Please provide me with Plagiarism Report.Class reading and Chapters are attached belowIn Class, materials must be used only. No Outside source.QUESTION Write a 5-7 page paper (double spaced, 12 point

Please provide me with Plagiarism Report.Class reading and Chapters are attached belowIn Class, materials must be used only. No Outside source.QUESTION Write a 5-7 page paper (double spaced, 12 point
iii The W on derfu l W orld o f A dam S m it h W hat w as th at n ew v is io n? A s w e m ig ht e x pect, it w as n ot a S ta te b ut a S yste m — more p re cis e ly , a S yste m o f P erfe ct L ib erty . B ut it w ould b e a m is ta k e to p lu nge in to its e x tr a o rd in ary c o ncep tio n u ntil w e h ad m ad e th e a cq uain ta n ce o f i ts n o l e ss e x tr a o rd in ary — certa in ly u nusu al— au th or. A v is ito r to E ngla n d in th e 1 760s w ould q uite p ro bab ly h av e le arn ed o f a c erta in A dam S m ith o f th e U niv ers ity o f G la sg ow . D r. S m ith w as a w ell- k now n, i f n ot a f a m ous, m an ; V olta ir e h ad h eard o f h im , D av id H um e w as h is i n tim ate , s tu den ts h ad t r a v ele d a ll t h e w ay f ro m R ussia t o h ear h is l a b ore d b ut e n th usia stic dis c o urs e . In ad ditio n to bein g re n ow ned fo r his sc h ola stic a cco m plis h m en ts , D r. S m ith w as k now n a s a r e m ark ab le p ers o nality . H e w as, f o r ex am ple , noto rio usly ab se n tm in ded : once, w alk in g alo ng in earn est d is q uis itio n w ith a f rie n d, h e f e ll i n to a t a n nin g p it, a n d i t w as s a id t h at h e h ad b re w ed h im se lf a b ev era g e o f b re ad a n d b utte r a n d p ro nounced it th e w ors t c u p o f te a h e h ad e v er ta ste d . B ut h is p ers o nal q uir k s, w hic h w ere m an y, d id n ot in te rfe re w ith his in te lle ctu al ab ilitie s. A dam S m ith w as am ong th e f o re m ost p hilo so phers o f h is a g e. At G la sg ow , A dam S m ith le ctu re d o n p ro ble m s o f M ora l P hilo so phy, a d is c ip lin e a g re at d eal m ore b ro ad ly c o nceiv ed i n t h at d ay t h an i n o urs . M ora l P hilo so phy co vere d N atu ra l T heo lo gy, E th ic s, Ju ris p ru den ce, an d P olitic al E co nom y: it th us ra n ged a ll th e w ay fro m m an ’s s u blim est im puls e s to w ard o rd er a n d h arm ony to h is s o m ew hat le ss o rd erly a n d h arm onio us a ctiv itie s in t h e g rim mer b usin ess o f g ougin g o ut a l iv in g f o r h im se lf . Natu ra l th eo lo gy— th e s e arc h f o r d esig n in th e c o nfu sio n o f th e c o sm os— h ad b een a n o bje ct o f t h e h um an r a tio naliz in g i m puls e f ro m e arlie st t im es; o ur t r a v ele r w ould h av e f e lt q uite a t e ase a s D r. S m ith e x pounded t h e n atu ra l l a w s t h at u nderla y t h e s e em in g c h ao s o f t h e u niv ers e . B ut w hen i t c am e t o t h e o th er e n d o f th e s p ectr u m — th e s e arc h fo r a g ra n d a rc h ite ctu re b en eath th e h urly – b urly o f d aily lif e — our tr a v ele r m ig ht h av e fe lt th at th e g ood d octo r w as r e ally s tr e tc h in g p hilo so phy b ey ond i ts p ro per l im its . For if th e E nglis h so cia l sc en e o f th e la te e ig hte en th c en tu ry su ggeste d a n yth in g, it w as m ost e m phatic ally n ot ra tio nal o rd er o r m ora l p urp ose . A s so on a s o ne lo oked a w ay f ro m th e e le g an t liv es o f th e le is u re c la sse s, s o cie ty pre se n te d its e lf a s a b ru te s tr u ggle f o r e x is te n ce in its m ean est f o rm . O uts id e th e d ra w in g r o om s o f L ondon o r th e p le asa n t r ic h e sta te s o f th e c o untie s, a ll th at o ne sa w w as ra p acity , c ru elty , a n d d eg ra d atio n m in gle d w ith th e m ost ir ra tio nal an d b ew ild erin g cu sto m s an d tr a d itio ns o f so m e still earlie r an d alr e ad y a n ach ro nis tic d ay. R ath er th an a c are fu lly e n gin eere d m ach in e w here each p art c o uld b e s e en to c o ntr ib ute to th e w hole , th e b ody s o cia l r e se m ble d one of Ja m es W att’s str a n ge ste am m ach in es: bla ck , nois y , in eff ic ie n t, dan gero us. H ow c u rio us th at D r. S m ith s h ould h av e p ro fe sse d to s e e o rd er, desig n, a n d p urp ose i n a ll o f t h is ! Suppose , fo r ex am ple , our vis ito r had gone to se e th e tin m in es of Corn w all. T here h e w ould h av e w atc h ed m in ers lo w er th em se lv es d ow n th e bla ck sh afts , an d o n re ach in g b otto m d ra w a can dle fro m th eir b elts an d str e tc h o ut fo r a s le ep u ntil th e c an dle g utte re d . T hen fo r tw o o r th re e h ours th ey w ould w ork th e o re u ntil th e n ex t tr a d itio nal b re ak , th is tim e f o r a s lo ng as it to ok to sm oke a p ip e. A fu ll h alf -d ay w as sp en t in lo ungin g, h alf in pic k in g a t t h e s e am s. B ut h ad o ur v is ito r t r a v ele d u p n orth a n d n erv ed h im se lf ag ain st a d esc en t in to th e p its o f D urh am o r N orth um berla n d, h e w ould h av e se en so m eth in g quite dif f e re n t. H ere m en an d w om en work ed to geth er, str ip ped to th e w ais t, an d so m etim es re d uced fro m pure fa tig ue to a whim perin g h alf -h um an sta te . T he w ild est an d m ost b ru tis h cu sto m s w ere pra ctic ed ; se x ual ap petite s aro use d at a g la n ce w ere g ra tif ie d d ow n so m e dese rte d s h aftw ay ; c h ild re n o f s e v en o r t e n w ho n ev er s a w d ay lig ht d urin g t h e win te r m onth s w ere u se d a n d a b use d a n d p aid a p itta n ce b y t h e m in ers t o h elp dra g a w ay th