Invisible hand is introduced first in theory of moral sentiments to describe how acting in self interest in production will benefit the greater good. Just FYI

@japiro14

2 ай бұрын

Can you give the page nr??

"In the progress of the division of labour... The man whose whole life is spent in performing a few simple operations, of which the effects, too, are perhaps always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention, in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become."

I'm quite surprised and grateful that 278 comments have been posted regarding the clip of this interview I conducted way back in 2004. It would be more enlightening, however, if people could talk about the substance of Professor Chomsky's argument rather than his ethnic heritage. Peace and empathy to all.

Chomsky, due to his intellect, is very good at seeing the fly in the soup and declaring the whole batch unfit for human consumption. He ignores that the meaning of Invisible Hand as used by Economists came from Adam Smith's Theory of Moral Sentiments. He also ignores that immediately after Nafta, you had the Peso Crisis, so of course there would be a dip (for different reasons) immediately after.

As someone who studies Political Economy it's kind of sad to see how misinterpreted many of Adam Smith's arguments are. He wanted to prioritize production but also recognized the huge threat that free markets created, especially regarding the control producers had over wages.

@yydd4954

2 жыл бұрын

Didn't Adam Smith support free market himself? He said government intervention is a problem, he talked about liberty of people too. The political left trys it's best to claim Adam Smith but you just can't.

@yydd4954

2 жыл бұрын

@潘poon adam Smith actually supported free market bro What's so surprising?

@richg16

2 жыл бұрын

@@yydd4954 to some extent - but he was pro-market and pro-trade because at the same the means of production made commodities harder to get Fun fact- Adam Smith defined landlords as “cruel parasites” who interfered with market forces

@yydd4954

2 жыл бұрын

@@richg16 who is advocating landlords here? U don't understand free market maybe. Landlords don't do capital accumulation bro! That's where adam Smith said so.

@yydd4954

2 жыл бұрын

@@richg16 he wasn't free market capitalist to some extent. He was one to discover this properly! Laseiz faire?! He was against government too much interference too. The left try their best to claim Adam Smith but sorry not possible!

The quote in question, is indeed embedded in section regarding "foreign industry" and ends as follows: "...and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." Note here the key phrase "as in many other cases." To quote just one of these other cases--one which had absolutely nothing to do with foreign industry--consider the following: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest..." Obviously this ties right into the invisible hand idea the runs throughout Smith's book. The phrase "invisible hand" was merely an evocative name Smith chose to give his idea at a certain point in his book, not knowing that it would eventually become the mother of all memes in the history of economics. So the attempt to discredit the entire idea of the invisible hand based on a questionable usage of this phrase in a single passage, as Chomsky tries to do here, is breathtakingly dishonest.

@Utd7legacy

4 жыл бұрын

Thank you sir

@bobsykes7140

4 жыл бұрын

"Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security."

@geneba712

2 жыл бұрын

@@bobsykes7140 Yes, but what A. Smith said in The Theory of Moral Sentiments, Part IV, cap. 1, par. 10? "They (the rich) consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an INVISIBLE HAND to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for." I have products and services that a king of the past even couldn't dare to imagine. All due to the invisible hand of capitalism. Those who write messages against capitalism are doing it from a computer or device that was maybe MADE in China, but CREATED in a capitalist enterprise. To invalidate a broad concept of Adam Smith by the limited usage in a certain context is intellectual dishonesty from Chomsky's part.

His last point is very interesting. There appears indeed little difference in the way big companies like GM operate to State-enterprises. They plan every detail. The whole assembly-line from raw materials > assembling > shipment > shops > consumer is already in place way ahead. The only people who really trade in the market are small local businesses, shopkeepers etc

It seems that you're the one who should learn what these terms mean... anarchism means a /stateless/ society. saying that an advocate for a stateless society is a "soundboard...for statist ideology" makes no sense; I don't think I need to explain why

I thought the "Division of Labor" had more to with the importance of specialization in an economy rather than the boring repetition of factory work.

The book is easy to search now with google books. In my search "invisible hand" comes up one time, on page 400, in the context mentioned by Professor Chomsky. The chapter is titled: "of restraints upon the importation from Foreign countries of such goods as can be produced at home." In other words-invisible hand is protectionism. Could you please indicate on which pages the other two instances appear?

However true Chomsky's statement that Adam Smith meant something else with the invisible hand may be, it does not add any value to the general economic debate. The fact remains that there is a concept called 'the invisible hand of the market' and it is quite clear what most people mean with it. The truly interesting question is whether markets actually function according to the invisible hand and whether this is deemed a good or a bad thing. Chomsky's argument is not wrong, but it simply does not offer any useful critique on the concept itself. Perhaps as Patrick Henry said below in a comment this might be labelled Pseudo-Intellectualism.

