This very short chapter deals with drawbacks. I’d have had an easier time of it if I knew what drawbacks are. Next chapter is about bounties, and the same applies. As near as I can tell, a drawback is a refund of a portion of whatever duty is charged on export.
Page 389: “They tend not to overturn that balance which naturally establishes itself among all the various employments of society.” My problem here is that it doesn’t make sense to me to speak of some sort of natural balance of employments and then see interference by the State as external to this; the State is an integral, inevitable part of capitalism, and when it interferes in the market, it is (to the extent it does so successfully from the point of view of the capitalists) doing exactly what it is supposed to do. It is like trying to understand the movement of an orbiting body by examining the centrifugal force, but seeing gravity as an unnatural interference.
*cough*centripetal*cough*
Sorry, I think I had a rotating inertial reference frame stuck in my throat, there.
Suggests that the purpose is polemic, doesn’t it? Have to figure that anything that disinvolves the state from commerce tends to the diminishment of the state. Which, y’know, if you’re writing in a time when “the state” mostly means the organized murder apparatuses of kings, would have to seem like a pretty unequivocal good.
Skwid: Ooops. I could edit it, but I think I’ll just leave my stupidity hanging out there for everyone to see.
There are two different ways that government can affect the balances of employment; by its regulatory practices, or by its own employment.
To a free market capitalist, the government providing jobs and employment is much like a referee playing the game while he’s refereeing.
On the other hand, a government’s regulatory practices do indeed affect the balances of employment. And there you have to decide how much regulation is healthy. But it is an external force working upon the market. A knee brace may keep your knee functioning better, but it’s not a part of your leg.
Reading TWoN in absence of any reference to the Theory of Moral Sentiments is truly difficult if not actually impossible. It’s the earlier work in which the phrase “invisible hand” appears; and Smith is none too sanguine about the effects of capitalism on society and morality. Though in the end, of course, he is the ultimate modernist looking resolutely forward because that is the only possible direction, without notion of which direction that actually is.
In the sentence excerpted, Smith is building upon his earlier idea in the Theory of Moral Sentiments, that the market left to itself without action by the state (any given set of laws at a time is not considered to be “action” by the state) will find an equilibrium on its own. Modern prinicples of economics have all sorts of examples of this, such as the point at which the supply and demand curves meet.
The problem with Smith and all modern economists is that they fail to comprehend the inherent trend in any market economy toward monopolism. The more far-thinking members of the capitalist class do, however, see this very problem. Laissez-faire types will point to the model of Henry Ford’s pay scale as proof that the capitalists themselves can fix the monopoly problem by simply paying a wage that will support the perpetuation of the system. “Liberals” on the other hand will point to John Maynard Keynes’ theories on counter-cyclical spending and social safety net as ways of correcting system crashes.
Democratic states with theoretic universal suffrage are a special case. The mass at any given moment, however subject to false consciousness, is still going to go into paroxysms of rage at the worst excesses and use them to stand for (correctly) the entire capitalist system. The Triangle fire, for instance.
So the democratic state, in an effort to head off revolutionary activity, puts fetters on the market, which actually have the medium-term effect of hurting market performance so badly that the same mass becomes convinced that the only way to grow the economy (i.e., wages) is to decrease regulation.
Thus, it may be said from any number of perspectives, that democracies and markets aremutualy pathogenic. In this, I think, Smith was unusually prescient.
Iorich! It’s in the mail for moi today!
Yaaaaaaaaaaay!
Been following the Taltos series since I was 15 (7+ years ago).