eir tu bs o f c o al; p re g nan t w om en d re w c o al c ars lik e h ors e s a n d ev en g av e b ir th i n t h e d ark b la ck c av ern s. But it w as n ot ju st in th e m in es th at lif e a p peare d c o lo rfu l, tr a d itio nal, o r fe ro cio us. O n th e la n d, to o, an o bse rv an t tr a v ele r w ould h av e se en sig hts hard ly m ore s u ggestiv e o f o rd er, h arm ony, a n d d esig n. In m an y p arts o f th e co untr y b an ds o f a g ric u ltu ra l p oor r o am ed in s e arc h o f w ork . F ro m th e W els h hig hla n ds, C om pan ie s o f A ncie n t B rito ns (a s th ey s ty le d th em se lv es) w ould co m e tr o opin g dow n at harv est tim e; so m etim es th ey had one hors e , unsa d dle d a n d u nbrid le d , fo r th e e n tir e c o m pan y; s o m etim es th ey a ll s im ply walk ed . N ot in fre q uen tly th ere w ould be only one of th e lo t w ho sp oke Englis h an d so co uld se rv e as in te rm ed ia ry betw een th e ban d an d th e gen tle m en f a rm ers w hose la n ds th ey a sk ed p erm is sio n to a id in h arv estin g. I t is n ot s u rp ris in g t h at w ag es w ere a s l o w a s s ix pen ce a d ay. And fin ally , h ad o ur v is ito r sto pped a t a m an ufa ctu rin g to w n, h e w ould hav e se en still o th er re m ark ab le sig hts — but a g ain , n ot su ch a s to b eto ken ord er to th e u ned ucate d e y e. H e m ig ht h av e m arv ele d a t th e f a cto ry b uilt b y th e b ro th ers L om be in 1 742. It w as a h uge b uild in g fo r th ose d ay s, fiv e hundre d f e et l o ng a n d s ix s to rie s h ig h, a n d i n sid e w ere m ach in es d esc rib ed b y Dan ie l D efo e a s c o nsis tin g o f “ 2 6,5 86 W heels a n d 9 7,7 46 M ovem en ts , w hic h work 7 3,7 26 Y ard s o f S ilk -T hre ad e v ery tim e th e W ate r- W heel g oes ro und, whic h i s t h re e t im es i n o ne m in ute .” E qually w orth y o f n ote w ere t h e c h ild re n who te n ded th e m ach in es ro und th e c lo ck fo r tw elv e o r fo urte en h ours a t a tu rn , c o oked th eir m eals o n th e g rim y b la ck b oile rs , a n d w ere b oard ed in sh if ts i n b arra ck s w here , i t w as s a id , t h e b ed s w ere a lw ay s w arm . A s tr a n ge, c ru el, h ap hazard w orld th is m ust h av e a p peare d to e ig hte en th – cen tu ry a s w ell a s to o ur m odern e y es. All th e m ore r e m ark ab le , th en , to f in d th at it c o uld b e r e co ncile d w ith a s c h em e o f M ora l P hilo so phy e n vis io ned b y Dr. S m ith , a n d th at th at le arn ed m an a ctu ally c la im ed to f a th om w ith in it th e cle ar- c u t outlin es of gre at purp ose fu l la w s fittin g an overa rc h in g an d mean in gfu l w hole . What s o rt o f m an w as t h is u rb an e p hilo so pher? “I a m a b eau in n oth in g b ut m y b ooks,” w as th e w ay A dam S m ith o nce desc rib ed h im se lf , p ro udly s h ow in g o ff h is tr e asu re d lib ra ry to a frie n d. H e was c erta in ly n ot a h an dso m e m an . A m ed allio n p ro file s h ow s u s a p ro tr u din g lo w er lip th ru st u p to m eet a la rg e aq uilin e n ose an d h eav y b ulg in g ey es lo okin g o ut fro m h eav y lid s. A ll h is lif e S m ith w as tr o uble d w ith a n erv ous aff lic tio n; his head sh ook, an d he had an odd an d stu m blin g m an ner of sp eech . In a d ditio n, th ere w as h is n oto rio us a b se n tm in ded ness. I n th e 1 780s, w hen Sm ith w as in h is la te fif tie s, th e in hab ita n ts o f E din burg h w ere re g ula rly tr e ate d to th e a m usin g s p ecta cle o f th eir m ost illu str io us c itiz en , a ttir e d in a lig ht- c o lo re d co at, k nee b re ech es, w hite silk sto ck in gs, b uck le sh oes, fla t bro ad -b rim med b eav er h at, a n d c an e, w alk in g d ow n th e c o bble d s tr e ets w ith his e y es f ix ed o n in fin ity a n d h is lip s m ovin g in s ile n t d is c o urs e . E very p ace or tw o h e w ould h esita te a s if to c h an ge h is d ir e ctio n o r e v en re v ers e it; h is gait w as d esc rib ed b y a f rie n d a s “ v erm ic u la r.” Acco unts of his ab se n ce of m in d w ere co m mon. O n one occasio n he desc en ded in to h is g ard en c la d o nly in a d re ssin g g ow n a n d, fa llin g in to a re v erie , w alk ed f if te en m ile s b efo re c o m in g t o . A noth er t im e w hile S m ith w as walk in g w ith a n e m in en t frie n d in E din burg h, a g uard p re se n te d h is p ik e in sa lu te . Sm ith , w ho had been th us honore d on co untle ss occasio ns, w as su dden ly h ypnotiz ed b y th e s a lu tin g s o ld ie r. H e re tu rn ed th e h onor w ith h is can e a n d th en f u rth er a sto nis h ed h is g uest b y f o llo w in g e x actly in th e g uard ’s fo ots te p s, d uplic atin g w ith h is c an e e v ery m otio n o f th e p ik e. W hen th e s p ell was b ro ken , S m ith w as s ta n din g a t t h e h ead o f a l o ng f lig ht o f s te p s, c an e h eld at th e r e ad y. H av in g n o id ea th at h e h ad d one a n yth in g o ut o f th e o rd in ary , h e gro unded h is s tic k a n d t o ok u p h is c o nvers a tio n w here h e h ad l e ft o ff . This a b se n t- m in ded p ro fe sso r w as b orn in 1 723 in th e to w n o f K ir k cald y, County F if e , S co tla n d. K ir k cald y b oaste d a p opula tio n o f f if te en h undre d ; a t th e tim e o f S m ith ’s b ir th , n ails w ere s till u se d a s m oney b y s o m e o f th e lo cal to w nsp eo ple . W hen h e w as f o ur y ears o ld , a m ost c u rio us i n cid en t t o ok p la ce. Sm ith w as k id nap ed b y a b an d o f p assin g g ypsie s. T hro ugh th e e ff o rts o f h is uncle (h is fa th er h ad d