@johnnonamegibbon3580

9 жыл бұрын

It's there, certainly, but the context that it is actually used in is not quite as ideal to the business sector as people are led to believe. That was his point. I wouldn't label it pseudo-intellectual because it isn't attacking the concept, it's attacking the way it is reframed. You missed his point.

@Lillymill

9 жыл бұрын

"The Invisible Hand of the market" is not merely a concept; it's a modern economic dogma, if not a cult.

@johnnonamegibbon3580

9 жыл бұрын

Lillymill Pretty much.

@MaverickChristian

7 жыл бұрын

I think Chomsky's characterization of the invisible hand in _The Wealth of Nations_ may have been a bit misleading. Here's what Smith actually said: _But it is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity either of money or of other goods._ _But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an _*_invisible_*_ _*_hand_*_ to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it._ [Emphasis mine] So the invisible hand was still about profit and self-interest, just as conventional wisdom says. It's just that Smith believed the invisible hand would motivate people to invest at home (and this is certainly true to at least some extent; it's why employment can potentially be quite low even in a country with free trade). Source: www.econlib.org/library/Smith/smWN13.html

@HUNDmiau

7 жыл бұрын

I'd say it is true because most buisnesses can not afford to outsource their production to third world countires. If everyone could afford it, nearly everyone would do it.

Can anyone please provide the exact page number Chomsky's referring to regarding division of labour being 'monstrous' etc?

"As long as politics is the shadow cast on society by big business, the attentuation of the shadow will not change the substance." John Dewey

There is a whole discourse among professors of economics, about what adam smith meant with the "invisible hand", wikipedia is your friend

AWSOME OBSERVATION! I was thinking the exact same thing, and you stated Chomskys, views on the topic fantasticly!

Adam Smith wrote 'the wealth of nations' at the time of the first industrial revolution. Employees (including Children as young as 8 years) were the property of the mill owner. It is not a perfect world, the hunger for ever more money created a depressing life for the poor. So when he talks about wealth of nations is he only talking about the wealthy few. The next you tube video you should watch is "the pitchforks are coming".

Interesting point in the last 30 seconds of identifying corporate internal trade vs. 'real' trade. Heard a similar parable in E-Myth Enterprise I was listening to yesterday.

Once in the Wealth of Nations but 3 times in total. The recognized use of the 'invisible hand' actually comes in The Theory of Moral Sentiments.

Yes, the actual term "invisible hand" appears only once and is in the context of trade and domestic vs. foreign investment. But clearly the idea is central to other areas of the book, especially basic price theory. That's why the quote is "he is in this, as in many other cases, led by an invisible hand..." As in many other cases is quite clear. And overall, Smith's criticism of mercantilism did not hinge on the passage under question, rather absolute advantage, which Ricardo refined.

1:31 the what institute? please help me out here if you can thanks

@sursmith37

3 жыл бұрын

The CATO Institute is a "libertarian think tank". Founded by Charles Koch no less. They typically push for the privatization of many things.

Has free trade not helped lift hundreds of millions of Chinese people out of abject poverty?

@riccardo9383

6 жыл бұрын

Tim K Free trade is a myth. Behind every economic development there was a state. The internet wouldn't exist if it weren't for the defense contracts made for decades in the public sector, only to be handed out to private hands. It's the socialization of costs and privatization of profits.

@MrStrawberryfields4

5 жыл бұрын

Yes.

