Jacqueline's Reviews > An Inquiry into the Nature and Causes of the Wealth of Nations

Good point about this classic. I would give it 5 stars, since it is truly the classic everyone knows it is, but rarely actually reads. I've read it 1.5 times and I remember it as fantastic. But you hit the nail on the head about his labor theory of value allowing for Marx's crazy scheme. Menger, Böhm-Bawerk, Mises and Rothbard are great for filling in the gaps and crevaces of Smith. But Smith is still worth reading for many reasons.

I didn't realize I had only given it 3. I actually meant 4 stars. It's a boring read though, really. Rothbard and Mises and Hayack are all great to add, but my favorite is still Bastiat.

Granted, Smith can be a bit boring. E.g. his 70+ page "digression on silver" was certainly a yawner section. But considering the book is 235 years old, I found most of it incredibly interesting, insightful and still relevant.

Bastiat certainly did have the gift of wit, however. He shown most in that manner.

You're wrong about the Labour theory of value. In fact Marx even said "nothing can be of value without being an object of utility. If the thing is useless, so is the labour contained in it". Smiths LTV was more to do with psychological disutility. I recommend austrians read the original texts, and not just what Bohm Bawerk criticized because to be fair he was off target more than a few times.

If Marx actually said the quote you used above - good for him. That's for sure. But if his basic ideas ignored it, or even if not but he still does not understand that value comes from the eyes of the beholder, NOT the costs (labor or otherwise), then his system has a major problem.

Why is the labour theory of value wrong? Saying the market determines what is produced is a circular definition. Your saying demand determines supply. So how does the market determine what to produce? What makes something valuable?

You strike me not having read Marx - at all.
He specifically says in the first section of Capital exactly what you say, i.e., if the item has no use value, the labor behind the work means nothing. He also explicitly denies that because socially necessary labor time is the source of value, that this means the worker is entitled to the entire outpout of work. As a matter of fact, he says under the terms of capitalism, it's just for the capitalist to take a surplus of the work produced.

I can provide exact quotes and references if need be, but if you're going to talk Marx, at least have the decency to read him...

Patrick he does say that quote, in the first section, possibly the first chapter. Amazing that people talk about how Marx was wrong, and yet haven't even made it through the opening portion of his book.

P.S. It was John Locke - you know the philosopher who seems to of had the most influence on the deceleration of independence and possibly the bill of rights - that actually made the claim that people have a God given and rational right to their labor.

Chapter 7 of Capital:

"The circumstance, that on the one hand the daily sustenance of labour-power costs only half a day’s labour, while on the other hand the very same labour-power can work during a whole day, that consequently the value which its use during one day creates, is double what he pays for that use, this circumstance is, without doubt, a piece of good luck for the buyer, but by no means an injury to the seller."

Spoken like someone who has not been a part of the labor force. Or are you writing tongue in cheek?

Me?

Sorry. My comment was to Jacqueline and her comment about labor. Not to CB

I felt like supporting labor! But I really can't say anything. I am getting ready to read Wealth of Nations.

Despite the rumors, Adam Smith is not the precursor to Milton Friedman, and Smith also supports a labor theory of value.
Enjoy.

He certainly goes into specifics about the power disparity between workers and 'masters' (in his phraseology).

You make a good point, but the other is labor is worth nothing if not being guided by someone with a vision. No amount of labor would have created the iphone if Steve Jobs hadn't dreamed it up first.

Bob - good point about creators like Jobs.

Smith actually was not as realistic about the power that workers have vis-a-vis the owners of companies.

The owners have huge costs to service that labor does not have such as capital, debt, contractual obligations, etc.

Owners also have to be constantly worried about losing present and future customers due to unavailability to provide them with products and services. These lags or long lapses can often easily be filled by competitors, existing or new to pop-up.

There are far from insignificant deterrents for management to "abuse" or otherwise ignore the needs and wants of their labor force.