ie d b efo re h is b ir th ), th e g ypsie s w ere tr a ced an d purs u ed , a n d i n t h eir f lig ht t h ey a b an doned y oung A dam b y t h e r o ad sid e. “ H e would h av e m ad e, I f e ar, a p oor g ypsy ,” s a y s o ne o f h is e arly b io gra p hers . Fro m h is e arlie st d ay s, S m ith w as a n a p t p upil, a lth ough e v en a s a c h ild giv en to f its o f a b str a ctio n. H e w as o bvio usly d estin ed f o r te ach in g, a n d s o a t se v en te en he w en t to O xfo rd on a sc h ola rs h ip — mak in g th e jo urn ey on hors e b ack — an d th ere h e r e m ain ed f o r s ix y ears . B ut O xfo rd w as n ot th en th e cita d el o f le arn in g w hic h it la te r b ecam e. M ost o f th e p ublic p ro fe sso rs h ad lo ng a g o g iv en u p e v en a p re te n se o f t e ach in g. A f o re ig n tr a v ele r r e co unts h is asto nis h m en t o ver a p ublic d eb ate th ere in 1 788. A ll f o ur p artic ip an ts p asse d th e allo tte d tim e in p ro fo und sile n ce, each ab so rb ed in re ad in g a p opula r novel o f th e d ay. S in ce in str u ctio n w as th e e x cep tio n ra th er th an th e ru le , Sm ith s p en t t h e y ears l a rg ely u ntu to re d a n d u nta u ght, r e ad in g a s h e s a w f it. I n fa ct h e w as o nce n early e x pelle d f ro m t h e u niv ers ity b ecau se a c o py o f D av id Hum e’s A Tre a tis e o f H um an N atu re w as f o und in h is r o om s— Hum e w as n o fit r e ad in g m atte r, e v en f o r a w ould -b e p hilo so pher. In 1 751— he w as n ot y et tw en ty -e ig ht— Sm ith w as o ff e re d th e C hair o f Logic a t th e U niv ers ity o f G la sg ow , a n d s h ortly th ere afte r h e w as g iv en th e Chair o f M ora l P hilo so phy. U nlik e O xfo rd , G la sg ow w as a s e rio us c en te r o f what h as co m e to b e calle d th e S co ttis h E nlig hte n m en t, an d it b oaste d a gala x y o f t a le n t. B ut i t s till d if f e re d c o nsid era b ly f ro m t h e m odern c o ncep tio n of a u niv ers ity . T he p rim p ro fe sso ria l g ro up d id n ot en tir e ly ap pre cia te a certa in le v ity an d en th usia sm in Sm ith ’s m an ner. H e w as accu se d of so m etim es s m ilin g d urin g re lig io us s e rv ic es (n o d oubt d urin g a re v erie ), o f bein g a fir m frie n d o f th at o utr a g eo us H um e, o f n ot h old in g S unday c la sse s on C hris tia n e v id en ces, o f p etitio nin g t h e Sen atu s A cad em ic u s f o r p erm is sio n to d is p en se w ith p ra y ers o n th e o pen in g o f c la ss, a n d o f d eliv erin g p ra y ers th at s m ack ed o f a c erta in “ n atu ra l re lig io n.” P erh ap s th is a ll fits in to b ette r pers p ectiv e if w e re m em ber th at S m ith ’s o w n te ach er, F ra n cis H utc h eso n, bro ke n ew g ro und a t G la sg ow b y r e fu sin g t o l e ctu re t o h is s tu den ts i n L atin ! The d is a p pro val c o uld n ot h av e b een to o s e v ere , f o r s m ith r o se to b e d ean in 1 758. U nquestio nab ly h e w as h ap py a t G la sg ow . I n th e e v en in gs h e p la y ed whis t— his a b se n t- m in ded ness m ad e h im a s o m ew hat u ndep en dab le p la y er— atte n ded le arn ed so cie tie s, an d liv ed a q uie t lif e . H e w as b elo ved o f h is stu den ts , n ote d a s a le ctu re r— ev en B osw ell c am e to h ear h im — an d h is o dd gait a n d m an ner o f s p eech g ain ed t h e h om ag e o f i m ita tio n. L ittle b usts o f h im ev en a p peare d i n b ookse lle rs ’ w in dow s. It w as n ot m ere ly h is e ccen tr ic p ers o nality th at g av e h im p re stig e. I n 1 759 he p ublis h ed a b ook t h at m ad e a n i n sta n t s e n sa tio n. I t w as e n title d The T heo ry of M ora l S en tim en ts , a n d i t c ata p ulte d S m ith i m med ia te ly i n to t h e f o re fro nt o f Englis h philo so phers . Theo ry w as an in quir y in to th e orig in of m ora l ap pro batio n a n d d is a p pro val. H ow d oes it h ap pen th at m an , w ho is a c re atu re of s e lf -in te re st, c an f o rm m ora l ju dgm en ts in w hic h s e lf -in te re st s e em s to b e held in a b ey an ce o r tr a n sm ute d to a h ig her p la n e? S m ith h eld th at th e a n sw er la y i n o ur a b ility t o p ut o urs e lv es i n t h e p ositio n o f a t h ir d p ers o n, a n i m partia l obse rv er, a n d in th is w ay to fo rm a s y m path etic n otio n o f th e o bje ctiv e (a s oppose d t o t h e s e lf is h ) m erits o f a c ase . The b ook a n d its p ro ble m s a ttr a cte d w id esp re ad in te re st. In G erm an y das Adam S m ith P ro ble m b ecam e a f a v orite s u bje ct f o r d eb ate . M ore im porta n tly , fro m o ur p oin t o f v ie w , th e tr e atis e m et w ith th e fa v or o f a n in tr ig uin g m an nam ed C harle s T ow nsh en d. Tow nsh en d is o ne o f th ose w onderfu l fig ure s w ith w hic h th e e ig hte en th cen tu ry s e em s to a b ound. A w itty a n d e v en le arn ed m an , T ow nsh en d w as, in th e w ord s o f H ora ce W alp ole , “ a m an e n dow ed w ith e v ery g re at ta le n t, w ho must h av e b een th e g re ate st m an o f h is a g e, if o nly h e h ad c o m mon s in cerity , co m mon ste ad in ess, an d co m mon se n se .” Tow nsh en d’s fic k le n ess w as noto rio us; a q uip o f th e tim es p ut it th at M r. T ow nsh en d w as ill o f a p ain in his sid e, but declin ed to sp ecif y w hic h sid e. A s ev id en ce of his la ck of co m mon se n se , it w as T ow nsh en d, as C han cello r of th e E xch eq uer, w ho help ed p re cip ita te t h e A m eric an R ev olu tio n, f ir s t b y r e fu sin g t h e c o lo nis ts t h e rig ht to ele ct th eir ow n ju dges an d