Noam Chomsky is a very intelligent man, and he is right by saying that Adam Smiths arguments for free markets are rather balanced and nuanced, but unfortunately his assertions regarding how Adam Smith used the term “Invisible Hand” in “Wealth of Nations”, and how that relates to the modern use of the expression, are misleading at best, and plain wrong at worst. Since there seems to be a lot of confusion on the topic, I decided to write a short explanation on how Adam Smith used the metaphor of the “Invisible Hand” in “Wealth of Nations”, and why I think Chomsky’s claims are misleading. I will post some version of this text on multiple KZread videos in which Chomsky talks about this subject. In “Wealth of Nations”, the “Invisible Hand” is mentioned once in book IV, chapter 2. That chapter is concerned with restraints upon importation of goods that can be produced at home. Among many other things that are discussed in this chapter, Adam Smith mentions the phrase “Invisible Hand” somewhat offhandedly, in a discussion about investment behavior. Now let’s look at the full quote: “By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.” With this sentence Adam Smith summarizes 2-3 previous pages in which he outlines his arguments. The quote has roughly four parts. We now look at each of them individually, and add in the context of the previous pages. 1. “By preferring the support of domestic to that of foreign industry, he intends only his own security; […]” This is the part that Chomsky mostly talks about. Adam Smith argues that upon equal or close to equal profits, merchants generally prefer to invest their capital in domestic rather than foreign industry. The reason for this is that the merchants like to have direct oversight over their business, and they are more accustomed to the people and the laws of their home country, which reduces the risk of doing business. Now, Chomsky is largely correct when he says that the “Invisible Hand” refers to this sort of “Home Bias”, but he fails to mention that according to Adam Smith, this is due to investors acting in their own self-interest. More importantly, he also fails to mention that this “Home Bias” is not the only thing to which the “Invisible Hand” is referring to. 2. “[…] and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain […]” This is a totally separate argument and has absolutely nothing to do with the “Home Bias” that was the subject of the first part. Smith argues, that when people invest their money, they look for the most profitable industry to do so. The most profitable industry in turn, is the industry which creates the most value. Since the annual revenue of a society is equal to the value added in production, the self-interest of investors, according to Smith, leads to the most beneficial investment of capital. This very much resembles how the expression “Invisible Hand” is used today, but Chomsky does not acknowledge or even mention this part at all. 3. ”[…] and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” Finally, we come to the part, where Adam Smith describes these mechanisms with the metaphor of the “Invisible Hand”. It generally refers to the fact that the self-interested actions of individuals can lead to outcomes which were not intended by the individuals. The important part here is “AS IN MANY OTHER CASES”, meaning that the metaphor is not limited to the aforementioned instances, but can be applied to many other cases as well. 4. “Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.” This last part concludes by saying, that this mechanism of the “Invisible Hand” frequently leads to outcomes which are beneficial to society as a whole, which again is very much in line with the modern use of the expression. Arguments for other cases where the “Invisible Hand” leads to better societal outcomes, can be found all over the book. In summary, the “Invisible Hand” as it is used by Adam Smith in “Wealth of Nations”, refers to the fact, that individual self-interested actions can lead to unintended outcomes. Smith also states, that the unintended results of individual self-interested actions, frequently improve national welfare better, than actions which are consciously designed to do so. Smith mentions the metaphor while explaining two mechanisms (1. Self-interested investors prefer to invest at home compared to abroad; 2. Self-interested investors invest in industries, which are most beneficial to society), but he also clearly states, that this holds in many other cases as well. So, Chomsky is right in saying that Adam Smith uses the “Invisible Hand” in “Wealth of Nations” to explain some sort of “Home Bias”, but he is wrong in reducing the expression to this very specific instance. He acknowledges only the first part of the sentence, but ignores the second part, and even more importantly, he ignores the third part in which Adam Smith explicitly says that the two mentioned cases are just specific examples of a more general concept, which applies to many other cases as well. Chomsky seems to imply that the way the expression of the “Invisible Hand” is used and understood today, is somehow in contrast to what Adam Smith wrote, but this assertion is simply not correct. The modern use of the expression “Invisible Hand” is a completely legitimate interpretation, and exactly in line with how Adam Smith used it in “Wealth of Nations”. Chomsky’s reductive interpretation, which he has repeated many times over the years in many different places, is indicative of him being either disingenuous or misinformed. If we give him the benefit of the doubt by assuming that he is being genuine, then his line of argumentation reveals a very superficial reading on his part, and he would have been well-advised to read the passage a little bit more carefully.

@NerdsMakeMedia

Жыл бұрын

Thank you so much for your lengthy and thoughtful response. Most impressive! I wonder if any Smith scholars have thoughts on this?

debates are necessary to understand if we are not following some idea which creates problems. chomsky might be wrong in some places but that does not mean you should disrespect him. i dont know how old he is but he is contributing to society even at this stage. he may reply to all the criticism you put in comment box and how can your argument be correct when your questions cant even reach him at the moment?

@ssssssssss1638

7 жыл бұрын

""The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life... But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it." Adam Smith wrote that and is what Chomsky's talking about

Do you understand the United Nations statistical comparison of long life and income in the country vs long life and income in the city factory?

"Goods are worth whatever labour went into producing them"- No. For starters, costs other than labour go into most goods (i.e. materials, overhead, etc.) Plus there is the additional value of having someone else produce the product for either cheaper, faster or better quality than if you were to do it yourself. That's why you pay more for a burger at a fast food joint than if you were to buy the patties yourself. They make it much faster and if you're not a culinary expert- perhaps tastier.

Arbitrage (buying at lower price in one market and selling a higher price in another) serves a very valuable purpose. It lowers the price in the market that is overpaying for a product.and raises the price in the market paying too little. Absent arbitrage (or competition in general), the buyers paying the higher price in one market are stuck indefinitely paying a higher price than they should.

@babayabadabadu was referring to the "you are stupid" comment earlier in the stream.

