Yaaaaaaaaaaay!

Been following the Taltos series since I was 15 (7+ years ago).

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.

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.

Sorry, I think I had a rotating inertial reference frame stuck in my throat, there.