th en by im posin g a heav y duty on Am eric an t e a. But his politic al sh orts ig hte d ness notw ith sta n din g, Tow nsh en d w as a sin cere stu den t o f p hilo so phy a n d p olitic s, a n d a s su ch a d ev ote e o f A dam Sm ith . W hat is m ore im porta n t, h e w as in a p ositio n to m ak e h im a n u nusu al off e r. I n 1 754, T ow nsh en d h ad m ad e a b rillia n t a n d lu cra tiv e m arria g e to th e Counte ss o f D alk eith , t h e w id ow o f t h e D uke o f B uccle u ch , a n d h e n ow f o und him se lf c astin g a b out f o r a t u to r f o r h is w if e ’s s o n. E ducatio n f o r a y oung m an of th e u pper c la sse s c o nsis te d la rg ely o f th e G ra n d T our, a sta y in E uro pe where o ne m ig ht a cq uir e th at p olis h s o h ig hly p ra is e d b y L ord C heste rfie ld . Dr. A dam S m ith w ould b e a n id eal c o m pan io n fo r th e y oung d uke, th ought Tow nsh en d, a n d a cco rd in gly h e o ff e re d h im f iv e h undre d p ounds a y ear p lu s ex pen se s a n d a p en sio n o f f iv e h undre d p ounds a y ear f o r l if e . I t w as t o o g ood an o ff e r to b e d eclin ed . A t b est S m ith n ev er r e aliz ed m ore th an o ne h undre d se v en ty pounds fro m th e fe es w hic h , in th ose day s, pro fe sso rs co lle cte d dir e ctly fro m th eir stu den ts . It is p le asa n t to n ote th at h is p upils re fu se d to accep t a re fu nd fro m D r. S m ith w hen h e le ft, sa y in g th at th ey h ad a lr e ad y been m ore t h an r e co m pen se d . The tu to r an d H is y oung G ra ce le ft fo r F ra n ce in 1 764. F or eig hte en month s th ey s ta y ed in T oulo use , w here a c o m bin atio n o f a b om in ab ly b orin g co m pan y a n d S m ith ’s e x ecra b le F re n ch m ad e h is s e d ate lif e a t G la sg ow lo ok lik e d is sip atio n. T hen th ey m oved o n to th e s o uth o f F ra n ce (w here h e m et an d w ors h ip ed V olta ir e a n d r e p uls e d th e a tte n tio ns o f a n a m oro us m arq uis e ), th en ce t o G en ev a, a n d f in ally to P aris . T o r e lie v e th e t e d iu m o f t h e p ro vin ces, Sm ith b eg an w ork o n a tr e atis e o f p olitic al e co nom y, a s u bje ct o n w hic h h e had le ctu re d at G la sg ow , d eb ate d m an y ev en in gs at th e S ele ct S ocie ty in Edin burg h, a n d d is c u sse d a t le n gth w ith his b elo ved f rie n d D av id H um e. T he book w as to b e The W ea lth o f N atio ns , b ut it w ould b e tw elv e y ears b efo re it was f in is h ed . Paris w as b ette r g oin g. B y th is tim e S m ith ’s F re n ch , a lth ough d re ad fu l, was g ood e n ough to e n ab le h im to ta lk a t le n gth w ith th e f o re m ost e co nom ic th in ker in F ra n ce. T his w as F ra n ço is Q uesn ay, a p hysic ia n in th e c o urt o f Louis X V a n d p ers o nal d octo r t o M me. P om pad our. Q uesn ay h ad p ro pounded a sc h ool o f eco nom ic s k now n as P hysio cra cy an d d ev is e d a ch art o f th e eco nom y c alle d a ta ble a u é co nom iq ue . T he ta ble a u w as tr u ly a p hysic ia n ’s in sig ht: i n c o ntr a d is tin ctio n t o t h e i d eas o f t h e d ay, w hic h s till h eld t h at w ealth was th e so lid stu ff o f g old a n d silv er, Q uesn ay in sis te d th at w ealth sp ra n g fro m p ro ductio n a n d th at it flo w ed th ro ugh th e n atio n, fro m h an d to h an d, re p le n is h in g t h e b ody s o cia l l ik e t h e c ir c u la tio n o f b lo od. T he ta ble a u m ad e a vast im pre ssio n— Mir a b eau th e eld er ch ara cte riz ed it as an in ven tio n dese rv in g of eq ual ra n k w ith w ritin g an d m oney. B ut th e tr o uble w ith Physio cra cy w as th at it in sis te d th at o nly th e a g ric u ltu ra l w ork er pro duced tr u e w ealth b ecau se N atu re la b ore d a t h is sid e, w here as th e m an ufa ctu rin g work er m ere ly a lte re d its fo rm in a “ ste rile ” w ay. H en ce Q uesn ay ’s s y ste m had b ut lim ite d u se fu ln ess f o r p ra ctic al p olic y. T ru e, it a d vocate d a p olic y o f la is se z-fa ir e —a ra d ic al dep artu re fo r th e tim es. But in desc rib in g th e in dustr ia l s e cto r a s p erfo rm in g o nly a s te rile m an ip ula tio n, i t f a ile d t o s e e t h at la b or c o uld p ro duce w ealth w here v er i t p erfo rm ed , n ot j u st o n t h e l a n d. To s e e t h at l a b or, n ot n atu re , w as t h e s o urc e o f “ v alu e,” w as o ne o f S m ith ’s gre ate st in sig hts . P erh ap s th is w as th e c o nse q uen ce o f h av in g g ro w n u p in a co untr y t h at b ustle d w ith t r a d e, r a th er t h an i n t h e o verw helm in gly a g ric u ltu ra l se ttin g o f F ra n ce. W hate v er t h e c au se , S m ith c o uld n ot a ccep t t h e a g ric u ltu ra l bia s of th e Physio cra tic cu lt (Q uesn ay ’s fo llo w ers , lik e M ir a b eau , w ere noth in g if n ot a d ula to ry ). S m ith h ad a p ro fo und p ers o nal a d m ir a tio n fo r th e Fre n ch d octo r— had it n ot b een fo r Q uesn ay ’s d eath , The W ea lth o f N atio ns would hav e been ded ic ate d to him — but P hysio cra cy w as fu ndam en ta lly unco ngen ia l t o S m ith ’s S co ttis h v is io n. In 1 766 t h e t o ur w as b ro ught t o a n a b ru pt h alt. T he duke’s y ounger b ro th er, who h ad jo in ed th em , c au ght a fe v er, a n d d esp ite th e fra n tic a tte n tio ns o f Sm ith ( w ho c alle d in Q uesn ay ), d ie d in a d elir iu m . H is G ra ce r e tu rn ed to h is esta te s a t D alk eith , a n d S m ith w en t fir s t to L ondon, a n d th en to K ir k cald y. Desp ite H um e’s e n tr e atie s, th ere h e s ta y ed , f o r th e b ette r p art o f th