The progress of science and technology are linked to DoL. It is neither good nor bad, but quite possibly the most powerful character of the human condition.

Read over what I said more carefully. I never assumed the lower price was "justified" (a rather morally loaded term you used there- what one person considers just maybe considered unjust to another). But whether a given price is just is completely irrelevant here. Arbitrage serves to reduce the price differences between two markets paying different prices (justified or not). Textbook economics.

@shammy1002 That's very civil and thoughtful of you, Shammy.

In fact if one is truly concerned about wage abuse, the better alternative is free trade. This is because wage abuse is by definition a problem of insufficient competition. If there are many buyers of labour, it is far more difficult to commit wage abuse. On the other hand, wage abuse is far more often enabled by government policies such as tariffs, regulations, licenses, patents etc that create uncompetitive markets. Natural monopolies do exist but they are the exception not the rule

Anarcho-syndicalism doesn't imply total lack of state, it suggests it as an ideal but recognizes the need for a replacement construct, suggesting a worker's union type of system. This is still a state, and honest Anarcho-syndicalists recognise this and are unable to reconcile this with the core pricipal of "power corruption". Naom has written maybe 100 books by now, I doubt anyone, myslef included has a complete grasp of all of his work.

You are incorrect. The foundations of neoclassical economics assume certain types of symmetry between participants in a market. As such, it assumes perfect information availability. And it absolutely does assume perfect markets. Look up the phrase "Perfect Competition".

@26Keano Noam is an anarcho-syndicalist. He's said before he supported the anarchist movement in Spain in the 1930's.

The problem with criticizing Adam Smith is that when his policies were adopted following the repeal of the Corn Laws in 1846, it brought in the greatest period of economic growth Britain, if not the world, has ever seen; where the general lot of the average man improved vastly and where hard work and an enterprising mind could get u untold riches. What is 'moral' is to have an even a playing field as possible, and not to treat people differently because of a perceived disadvantage

Anyone talking about Adam Smith needs to recognize that even though he was practically the founder of capitalism, he was also one of its greatest critics, and recognized some of the fatalities within the economic system.

@damionjackson1743

8 жыл бұрын

Even a greater critic that karl marx because I've read the communist manifesto and I am 160 pages into das kapital volume 1 and they dont really sound to diffrent from each other,than again marx was around 80 or 70 years after smith when industrial capitalism was in full swing in western eourpe.

@fraxus

7 жыл бұрын

Smith's main critique is against what we now call Mercantilism, and in favor of free-er markets. VERY different from Marx. You are right that the is some similarity between Smith & Marx - they both believed in 'labor theory of value' which has been overwhelmingly disproved since. Sadly for Marx, this error was foundation to his ideas.

@damionjackson1743

7 жыл бұрын

+fraxus I don't think Adam Smith would be in lockstep with today's Austrian economics so called free market policy he uses the term invisible hand but in the chapter freest of imports he argued against deregulation and advocated for a tariff based economy protectionism not a laissez faire policy. As Chomsky points out in this video Smith said there should be regulations when it benefits the common man.

@fraxus

7 жыл бұрын

No one ever suggested, even in the slightest way, that Smith would be Austrian School(AS). Where did you get that funny idea ? I don't subscribe to AS and I was not promoting it. I don't think there is any such thing as "today's Austrian economics" - AS was a school of economics that has (IMO) all but died since WW2. Just a few revivalists at George Mason U and a few others that seriously address it today. Yes some (IMO ill educated amateurs) libertarians subscribe to AS economics, but mostly b/c of Hayek hero worship. Hayek was one of the very last productive AS economists, *BUT* he never wrote about economics after ~1933 (I think was his rebuttal to Keynes). After that his writings were more econo-sociology. HOWEVER AS did make a several important contributions to economics that were adopted by Freshwate, Saltwater and the various Keynesians schools. Among AS contributions are the disproof of Marx 'labor theory of value' and wide support for the 'subjective theory of value'. -- This vid and many posts here are specifically about Smith's use of the phrase "invisible hand". Smith uses it 3 times in all his writings. It is very clear that it means that consequences follow without the intention of the actor/agent. That micro-motives add up to specific macro-behavior. So in Wealth of Nations"(WoN) he speculates that ppl won't buy foreign goods to the exclusion of local producers, b/c Smith *speculates* there will be a natural tendency/bias in favor local product. [IMO that appears to be untrue]. Chomsky (egotist that he is) want's to claim that ppl have vastly mis-read and mis-interpreted WoN b/c the common modern usage of "Invisible hand" is not about this international Trade reference. The mordern use of invisible hand is is roughly www.investopedia.com/terms/i/invisiblehand.asp that with free markets, self-interested actors produce goods that consumers desire efficiently (and this near pareto optimal is provable for free markets). IMO the modern meaning does not correspond to the international trade example where Smith used the precise phrase, but does precisely correspond to other word from WoN. "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." Big kerfuffle over nothing, mostly promoted buy those with a political axe to grind. -------------- >> but in the chapter freest of imports he argued against deregulation and advocated for a tariff based economy protectionism not a laissez faire policy. ABSOLUTELY WRONG! Smith wrote exactly the opposite of what you claim. Why post such factual errors ? After arguing at length that tariffs, barriers and monopolies are not harmful, but beneficial on net, Smith only advocated tariffs in two specific cases. Her eare quotes .... == >>> There seem, however, to be two cases, in which it will generally be advantageous to lay some burden upon foreign, for the encouragement of domestic industry. >>> The first is, when some particular sort of industry is necessary for the defence of the country. ... >>> The second case, in which it will generally be advantageous to lay some burden upon foreign for the encouragement of domestic industry, is when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former. This would not give the monopoly of the borne market to domestic industry, nor turn towards a particular employment a greater share of the stock and labour of the country, than what would naturally go to it. == So Smith only advocates tariffs for national defense, and to prevent tax advantages to foreign goods (iow to equalize taxes to same products). Further == >>> Taxes imposed with a view to prevent, or even to diminish importation, are evidently as destructive of the revenue of the customs as of the freedom of trade. == IOW Smith admits the necessity for taxation to fund the legitimate purposes of government, but is otherwise in favor of laissez faire.