Bob, Marx never thought that Steve Job's DIDN'T deserve reward. As Smith here points out, the division of labor paves the way for inventing to be a full time job. Marx's issue was that people were profiting for the sole fact that they owned a building and the machines inside, machines that the owner had no hand in developing or making. This was Marx's issue

The owners of the building take care that it is repaired when needed, that improvements are made when appropriate to the user or owner or future users or owners, or that it is left idle when appropriate to the circumstances of the area's economy, the owner's condition, etc. etc. Will the "public" ownership (Government) that Marx advocates do that? Look around, the worst maintained and most uneconomic investments possible are the norm for government buildings and other "means of production" assets. The private owners provide a very valuable service to society - careful management of property, something government squanders at every turn.

Wow.
Okay, so democratic ownership of production is not de facto government ownership of production. That should be kind of intuitively clear, but I guess it isn't when your sole conception of socialism is the USSR.

So yes, workers that democratically manage a workplace will also ensure that the workplace is taken care of, and do not require the forceful hand of the state to intervene, anymore or any less than a capitalist does.

By the way, the human species is 100,000-150,000 years old, to say that there are only two forms of production: State management, or private capitalist ownership, is quite obviously an egregiously false disjunctive fallacy.

So, how DO you define "democratic ownership of production"?
Oh, and I don't seem to recall Marx being a big advocate of "democracy" but rather "dictatorship."

I imagine you don't recall it because you didn't investigate all that thoroughly... Let's go over some basic points.
Language evolves overtime. How words are used in one century is not how they're used in another. Dictatorship for Marx means who has power in society. So by Marx's standard, we live in the 'dictatorship of bourgeoisie', i.e., the capitalists. It doesn't mean people don't vote, or pay taxes to a state, but it does mean that ultimately the state is an instrument of one class against another (whether that's actually true is a separate claim from parsing out this definition). So a democratic or parliamentarian government can still be a dictatorship.

When Marx was specifically asked 'what do you mean by dictatorship' he said 'the paris commune', which any cursory glance reveals is nothing even remotely akin to what you or I mean by dictatorship (e.g., Un, Castro, etc.).

Marx defining his example of working class dictatorship:

"The Commune was formed of the municipal councilors, chosen by universal suffrage in the various wards of the town, responsible, and revocable at short terms. The majority of its members were naturally workers, or acknowledged representatives of the working class. The Commune was to be a working, not a parliamentary body, executive, and legislative at the same time."

Again, nothing like what you or I mean.

Saying Marx wasn't a big advocate of Democracy is just ignorant. Which is kind of annoying because you've talked him quite a bit in this thread but it's clear you never bothered to read anything he wrote. The man was obsessed with spreading suffrage to all people, and implementing democracy at multiple levels of society.

Just a quick quote from the Programme of the French Worker's Party that he wrote:
" Considering,

That this collective appropriation can arise only from the revolutionary action of the productive class – or proletariat - organized in a distinct political party;

That a such an organization must be pursued by all the means the proletariat has at its disposal including universal suffrage which will thus be transformed from the instrument of deception that it has been until now into an instrument of emancipation"

And he clarifies that this applies to:
"That the emancipation of the productive class is that of all human beings without distinction of sex or race"

So a German Jew, writing in the 1870s about extending suffrage to all races and sexes, is not to be considered an advocate of democracy? Come on.... That's nearly unprecedented!

I don't really think defining democratic ownership is all that difficult, if anything I'm overwhelmed at how quickly people shy away from even trying to break from an obvious false disjunct (the one you presented a moment ago).

The people that work in the work place also manage it democratically. Period. Full stop. There's nothing overtly complicated or mystical about this. It's been done thousands and thousands of times often with great success. For the most clear cut success story look at Mondragon:
https://en.wikipedia.org/wiki/Mondrag...

By the way, noting that you're in love with libertarian values, there's also nothing in principle about this arrangement which is anti-libertarian. It in no way violates the no harm principle nor the free association principle.

LMAO

Stop it, stop it!
He's already dead.

Great comments!