e n ex t te n years , w hile th e g re at tr e atis e to ok sh ap e. M ost o f it h e d ic ta te d , sta n din g ag ain st h is f ir e p la ce a n d n erv ously r u bbin g h is h ead a g ain st th e w all u ntil h is pom ad e h ad m ad e a d ark s tr e ak o n th e p an elin g. O ccasio nally h e w ould v is it his f o rm er c h arg e o n h is e sta te s a t D alk eith , a n d o nce in a w hile h e w ould g o to L ondon to d is c u ss h is id eas w ith th e lite ra ti o f th e d ay. O ne o f th em w as Dr. S am uel J o hnso n, to w hose s e le ct c lu b S m ith b elo nged , a lth ough h e a n d th e ven era b le le x ic o gra p her had hard ly m et under th e m ost am ia b le of cir c u m sta n ces. S ir W alte r S co tt te lls u s th at J o hnso n, o n fir s t s e ein g S m ith , atta ck ed h im fo r s o m e s ta te m en t h e h ad m ad e. S m ith v in dic ate d th e tr u th o f his c o nte n tio n. “ W hat d id J o hnso n s a y ?” w as th e u niv ers a l in quir y . “ W hy, h e sa id ,” s a id S m ith , w ith th e d eep est im pre ssio n o f re se n tm en t, “ h e s a id , ‘Y ou lie !’” “ A nd w hat d id y ou re p ly ?” “ I s a id , ‘Y ou a re a s o n o f a — !’” O n s u ch te rm s, s a y s S co tt, d id th ese tw o g re at m ora lis ts f ir s t m eet a n d p art, a n d s u ch was t h e c la ssic al d ia lo gue b etw een t w o g re at t e ach ers o f p hilo so phy. Sm ith m et as w ell a ch arm in g an d in te llig en t A m eric an , o ne B en ja m in Fra n klin , w ho pro vid ed him w ith a w ealth of fa cts ab out th e A m eric an co lo nie s a n d a d eep a p pre cia tio n o f th e r o le th at th ey m ig ht s o m ed ay p la y. I t is u ndoubte d ly d ue to F ra n klin ’s in flu en ce th at S m ith s u bse q uen tly w ro te o f th e c o lo nie s th at th ey c o nstitu te d a n atio n “ w hic h , in deed , s e em s v ery lik ely to b eco m e o ne o f th e g re ate st an d m ost fo rm id ab le th at ev er w as in th e world .” In 1 776, The W ea lth o f N atio ns w as p ublis h ed . T w o y ears la te r S m ith w as ap poin te d C om mis sio ner o f C usto m s fo r E din burg h, a sin ecu re w orth six hundre d p ounds a y ear. W ith h is m oth er, w ho liv ed u ntil sh e w as n in ety , Sm ith liv ed o ut h is b ach elo r’s lif e in p eace a n d q uie t; s e re n e, c o nte n t, a n d in all l ik elih ood a b se n t- m in ded t o t h e e n d. And t h e b ook? It h as b een c alle d “ th e o utp ourin g n ot o nly o f a g re at m in d, b ut o f a w hole ep och .” Y et i t i s n ot, i n t h e s tr ic t s e n se o f t h e w ord , a n “ o rig in al” b ook. T here is a lo ng lin e of obse rv ers befo re Sm ith who hav e ap pro ach ed his unders ta n din g of th e w orld : L ock e, S te u art, M an dev ille , P etty , C an tillo n, Turg ot, n ot to m en tio n Q uesn ay an d H um e ag ain . S m ith to o k fro m all o f th em : t h ere a re o ver a h undre d a u th ors m en tio ned b y n am e i n h is t r e atis e . B ut where o th ers h ad fis h ed h ere a n d th ere , S m ith sp re ad h is n et w id e; w here oth ers h ad c la rif ie d t h is a n d t h at i s su e, S m ith i llu m in ate d t h e e n tir e l a n dsc ap e. The W ea lth o f N atio ns i s n ot a w holly o rig in al b ook, b ut i t i s u nquestio nab ly a maste rp ie ce. It is , fir s t of all, a huge pan ora m a. It open s w ith a fa m ous passa g e desc rib in g th e m in ute s p ecia liz atio n o f la b or in th e m an ufa ctu re o f p in s, a n d co vers , b efo re i t i s d one, s u ch a v arie ty o f s u bje cts a s “ th e l a te d is tu rb an ces i n th e A m eric an co lo nie s” (e v id en tly S m ith th ought th e R ev olu tio nary W ar would b e o ver b y t h e t im e h is b o ok r e ach ed t h e p re ss), t h e w aste fu ln ess o f t h e stu den t’s l if e a t O xfo rd , a n d t h e s ta tis tic s o n t h e h errin g c atc h s in ce 1 771. A g la n ce a t th e in dex c o m pile d fo r a la te r e d itio n b y C an nan s h ow s th e ra n ge o f S m ith ’s re fe re n ces a n d th oughts . H ere a re a d ozen e n tr ie s fro m th e le tte r A : Abassid es, o pule n ce o f S ara cen e m pir e u nder Abra h am , w eig hed s h ek els Abyssin ia , s a lt m oney Acto rs , p ublic , p aid f o r t h e c o nte m pt a tte n din g t h eir p ro fe ssio n Afric a, p ow erfu l k in g m uch w ors e o ff t h an E uro pean p easa n t Ale h ouse s, t h e n um ber o f, n ot t h e e ff ic ie n t c au se o f d ru nken ness Am bassa d ors , t h e f ir s t m otiv e o f t h eir a p poin tm en t Am eric a [ a s o lid p ag e o f r e fe re n ces f o llo w s] Appre n tic esh ip , t h e n atu re … o f t h is b ond s e rv itu de e x pla in ed Ara b s, t h eir m an ner o f s u pportin g w ar Arm y, … n o s e cu rity t o t h e s o vere ig n a g ain st a d is a ff e cte d c le rg y. In fin e p rin t th e in dex g oes o n fo r s ix ty -th re e p ag es; b efo re it e n ds it h as to uch ed o n e v ery th in g: “ R ic h es, t h e c h ie f e n jo ym en t o f, c o nsis ts i n t h e p ara d e of; P overty , s o m etim es u rg es n atio n to in hum an c u sto m s; S to m ach , d esir e f o r fo od bounded by narro w cap acity of th e; Butc h er, bru ta l an d odio us busin ess.” W hen w e h av e fin is h ed th e n in e h undre d p ag es o f th e b ook w e hav e a liv in g p ic tu re o f E ngla n d in th e 1 770s, o f a p pre n tic es a n d jo urn ey m en an d ris in g c ap ita lis ts , o f la n dlo rd s a n d c le rg ym en a n d k in gs, o f w ork sh ops an d f a rm s a n d f o re ig n t r a d e. The book is heav y goin g. It m oves w ith all th e delib era tio n of an en cy clo ped ic m in d, b ut n ot w