@damionjackson1743

7 жыл бұрын

+fraxus I was making a reference to our politics today with the Republican party and a significant faction of the Democratic party that supports free trade and reduction in tariffs Adam Smith and Chomsky points out that free trade would harm the British economy merchants and manufacturers will invest aboard and British workers would be undercut.just like at every free trade trade deal deficits have went up and those deficits represent job particularly manufacturing jobs that on average pay 50% more than average wage. I'm assuming you know that NAFTA created a 600 billion dollar trade deficit and that hollowed out and destroyed inner cities and rural areas. But all of this was but under the guise The historic Adam Smith free market quote which Adam Smith actually warned a against this very economic behaviour. You have to admit Austrian school,conservatives,market libertarians have always wrapped the Them themselves in language of Adam Smith but never really completely read Adam Smith. one more thing when you started to bring the home bias would it not be in the capitalist best interest to maximize profit by importing from aboard and and consumers looking for similar quality with a cheaper cost wouldn't that harm domestic production?.

@AroundSun The idea is that you dissolve concentrated, hierarchical, centralized power. So, for example, if I want organic food from a farm, I buy it from the farm right outside my town. If I want to establish a democratically decided upon social code for my town, I engage in local level, direct democratic governance open to the grievances, voices, and concerns of EVERYONE. It's not ill defined and if you've taken the time to read Chomsky on Anarchism, Rudolf Rocker, etc. youd see that.

one of the recruiting myths of orthodox economists and the like is that if the state weren't involved in the economy competition would be so fierce it would be impossible for a monopoly to form. the fact is capitalism is not just the market. it also rests on a very specific institutional structure the consists of a blank check as to how much can one own and at what expense. they don't seem concerned with the potential authoritarian character of private bussinesses.

thanks v much!

Marx was a critic of the bourgeois state that was emerging in Europe in states fighting monarchism and feudalism; he was a revolutionair who actively worked for the worker's government in Europe. Democracy for Marx has to be understood in the sense of a way of government controlled by workers; universal suffrage or elections was not by itself a solution to political activity in the modern times. Lenin does not opposed to Marx "democratism" , Lenin continues Marx's dialectical analysis to the new

@NerdsMakeMedia Now, it is true, as the Wikipedia article concurs-with-Chomsky in pointing out, that the phrase in the *WoN* occurs in the context of domestic producers (supposedly) preferring (at least oftentimes) domestic trade partners to foreign ones, when feasible, but Smith nonetheless was referring, in other words, to the idea of (as Hayek puts it) a result or upshot that is "the result of human [inter]action[s], [yet] not of human [intention or] design." I.e. a COMPOSITE outcome.

Hilarious/depressing that so many in the comments think they're better read than Chomsky about this.

@22kataking

3 жыл бұрын

LOL it aint hard to use your brain.

@NerdsMakeMedia He mentiones it in the moral sentiments several times. He mentions this concept in different meanings, unrelated to one another, in one particular nuance as the invisible hand redistributing wealth from the rich to the poor etc. Chomsky is correct in saying that he never has used the invisible hand in the sense of the price mechanism controlling equilibrium or that everyone would be better off. He is a strong advocate of government intervention, on a constant basis.

