Posted on 03/10/2007 9:48:43 AM PST by A. Pole
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The father of modern economics, Adam Smith, wrote more than 200 years ago about the all-powerful "invisible hand" of the market. It was tough, he said, but good for all.
The late Nobel Prize-winning economist Milton Friedman was the great champion of the invisible hand and free markets. Governments, he said, should just let markets do their work.
Economist Duncan Foley, in his new book "Adam's Fallacy," says wait a minute. This is free market theology, he says, and it's producing a value-free society, an unequal society, an immoral society.
This hour On Point: the author of "Adam's Fallacy" meets the defenders of Adam Smith.
Quotes from the Show:
"Ultimately, material productivity comes because people are working hard. It doesn't come because they are following a particular value system or correctly playing the market." Duncan K. Foley
"I am not against markets." Duncan K. Foley
"We tend to neglect the fact that markets exist in a context created by other institutions." Duncan K. Foley
"Adam Smith also wrote a book on morals." Allan Meltzer
"To make a whole person, we don't have to do it all in the economics classroom." Allan Meltzer
"I'm as much an uber-capitalist as you are likely to find, but I don't disagree with that at all. Right action leads to far greater long-term success - the danger is short-term thinking. Grabbing for the goal today with no thought of tomorrow is like eating seed-corn. And unfortunately, it's an epidemic among the Fortune 500 these days. :("
I agree with you about the short term vs long term thinking. It's very easy for us to decide what makes us happy in the short term, much more difficult to determine if that which just made us happier will eventually cause us pain. That's where morality comes in.
Morals are simply guidelines to help us make the right short term decision (so that we won't suffer greater pains down the road).
"Capitalism unchecked (super capitalism) ends up destroying society for want of material wealth. Capitalism needs a soul. Without one it is just another machine that ignores humanity."
The basis of capitalism is freedom WITH responsibilty, so the check is the responsibilty part of the equation.
Your "Capitalism Unchecked" is freedom WITHOUT responsibility.
It is not valid to equate Adam smith's laissez faire with capitalism. Fortunately, values are best settled in the marketplace of ideas, just like everything else.
I submit that free market capitalism is far and away better than any of the other isms you list, because it alone is created out of 100% voluntary actions.
Liquidity? Think most Hedge Funds could cover their positions if necessary — especially Short positions? They have created a disaster/train wreck waiting to happen that most are turning a blind-eye too.
The corporate market as it exists today was not the case when Adam Smith was around. If Smith could see the predatory practices and the open borders/free trade ideology that is so prevelent, he would be appalled.
Not quite. Multimationals linked to government regulation squeeze out competition. The conspiracy of big industry and big government is the culprit.
Uncontrolled free enterprise always responds to market pressure, which keeps the consumer in charge. Government is the cause of immorality in the market, not capitalism.
Yeah, socialism is so much better.
"ism" being all bunk I tend to agree that socialism the capitalism of the few will kill us off as well.
The "market as god" is nonsensical. Unbridled capitalism will and does enslave and destroy the individual no less than communism or any other ism.
When money is worshiped as God, human life is nothing more than a number, and its only value is monetary in nature... this view leads to slavery, but absolute and economic... It leads to abuse of the individual, and the destruction of any sort of society as modernly defined.
Those that say let the market do what it will and government should not regulate or oversee it in any fashion are absolute idiots.
In a truly free market any company should be able to purchase anything they can that is legal.
One of the things that a company can purchase is government itself: they can lobby to pile up regulations that only companies their size can afford, they can lobby to decrease taxes only on products/services they provide, etc.
And this is exactly what they do.
So the bastardized version of welfare-state capitalism that we are currently living under is not an aberration, but is the end result of corporations purchasing the things they want, i.e. bigger government.
If you oppose the right of corporations to purchase government action then you are anti-capitalist because you are limiting what they can purchase.
If you support the right of corporations to purchase government action then you are anti-capitalist because you would then have to support the welfare nanny state that has resulted.
This is why there is no such thing as a truly "free market" and there never will be and anyone who believes otherwise is an ideologue more concerned with bolstering up a utopian vision than improving the situation in the real world.
n the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress of England towards opulence and improvement in almost all former times...
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.
The Wealth of Nations, Book II, Chapter III
Adam Smith
According to the system of natural liberty, the sovereign has only three duties to attend to ... first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, so far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice, and thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain...
The Wealth of Nations, Book IV, Chapter IX
Adam Smith
http://en.wikipedia.org/wiki/Adam_Smith
He would make a great Libertarian
When I was very young, everything was "Made in Japan", then later "Made in Taiwan".
Japan, and to a lesser extent Taiwan, are now much wealthier countries and no longer have a big wage advantage over the US.
Same thing will happen to China.
Yes.
They have created a disaster/train wreck waiting to happen that most are turning a blind-eye too.
A short covering disaster? You don't know much about markets, do you?
It (getting burned by short sellers and hedge funds)happens all the time to these greedy capitalist pigs in the financial industry...they're pretty stupid people, ya know.
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