ith th e p re cis io n o f a n o rd erly o ne. T his w as a n ag e w hen a u th ors d id n ot s to p to q ualif y th eir id eas w ith ifs , a nds , a n d buts , an d it w as a n e ra w hen it w as q uite p ossib le f o r a m an o f S m ith ’s in te lle ctu al sta tu re v ir tu ally to e m bra ce th e g re at b ody o f k now le d ge o f h is tim es. H en ce Wea lth duck s noth in g, min im iz es noth in g, fe ars noth in g. W hat an ex asp era tin g book! A gain an d ag ain it re fu se s to w ra p up in a co ncis e se n te n ce a co nclu sio n it has la b orio usly arriv ed at over fif ty pag es. T he arg um en t is s o fu ll o f d eta il a n d o bse rv atio n th at o ne c o nsta n tly h as to c h ip aw ay th e orn am en ta tio n to fin d th e ste el str u ctu re th at hold s it to geth er undern eath . C om in g to s ilv er, S m ith d eto urs f o r s e v en ty -fiv e p ag es to w rite a “d ig re ssio n” o n it; c o m in g to re lig io n, h e w an ders o ff in a c h ap te r o n th e so cio lo gy o f m ora lity . B ut f o r a ll i ts w eig htin ess, t h e t e x t i s s h ot t h ro ugh w ith in sig hts , o bse rv atio ns, a n d w ell- tu rn ed p hra se s th at im bue th is g re at le ctu re with lif e . I t w as S m ith w ho f ir s t c alle d E ngla n d “ a n atio n o f s h opkeep ers ” ; it was Sm ith w ho w ro te , “B y natu re a philo so pher is not in gen iu s an d dis p ositio n half so dif f e re n t fro m a str e et porte r, as a m astif f is fro m a gre y hound.” A nd o f th e E ast In dia C om pan y, w hic h w as th en ra v ag in g th e East, h e w ro te : “ It is a v ery s in gula r g overn m en t in w hic h e v ery m em ber o f th e a d m in is tr a tio n w is h es to g et o ut o f th e c o untr y … a s s o on a s h e c an , a n d to w hose in te re st, th e d ay a fte r h e h as le ft it a n d c arrie d h is w hole fo rtu ne with him , i t i s p erfe ctly i n dif f e re n t t h ough t h e w hole c o untr y a s s w allo w ed u p by a n e arth quak e.” The W ea lth o f N atio ns is in n o s e n se a te x tb ook. A dam s m ith is w ritin g to his a g e, n ot to h is c la ssro om ; h e is e x poundin g a d octr in e th at is m ean t to b e of im porta n ce in ru nnin g an em pir e , n ot an ab str a ct tr e atis e fo r acad em ic dis tr ib utio n. T he d ra g ons th at h e s la y s (s u ch a s th e M erc an tilis t p hilo so phy, whic h ta k es o ver tw o h undre d p ag es to d ie ) w ere a liv e a n d p an tin g, if a little tir e d , i n h is d ay. And fin ally , th e b ook is a re v olu tio nary o ne. T o b e su re , S m ith w ould hard ly hav e co unte n an ced an upheav al th at dis o rd ere d th e gen tle m an ly cla sse s a n d e n th ro ned th e c o m mon p oor. B ut th e im port o f The W ea lth o f Natio ns i s r e v olu tio nary , n oneth ele ss. S m ith i s n ot, a s i s c o m monly s u ppose d , an ap olo gis t fo r th e up-a n d-c o m in g bourg eo is ; as w e sh all se e, he is an ad m ir e r o f th eir w ork b ut su sp ic io us o f th eir m otiv es, a n d m in dfu l o f th e need s o f th e g re at la b orin g m ass. B ut it is n ot h is a im to e sp ouse th e in te re sts of a n y c la ss. H e is c o ncern ed w ith p ro m otin g th e w ealth o f th e e n tir e n atio n. And w ealth , to A dam S m ith , co nsis ts o f th e g oods th at all th e p eo ple o f so cie ty c o nsu m e, a lth ough n ot, o f c o urs e , in e q ual a m ounts . T here w ill b e poverty a s w ell a s w ealth i n t h e S ocie ty o f N atu ra l L ib erty . Noneth ele ss, th is is a d em ocra tic , a n d h en ce r a d ic al, p hilo so phy o f w ealth . Gone is th e n otio n o f g old , tr e asu re s, k in gly h oard s; g one th e p re ro gativ es o f merc h an ts o r f a rm ers o r w ork in g g uild s. W e a re in th e m odern w orld , w here th e f lo w o f g oods a n d s e rv ic es c o nsu m ed b y e v ery one c o nstitu te s t h e u ltim ate aim a n d e n d o f e co nom ic l if e . And n ow , w hat o f th e v is io n? A s w e sh all se e, it c an not b e so sim ply desc rib ed a s H obbes’s p rin cip le o f s o vere ig n p ow er. S m ith ’s v is io n is m ore lik e a b lu ep rin t fo r a w hole n ew m ode o f s o cia l o rg an iz atio n, a m ode c alle d Politic al E co nom y, o r, i n t o day ’s t e rm in olo gy, e co nom ic s. At t h e c en te r o f t h is b lu ep rin t a re t h e s o lu tio ns t o t w o p ro ble m s t h at a b so rb Sm ith ’s atte n tio n. F ir s t, h e is in te re ste d in la v in g b are th e m ech an is m b y whic h s o cie ty h an gs to geth er. H ow is it p ossib le fo r a c o m munity in w hic h ev ery one is busily fo llo w in g his se lf -in te re st not to fly ap art fro m sh eer cen tr if u gal f o rc e? W hat is it th at g uid es e ach in div id ual’s p riv ate b usin ess s o th at i t c o nfo rm s to t h e n eed s o f th e g ro up? W ith n o c en tr a l p la n nin g a u th ority an d n o s te ad yin g in flu en ce o f a g e-o ld tr a d itio n, h ow d oes s o cie ty m an ag e to get t h ose t a sk s d one w hic h a re n ecessa ry f o r s u rv iv al? These q uestio ns le ad S m ith to a fo rm ula tio n o f th e la w s o f th e m ark et. What h e s o ught w as “ th e i n vis ib le h an d,” a s h e c alle d i t, w here b y “ th e p riv ate in te re sts an d passio ns of m en ” are le d in th e dir e ctio n “w hic h is m ost ag re eab le t o t h e i n te re st o f t h e w hole s o cie ty .” But th e la w s o f th e m ark et w ill b e o nly a p art o f S m ith ’s in quir y . T here is an oth er q uestio n th at in te re sts h im : w hith er s o cie ty ? T he la w s o f th e m ark et are lik e th e la w s th at e x