Chomsky is actually right on what he says about the invisible hand and division of labour. I see a lot of people getting upset but instead of answering incoherently just look it up in the Wealth of Nations. Chomsky is actually right.

We can and do in some cases own and control many or all of those things through public trading and free markets. The problem that Dewey is pointng out is that we are increasingly disconnected as we as a society become lazier and allow or are duped into relinquishing it. Politicians are owned by big financial interests and social engineering has us divided and squabbling over relatively minor issues while they orchestrate changes in legislature to benifit those who got them elected.

@TheCapitalistdog That is your opinion. So what is your solution?

Inflammatory rhetoric. "The anarchosyndicalist Fernand Pelloutier asked: "Must even the transitory state to which we have to submit necessarily and fatally be a collectivist jail? Can't it consist in a free organization limited exclusively by the needs of production and consumption, all political institutions having disappeared?''

@radicalKT Absolutely it decreased because of efficiency. Chinese workers are more productive (a.k.a) efficient because they perform the same labor at a much lower cost. So the American consumer is better off outsourcing that labor (hence reducing domestic manufacturing sector) in return for cheaper goods and services. Basic economics. As you look at any economy, the natural progression is from rural to manufacturing and from manufacturing to service. Globally this holds true as well.

When people are being paid far less than the value of their labour, they are being 'exploited'. You can't get mansions or Lamborghinis without ripping someone off at some point, whether it be through overly high prices or exploiting people. While one can argue that the value of people's labour is unequal, people with mansions simply can't have earned that much money without exploiting people. You can hardly call it fair that some must earn their wealth while others don't simply by luck of birth.

Which invisible hands are directing trade between China and the USA today?

Hence the rise of popular movements. In Bolivia, they were pissed off that everything was getting privatised, so they took to the streets and took it back. In the 80s, here in the UK, people were pissed off that Thatcher wanted to introduce the Poll Tax, so they refused to pay it and took to the streets. There are still constraints put upon us by the state, yes, but the alternative is scarier I think. With no government, what happens if I get mugged? Or robbed? Or fall ill and can't work?

Consumer control what's bought, which indirectly determines the wages of the workers and higher-ups. (no profit, no wage) If the company allocates its money stupidly it goes out of business. (and you're free to quit your job) Consumers are free to buy what they want, and not buy what they don't want, why wouldn't they be?

So given that both markets and government will fail (perfection doesn't exist), the question is which one results in a more economically efficient outcome. For example, profit is not a perfect measure of what the customer prefers. But government has an objectively far worse track record of determing what the consumer prefers (and a great track record at rewarding its favored political constituencies for reasons other than economic efficiency or ability to produce a valuable product to society).

What Noam is talking about is state capitalism. The central bank and national currency led to consolidated banking, which led to consolidated industry.

@0Jonnyboy000 A bubble is followed by a compensating crash. "False wealth" is increased but then subsequently decreased. When you average a full economic cycle in your analysis, you can't attribute the economic growth to a bubble. That said 1993-2007 includes two bubbles but only one crash. So you have a point.

I could just as easily have picked any other arbitrary group of people other than a corporation (i.e. tall, white men), and said that trade really hasn't increased because tall, white, men now do most of the trading. That being said, he is likely right that free trade leads to greater inequality, But that's not an intellectually defensible case against it. If your goal is to redistribute the economic pie, what you want is the biggest possible pie to divy out. Free trade increases the pie.

@radicalKT I was talking about the GDP of advanced (first-world) countries, including the U.S. Okay cool so you've just admitted that I'm right. Why all the anger dude?

If what Chomsky says is correct, then he makes Milton Friedman and Ron Paul look like children. Goddess gracious

@rational-public-discourse

2 ай бұрын

Goodness gracious.

p213 in WoN is the what Prof Chomsky touched on re DoL diminishing the laborer to a barbaric idiot. The para prior on p212 offers great context.

""In order to restore democracy, one thing and one thing only is essential. The people will rule when they have power, and they will have power in the degree they own and control the land, banks, the producing and distributing agencies of the nation. Ravings about Bolshevism, communism, socialism are irrelevant to the axiomatic truth of this statement. They come either from complaisant ignorance or from the deliberate desire of those in possession of power and rule to perpetuate their privilege"

@radicalKT Btw in your example, the U.S manufacturing sector decreases by more than the China manufacturing sector increases. Why? Because the Chinese labor is lower cost than U.S labor. Overall, the global manufacturing sector has declined not increased.

"By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." I think that is fairly explicit. The language can be a little challenging at times so I'm not surprised people get it wrong.

