. To me Kozy's approach reeks of ahistoricisim. His dismissal of Smith's The Theory of the Moral Sentiments as "sophmoric" along with his general tone brands HIM as sophmoric in my estimate.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Dec 14th, 2010 at 02:03:25 AM EST
Smith did express more concern of labour condition and oligopoly abuse than both admirers and critics are willing to see.

But the settled "natural" price of labour accepts raw power relations without any challenge or limits. Does economy has to be that amoral? Can't there be no theory or workable economy that includes abuse misery considerations seriously? What is the core value of the massive efforts to organize economy?

by das monde on Tue Dec 14th, 2010 at 03:22:38 AM EST
[ Parent ]
Smith was also critical of the activities of The British East India Company. But with regards to economics it is necessary to understand that, prior to Smith and the Physiocrats, excepting perhaps Mandeville, the alternatives to what were being formulated by these emerging economists was, basically, divine providence. The single greatest accomplishment of these philosophers was to move the discussion into the secular realm.

Another consideration is that it was only because Smith was addressing an elite audience and taught elite students that he could be even as critical as he was. Shifting the whole discussion of morality onto secular grounds while creating a secular understanding of the economy was a very significant accomplishment. It is not shocking that he was not also a social revolutionary. Had he been that he would have not succeeded in accomplishing what he did. He was an educator at a time when only the elite got a formal education, even if some were scholarship students.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Dec 14th, 2010 at 01:18:59 PM EST
[ Parent ]
das monde:
Does economy has to be that amoral? Can't there be no theory or workable economy that includes abuse misery considerations seriously? What is the core value of the massive efforts to organize economy?

great questions!

my first response is that until we have an auto-compensating, self-steering robot economy, we will always be dependent on the human hands on the joystick, with all the attendant chaos that ensues when said steerers lose sight of higher social goals, and paranoidly pursue short-term gains at the (huge) expense of the commons, which by now we know to be much more than some 'spare' land on which the poor could better their lives through resource sharing, much more indeed, to include the biosphere and its precarious fragility.

so eventually economy-by-algorithm, but the consensus needed, and perhaps the open source software to guide it are still ahead.

the neo-feudalism to which you refer seems like the default policy for our betters, and it will take a massively diffused response from the people to ensure that ultimate fairness will ensue.

this will take a quantum increase in public awareness, and familiarity with all the newspeak we pick apart here at ET, and this is why the massive cuts in education, i believe, because the empowerment of the masses depends on this to avoid the naked anger of the 'flexibilised' and unemployed otherwise releasing their rage in scenes such as occurred in rome today, which smacked of civil war.

a side note, i was struck by how restrained the video footage portrayed the police forces on the nooze. whether this is selective propaganda will probably emerge sooner or later...

as for core value to an economic philosophy, i think that's just it...to deserve the sobriquet of 'philosophy' it must be oriented to the greatest good to the greatest number, otherwise it's just 'policy', and under neolib forces has become a machine for squeezing labour into an ever decreasing race to the bottom, where globalisation has pitted workers from all over the world to undercut and thus undermine any collective solidarity that could better their declining lot.

agitate, organise, were the watchwords for the keir hardy era, through the wobblies and until genuine labour movements self-combusted on the third way altar, after unions were demonised, and a la reagan and now zapatero, castrated of any real power.

the uphill battle to create a global workers' utopia, as envisaged by marx, (then betrayed by every satrap government that professed intellectual allegiance to such noble, and essentially christian models of social justice,) has been a long and bloody one, and the mindset that opposes such progress has been justified by totalitarian hellworlds created in communism's name, and the centuries of amassing capital and rentier leverage through the concept of private property, amped up through the years to include financialisation of enterprise, sophisticated fractional reserve banking, currency, commodity and real estate speculations and the instrumentalisation of crude lumpenproletariat psychological traits to ensure the hoi polloi are kept chasing chimeras through vulgar media manipulation, distracted from the massive chains that weigh down their lives, and place in hock the next unborn generations' labour too.

farm animals indeed, worked to an early grave, fettered, fenced and fattened, lashed to a procrustean bed of debt-duty, which as some here have keenly observed is taken seriously by those least equipped to game it, and thoroughly ignored by those who design the rules they then break, with mealymouthed excuses and relative impunity.

the poor are thus punished twice, once by their masters, then by their own sense of right and wrong!

what passes for 'economic rationalism' is anything but, as it blithely slithers between multiple 600lb gorillas in the parlour, like planetary climate instability, marauding buccaneers of sovereign (thus weakening) economies, (behaving like a bunch of enraged tyrannosaurii on a last bender as they see the sky darkening from comet impact), malthusian limits, mass dementia religiosa and the spells of titillating frippery (SPEND YOUR WAY THERE!!!!) launched 24/7 at the burgeoning young consumers who will provide the demand, though with what wages remains to be seen.

when effigies of milton friedman hang by their heels on wall st, and someone of the necessary calibre to organise a world wide workers union (that doesn't get taken over by the mob) emerges from the rubble of broken currencies, lost decades, and 0% interest rates, then we'll know the algorithm is tweaked to satisfaction, taxes will be paid willingly, the global civic unity will have crystallised and we'll be able to study the whole sorry saga in the history books, how such a tool as money underwent the formality of occurring, and all the games crooks played with it, before we settled down and took it seriously enough to evolve its use as something fully pragmatic, demonstrably fair, and consistently compassionate.

ponies quite possibly included...

until then we have this hydra headed effort to despoil the planet while screwing 98% of the inhabitants out any quality of life that isn't immediately commodified and sold back to them, often at gunpoint.

yes it keeps me up at night, thanks science for melatonin!

and thanks to das monde and all the commenters for trying to help us see through the mist we're wandering in, and trying also to conceptualise a better, fairer way to use financial policy for greater good.

yay ET, superb...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Dec 14th, 2010 at 07:44:13 PM EST
[ Parent ]
The economy isn't amoral.

The economy's moral basis is that individuals must compete for private property. Accumulation of private property is the only acceptable moral goal.

Smith argued for mitigation of the social damage caused by this idea, but he still agreed with it in principle. And mitigation rather than denial is the basis of Socialism - property rights are fine, some competition is fine, but there should be a safety net rather than economic and social perdition for the losers.

The corollary is that misery will remain as long as forced competition remains. Instead of mitigating the results of failure, it might be more useful to concentrate on mutual aid as a primary goal and reduce competition to a seasoning.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Dec 14th, 2010 at 08:52:47 PM EST
[ Parent ]
Currently, efforts of governments consistently serve only one goal - enforcement of various rentier privileges, including debt claims. Heck, they even try to be innovative in developing new rent frontiers.

What underlies de factor ethics of the modern governments and elite societies is sanctimony of rentiers' "hard work". Anything could be compromised but not their interests.

You know how hard is to earn for a modest house? Now imagine how hard is earn a Miami mansion, ha ha.

by das monde on Wed Dec 15th, 2010 at 05:34:26 AM EST
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