pla in h ow a s p in nin g to p s ta y s u prig ht; b ut th ere is als o th e q uestio n o f w heth er th e to p, b y v ir tu e o f its s p in nin g, w ill b e m oved alo ng t h e t a b le . To S m ith an d th e gre at eco nom is ts w ho fo llo w ed him , so cie ty is not co nceiv ed a s a s ta tic a ch ie v em en t o f m an kin d w hic h w ill g o o n re p ro ducin g its e lf , u nch an ged a n d u nch an gin g, fro m o ne g en era tio n to th e n ex t. O n th e co ntr a ry , s o cie ty i s s e en a s a n o rg an is m t h at h as i ts o w n l if e h is to ry . I n deed , i n its e n tir e ty The W ea lth o f N atio ns i s a g re at t r e atis e o n h is to ry , e x pla in in g h ow “th e s y ste m o f p erfe ct lib erty ” ( a ls o c alle d “ th e s y ste m o f n atu ra l lib erty ”)— th e w ay S m ith r e fe rre d t o c o m merc ia l c ap ita lis m — cam e i n to b ein g, a s w ell a s how i t w ork ed . But u ntil w e h av e f o llo w ed S m ith ’s u nra v elin g o f th e la w s o f th e m ark et, we c an not tu rn to th is la rg er a n d m ore fa sc in atin g p ro ble m . F or th e la w s o f th e m ark et th em se lv es w ill b e a n in te g ra l p art o f th e la rg er la w s th at c au se so cie ty to p ro sp er o r d ecay. T he m ech an is m b y w hic h th e h eed le ss in div id ual is k ep t i n l in e w ith e v ery body e ls e w ill a ff e ct t h e m ech an is m b y w hic h s o cie ty its e lf c h an ges o ver t h e y ears . Hen ce w e b eg in w ith a lo ok a t th e m ark et m ech an is m . It is n ot th e s tu ff th at e x cite s t h e i m ag in atio n o r s tir s t h e p uls e . Y et, f o r a ll i ts d ry ness, i t h as a n im med ia cy th at s h ould le ad u s to c o nsid er it w ith a re sp ectf u l e y e. N ot o nly are t h e l a w s o f t h e m ark et e sse n tia l t o a n u nders ta n din g o f t h e w orld o f Adam Sm ith , b ut th ese sa m e la w s w ill u nderlie th e v ery d if f e re n t w orld o f K arl Marx , a n d th e s till d if f e re n t w orld in w hic h w e liv e to day. S in ce w e a re a ll, know in gly o r o th erw is e , u nder th eir s o vere ig nty , it b eh ooves u s to s c ru tin iz e th em r a th er c are fu lly . Adam S m ith ’s l a w s o f t h e m ark et a re b asic ally s im ple . T hey t e ll u s t h at t h e outc o m e o f a c erta in k in d o f b eh av io r i n a c erta in s o cia l f ra m ew ork w ill b rin g ab out p erfe ctly d efin ite an d fo re se eab le re su lts . S pecif ic ally th ey sh ow u s how th e driv e of in div id ual se lf -in te re st in an en vir o nm en t of sim ila rly motiv ate d in div id uals w ill r e su lt in c o m petitio n; a n d th ey f u rth er d em onstr a te how c o m petitio n w ill r e su lt i n t h e p ro vis io n o f t h ose g oods t h at s o cie ty w an ts , in th e q uan titie s th at s o cie ty d esir e s, a n d a t th e p ric es s o cie ty is p re p are d to pay. L et u s s e e h ow t h is c o m es a b out. It co m es ab out in th e fir s t p la ce b ecau se se lf -in te re st acts as a d riv in g pow er to g uid e m en to w hate v er w ork s o cie ty is w illin g to p ay f o r. “ It is n ot fro m th e b en ev ole n ce o f th e b utc h er, th e b re w er, o r th e b ak er th at w e e x pect our din ner,” sa y s S m ith , “b ut fro m th eir re g ard to th eir se lf -in te re st. W e ad dre ss o urs e lv es, n ot to th eir h um an ity , b ut to th eir s e lf -lo ve, a n d n ev er ta lk to t h em o f o ur n ecessitie s, b ut o f t h eir a d van ta g es.” But s e lf -in te re st i s o nly h alf t h e p ic tu re . I t d riv es m en t o a ctio n. S om eth in g els e m ust pre v en t th e push in g of pro fit- h ungry in div id uals fro m hold in g so cie ty u p to e x orb ita n t ra n so m : a c o m munity a ctiv ate d o nly b y s e lf -in te re st would b e a c o m munity o f ru th le ss p ro fite ers . T his re g ula to r is c o m petitio n, th e c o nflic t o f t h e s e lf -in te re ste d a cto rs o n t h e m ark etp la ce. F or e ach m an , o ut to d o h is b est fo r h im se lf w ith n o th ought o f s o cia l c o nse q uen ces, is fa ced with a f lo ck o f s im ila rly m otiv ate d i n div id uals w ho a re e n gag ed i n e x actly t h e sa m e purs u it. H en ce, each is only to o eag er to ta k e ad van ta g e of his neig hbor’s g re ed . A m an w ho p erm its h is s e lf -in te re st to ru n a w ay w ith h im will f in d t h at c o m petito rs h av e s lip ped i n t o t a k e h is t r a d e a w ay ; i f h e c h arg es to o m uch f o r h is w are s o r if h e r e fu se s to p ay a s m uch a s e v ery body e ls e f o r his w ork ers , h e w ill f in d h im se lf w ith out b uyers in th e o ne c ase a n d w ith out em plo yees in th e oth er. Thus very m uch as in The Theo ry of M ora l Sen tim en ts , th e s e lf is h m otiv es o f m en a re tr a n sm ute d b y in te ra ctio n to y ie ld th e m ost u nex pecte d o f r e su lts : s o cia l h arm ony. Consid er, fo r e x am ple , th e p ro ble m o f h ig h p ric es. S uppose w e h av e o ne hundre d m an ufa ctu re rs o f g lo ves. T he s e lf -in te re st o f e ach o ne w ill c au se h im to w is h to r a is e h is p ric e a b ove h is c o st o f p ro ductio n a n d th ere b y to r e aliz e an e x tr a p ro fit. B ut h e c an not. I f h e r a is e s h is p ric e, h is c o m petito rs w ill s te p in a n d ta k e h is m ark et a w ay f ro m h im b y u nders e llin g h im . O nly if a ll g lo ve man ufa ctu re rs c o m bin e a n d a g re e to m ain ta in a so lid fro nt w ill a n u nduly hig h p ric e b e ch arg ed . A nd in th is case , th e co llu siv e co alitio n co uld b e bro ken b y a n e n te