From: Nicola Taylor (nmtayl@YAHOO.COM.AU)
Date: Thu Nov 30 2006 - 21:41:27 EST
> DOGAN > --------------------- > Nicky, lets put what you say about Marx and > Neoclassic for the time being > aside and (bearing our question in mind) > concentrate on Smith, because there is > lots of clarification necessary as to how interpret > Smith's work. But let me > remind you that Marx is as much concerned about the > freedom of individuals > as anybody else in western social and political > thought. Dogan, in asking whether unemployment is 'rational' in a CAPITALIST system - (that was the question, right?) - I don't actually need to consider Marx's thoughts on the freedom of individuals. I do need to consider WHAT IS RATIONAL FOR CAPITAL? i.e. does the existence of unemployment contribute in some way to profit-making goals of the corporation (an individual entity) and/or reproduction/accumulation of capital (a totality). > > You seem to accept the mainstream interpretation of > Smith's work as offered > by people like Milton Friedman and F. A. Hayek. But > I think that this > approach fails to grasp the complexcity of Smith's > teaching. No, I don't accept the mainstream interpretations of Smith. Rather I am talking about *what has been made of Smith's ideas* in the construction and development of the so-called *value-neutral* neoclassical system. I also wanted to bring to your attention the fact that contemporary real-world capitalism is 'irrational' from a neoclassical point of view. Most economists spend their lives attempting to make the irrational real better conform to the rational ideal. That's all. With your views on Smith (below) I largely agree. cheers Nicky > > Just some methodological remainders: Smith was and > is one of the greatest > historians of society and the state and as such he > approached social formations > historically. The main question he poses in this > connection is this: what is > more advanced and, if you like, better - feudalism > or "commercial society" > (what we call capitalism today)? He definitely sees > capitalism more advanced > than feudalism. He wrote the 'Wealth of Nations' > long before the French > Revolution of 1789. Therefore, everything he wrote > he wrote also with the aim to > highlight the advantages of capitalism compared to > feudalism. He uses his > famous "invisible hand" in this context. (He uses > this metaphor only three times > in his whole work: once in the Theory of Moral > Sentiments to criticise land > lords, once in his philosophical essay on Astronomy > and once in Wealth of > Nations.) In Wealth of Nations when he uses this > metaphor the main question he > has in mind is this: who do administer social wealth > in feudalism and in > capitalism? In Feudalism it is adminstered by land > lords, in capitalism, by > contrast, it is administered by manufacturers. Now > according to Smith Landlords make > up an idle class because they waste social wealth. > They do not invest it. > Rather they consume and waste it for luxary. > Manufacturers, by contrast, have to > invest it because they are permanently under the > pressure of competition. In > this connection he uses the metaphor of invisible > hand and says that > manufacturers are lead to contribute to the benefit > of society. They do this not > consciously, this is not their aim at all, they > pursue their own benefit, namely > to make profit, but because they have to invest > they necessarily contribute > to the benefit of society. > > Please note that he does not speak of individuals > here. He speaks of > manufacturers. > > Now, the other aspect you refer to in this > connection is the notion of free > trade. He explicitly says that free trade is > impossible not because the state > interfers with the invisible hand of the market but > because manufacturers > want to defend and expand their monopolies and > therefore put the state under > pressure to do so. So, Smith says that the greatest > enemies of free trade are > manufacturers whose interests are always against the > general interets of > society. This leads him to the famous concept of the > night-watch state. If the > state is strong that would put manufacturers in a > much stronger position in > relation to society than they are anyway because of > their economic position. > > In your email you refer to the concept of > self-ineterst. Again, here I think > some clarification is in order. In his work Smith > uses the concept of > self-interest in various ways. One meaning may be > called what we refer to as 'life > project'. The other meaning has indeed to do with > economic interest. This > distinction is very important to understand what > Smith teaches us. > > As to the first meaning. Indeed, in this connection, > that is, in the > connection that individuals pursue their life > projects, social institutions should > interfer as less as possible, because individuals > know it better than anybody > else what is in their own interests. Smith employs > here a different social > theory than commercial society. The foundation of > social relations when he > refers to the concept of life project is mutual > sympathy, support, respect and > recognition. In short, it is a social theory which > envisages a society in which > everybody is everyboy's neighbour, in which > everybody sees everybody else as > his/her second self. > > As to the second meaning: However, as soon as > economic interests come into > play there occurs what he calls corruption of moral > sentiments, power relations > and mutual negation. Market society according to > Smith is, then, a morally > corupt and is therefore a irrational society. > > === message truncated === Send instant messages to your online friends http://au.messenger.yahoo.com
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