@geneba712

2 жыл бұрын

Yes, but what A. Smith said in The Theory of Moral Sentiments, Part IV, cap. 1, par. 10? "They (the rich) consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an INVISIBLE HAND to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for." I have products and services that a king of the past even couldn't dare to imagine. All due to the invisible hand of capitalism. Those who write messages against capitalism are doing it from a computer or device that was maybe MADE in China, but CREATED in a capitalist enterprise. To invalidate a broad concept of Adam Smith by the limited usage in a certain context is intellectual dishonesty from Chomsky's part.

@AroundSun Chomsky is very well informed about the realities of our world socio-economically, politically, etc. Anarcho-syndicalism is not as vague and ill defined as you think it is. It's process oriented and it's based on people partaking in active, direct democracy and institutions that protect the rights of the common man all ON A LOCAL LEVEL and slowly overtime dissolving the far reaching empires that oppress the masses throughout the world.

@dick391 Well you are welcome to come to your own conclusions. I was simply putting forth some additional information about the situation which might add perspective; unfortunately this venue isn't really conducive to elaborate discussion. I will add, however, that moving from the horse and buggie to the automobile is slightly different than outsourcing jobs to countries with less stringent labor rights. Also, you may think it's illogical, but it could simply be different tastes.

guy talking about today what was only known 300 years ago different time and world

where is the part where Adam Smith says division of labor will be dangerous in the long run ? I'm making a paper on Wealth of Nations and the Theory of Moral Sentiments and it is clear he is very much in favor of division of labor both in the short and long run.

Not sure why you would indicate I need to take such a class when at no point I said markets were perfect. You're falling hard for the fallacy that I described earlier. Government subsidy is a classic case of government failure, not market failure. Wage abuse is a morally loaded term. But let's suppose a case of truly, unbelievably terrible wage abuse. Arbitrage still serves to raise the wage (price) of the "abused" through higher demand and to lower the wage of the "non" abused by lower demand.

@ but Chomsky conveniently forgets the requirements that need to be in place in order for free markets to work. Adam Smith advocated a limited role for government. he supported an independent court system and administration of justice to control crime and protect property just......like Hayek did ....

@warbread His argument is a total non sequitur. Whether the trade occurs inside of a corporation or not is wholly irrelevant. The real issue is whether both countries are better off economically as a result of free movement of labor and capital. A US corporation that sets up a plant in Mexico provides jobs and capital investment for Mexicans that wouldn't have existed in the face of protectionist policies. In turn it provides Americans with a cheaper product (or better product at the same price)

>> By preferring the support of domestic to that of foreign industry, he [/the capitalist] intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

@26Keano The problem is that it is an ACTIVE PROCESS. He would agree with you that there's more questions than answers. The questions that need to be asked will lead to organically, generated, bottom up, direct democratic solutions that represent the will of the masses: ANARCHO-SYNDICALISM. It's the same thing people are saying about the Occupy Movement right now. Narrow it down to 4 points for me, what are you guys trying to do, blah blah COME TO A GA AND FIND OUT

@dick391 His argument, if I'm understanding him right, is that the supposed effect of NAFTA was increased trade between Mexico and the US, but what we're really seeing is corporations now moving their goods from the US to Mexico (implied: to exploit their labor) and then back to the US. Sure, there is more stuff moving across the border, but it's not really trade. The effect has been, as is argued explicitly elsewhere, that the trade agreement is very one-sided in favor of US firms.

@radicalKT Obviously a rural worker would only take the job if it is better than their current situation, which is admittedly rough. If you deny them the opportunity to make such move (via protectionism to prevent capital investment), how on earth are you making their lives better? Do you see the flaw in your reasoning now?

Apple also probably makes an iphone for cheaper and better quality than you do (just guessing). Hence you are willing to pay more than what their labour and other costs are, because it's less costly (and better) than what you could do yourself. They have now added value to the product (through reduced costs, time, etc). Innovation in products that do not generate profit in effect is innovation in products that no one wants. You should pick up an economic text book some time, you'll learn much.

@NerdsMakeMedia Just go to Wikipedia & search "Invisible Hand" and, about half-way down the page is the quote from *Wealth of Nations*. It refers to the fact that even though the (proverbial) butcher, baker, & candlestick-maker r seeking-&-acting-on merely their own subjectively-perceived self-interest ("buy-low, sell-high"), their interactive-composite effect, or result, in the market is one in which maximum possible satisfaction of utility(s) is obtained most efficiently. Cf. Joe Stiglitz.

Gov. should charge based on services, like its dealing with other nations and facilitating the importation of foreign goods. import tariffs as the sole means of generating revenue.

But why & how?

Unfortunately, Chomsky never argues what the alternative to labour is.This sleight of hand disables you from seeing that the alternative to grinding labour is death. It's all relative.

@fmlAllthetime

9 жыл бұрын

Samsgarden Because humanity has never used a system other than wage labour that was effective and allowed survival... the real problem is the population size, systematic issues and modern lifestyles.

@spankrobot

8 жыл бұрын

+Samsgarden are you saying that Chomsky wants an alternative to labor? Cites, please. And you imply that there is only grinding labor or death -- no other alternative. Seriously?

[continuation of previous comment] Each individual becomes more expert in his own peculiar branch, more work is done upon the whole, and the quantity of science is considerably increased by it." - Adam Smith (talking about Division of labor in thinking)

"As long as politics is the shadow cast on society by big business, the attentuation of the shadow will not change the substance."

Exploiting Chinese workers? Raising their wages!

@fifh89 He's simply advocating people taking up a plethora of skill sets and responsibilities within their communities so they're better informed, overall, about each area with which they have involvement. If someone works in politics but doesn't understand the kleptocratic machinations of the economy, they can't very well do anything to create a more ethical, humanitarian socio-economic system. If you're a doctor but you also understand the law, you're now better prepared to perform 2 functions

know i should: maybe now i found it might gutenberg(org)/files/38194/38194-h/38194-h.htm#Page_185

@radicalKT No you're way off. The manufacturing sector (as a percentage of GDP) has shrunk precisely due to advances in technology and utilization of cheaper labor (higher productivity). It now costs us much less time and resources to produce manufactured goods of a given level of quality. This frees up more resources to be spent on services It's a common cycle that all advanced economies go through. Demand for services increases more than mfg goods as national income rises. Econ 101

i'm curious about his comment about how the division of labour will make a person a mindless machine. the alternative i guess would be a population of brilliant, enlightened subsistence farmers? this should ensult anybody today that is employed on any level in any industry/business.

Having parts made in illinois and then assembled in mexico is still trade. It is a trade of money for labour.

He points that out quite often actually, this was just a short clip of his ideas.

@dmowings Who's opinions on economics do you value? Milton Friedman? David Rockefeller? Timothy Gheitner? Ben Bernanke? Yeah, I trust those guys and their "opinions on economics", haha, "opinions".

A consumer purchasing, any goods, does not entail that the consumer agrees for the money to go, to the CEO of that company, or the workers. People do NOT behave out, of rational self interest you have designer images, and forcing people, to the option of paying extortionate prices, or starving. I am not saying this is always the case, but Capitalism does depends on forcing people indirectly into paying more then the goods are worth. I do not see how this is Ethical at all.

The problem is that when population gets large enough and peoples find that other share their views, or not, they'll organize and start to build their own state. So if you would dismantle the state entirely peoples from all political spectra would organize and construct a hierarchical organisation with it's own logical rules. Peoples would spontaneously experience the need of governing organizations in order to uphold certain social contracts, like contracts or the punishing of criminals etc

I thought it meant the invisible hand of a businessman picking your pocket and sliding your home out from under you for another nickel. My bad.

You just said no one associates Smith with free trade and then said it was Ricardos idea and then say Smith barely touches on it. So does he mention free trade or not.

@radicalKT Btw the fact that someone has two bad options to choose from doesn't mean that they have "no choice". Obviously you have two compare the two bad options and pick the lesser evil. In this case, the lesser evil is working in factory under brutal conditions rather than starving to death on their farms. Based on your reasoning you'd rather they suffer on their farms then be allowed to move to the city. Do you honestly have a degree in Economics?

You can't spell the phrase "contrived bullshit" without the word "idiot", either.

"The beneficial social affects of the businessmen's endeavors are no part of his intentions." Adam Smith

@willmickel71

8 жыл бұрын

+astrallus oops... Lol

@0Jonnyboy000 Another example is the transition from a manufacturing economy to a service economy. This is naturally occuring phenomenon that had been occurring well before NAFTA. How long did it take for increases in service jobs to overtake manufacturing losses, again I'm not sure. But most economists would agree that this has been a net benefit in the long run. The counter-argument that we should limit productivity gains to prevent short-term creative destruction seems illogical to me

I'm intrigued. So are you suggesting limited government isn't necessary for say, solving the public good problem or the tragedy of the commons?

Not at all actually. After the Civil War govt shrank back down, after WWI it shrank, both under Harding & Coolidge it shrank, even after WWII federal budget was cut 40%. Small govt bebegs bigger govt is a ridiculous statement. "Govt" isnt some unchanging entity.

My apologies. I have only skimmed the comments and must have missed the earlier dude.

@wspsaves this is still entirely possible with today's status quo. many people have non-paid ambitions. the free choice lies within the individual. as far as vocation goes, when i need a doctor i want to see a doctor. same as a lawyer. that's why it's called a proffession. a highschool friend of mine went thru med school and came out the other end a paediatrician. He will assure you that with the scope of medicine, there's little serious room for law.