rp ris in g m an ufa ctu re r f ro m a n oth er f ie ld — sa y, s h oem ak in g —who d ecid ed to m ove h is c ap ita l in to g lo ve m an ufa ctu re , w here h e c o uld ste al a w ay t h e m ark et b y s h ad in g h is p ric e. But th e la w s o f th e m ark et d o m ore th an im pose a c o m petitiv e p ric e o n pro ducts . T hey als o se e to it th at th e p ro ducers o f so cie ty h eed so cie ty ’s dem an ds f o r th e quantitie s o f g oods it w an ts . L et u s s u ppose th at c o nsu m ers decid e th ey w an t m ore g lo ves th an a re b ein g tu rn ed o ut, a n d fe w er sh oes. Acco rd in gly th e p ublic w ill s c ra m ble fo r th e s to ck o f g lo ves o n th e m ark et, while th e s h oe b usin ess w ill b e d ull. A s a r e su lt g lo ve p ric es w ill te n d to r is e as c o nsu m ers tr y to b uy m ore o f th em th an th ere a re r e ad y a t h an d, a n d s h oe pric es w ill te n d to fa ll a s th e p ublic p asse s th e s h oe s to re s b y. B ut a s g lo ve pric es r is e , p ro fits in th e g lo ve in dustr y w ill r is e , to o; a n d a s s h oe p ric es f a ll, pro fits i n s h oe m an ufa ctu re w ill s lu m p. A gain s e lf -in te re st w ill s te p i n t o r ig ht th e b ala n ce. W ork ers w ill b e r e le ase d f ro m t h e s h oe b usin ess a s s h oe f a cto rie s co ntr a ct th eir o utp ut; th ey w ill m ove to th e g lo ve b usin ess, w here b usin ess is boom in g. T he re su lt is q uite o bvio us: g lo ve p ro ductio n w ill ris e a n d sh oe pro ductio n f a ll. And th is is e x actly w hat s o cie ty w an te d in th e f ir s t p la ce. A s m ore g lo ves co m e o n th e m ark et to m eet d em an d, g lo ve p ric es w ill f a ll b ack in to lin e. A s fe w er s h oes a re p ro duced , th e s u rp lu s o f s h oes w ill s o on d is a p pear a n d s h oe pric es w ill a g ain ris e u p to n orm al. T hro ugh th e m ech an is m o f th e m ark et, so cie ty w ill h av e c h an ged t h e a llo catio n o f i ts e le m en ts o f pro ductio n t o f it i ts new d esir e s. Y et n o o ne h as is su ed a d ic tu m , a n d n o p la n nin g a u th ority h as esta b lis h ed sc h ed ule s of outp ut. S elf -in te re st an d co m petitio n, actin g one ag ain st t h e o th er, h av e a cco m plis h ed t h e t r a n sitio n. And o ne f in al a cco m plis h m en t. J u st a s t h e m ark et r e g ula te s b oth p ric es a n d quan titie s o f goods a cco rd in g to th e f in al a rb ite r o f p ublic d em an d, s o it a ls o re g ula te s th e in co m es o f th ose w ho co opera te to p ro duce th ose g oods. If pro fits in o ne lin e o f b usin ess a re u nduly la rg e, th ere w ill b e a ru sh o f o th er busin essm en in to th at f ie ld u ntil c o m petitio n h as lo w ere d s u rp lu se s. I f w ag es are o ut o f lin e in o ne k in d o f w ork , th ere w ill b e a ru sh o f m en in to th e fa v ore d o ccu patio n u ntil it p ay s n o m ore th an c o m para b le jo bs o f th at d eg re e of s k ill a n d tr a in in g. C onvers e ly , if p ro fits o r w ag es a re to o lo w in o ne tr a d e are a, th ere w ill b e a n e x odus o f c ap ita l a n d la b or u ntil th e su pply is b ette r ad ju ste d t o t h e d em an d. All th is m ay s e em s o m ew hat e le m en ta ry . B ut c o nsid er w hat A dam S m ith has d one, w ith h is im petu s o f s e lf -in te re st a n d h is re g ula to r o f c o m petitio n. Fir s t, h e h as e x pla in ed h ow p ric es a re k ep t f ro m r a n gin g a rb itr a rily a w ay f ro m th e a ctu al c o st o f p ro ducin g a g ood. S eco nd, h e h as e x pla in ed h ow s o cie ty c an in duce its p ro ducers o f c o m moditie s to p ro vid e it w ith w hat it w an ts . T hir d , he h as p oin te d o ut w hy h ig h p ric es a re a s e lf -c u rin g d is e ase , fo r th ey c au se pro ductio n i n t h ose l in es t o i n cre ase . A nd f in ally , h e h as a cco unte d f o r a b asic sim ila rity o f in co m es a t e ach le v el o f th e g re at p ro ducin g s tr a ta o f th e n atio n. In a w ord , h e h as fo und in th e m ech an is m o f th e m ark et a se lf -re g ula tin g sy ste m f o r s o cie ty ’s o rd erly p ro vis io nin g. Note “ se lf -re g ula tin g.” T he b eau tif u l c o nse q uen ce o f t h e m ark et i s t h at i t i s its o w n g uard ia n . If o utp ut o r p ric es o r c erta in k in ds o f re m unera tio n s tr a y aw ay fro m th eir s o cia lly o rd ain ed le v els , fo rc es a re s e t in to m otio n to b rin g th em b ack to th e fo ld . It is a c u rio us p ara d ox th at th us e n su es th e m ark et, whic h is th e a cm e o f in div id ual e co nom ic f re ed om , is th e s tr ic te st ta sk m aste r of a ll. O ne m ay a p peal th e r u lin g o f a p la n nin g b oard o r w in th e d is p en sa tio n of a m in is te r; b ut th ere is n o a p peal, n o d is p en sa tio n, fro m th e a n onym ous pre ssu re s o f th e m ark et m ech an is m . E co nom ic f re ed om is th us m ore illu so ry th an a t fir s t a p pears . O ne c an d o a s o ne ple ase s in th e m ark et. B ut if o ne ple ase s to d o w hat th e m ark et d is a p pro ves, th e p ric e o f in div id ual f re ed om is eco nom ic r u in atio n. Does th e w orld re ally w ork th is w ay ? T o a v ery re al d eg re e it d id in th e day s o f A dam S m ith . E ven in h is tim e, o f c o urs e , th ere w ere a lr e ad y f a cto rs th at a cte d a s r e str a in ts a g ain st th e f re e o pera tio n o f th e m ark et s y ste m . T here were c o m bin atio ns o f m an ufa ctu re rs w ho rig ged p ric es a rtif ic ia lly h ig h a n d asso cia tio ns o f jo urn ey m en w ho r e sis te d th e p re ssu re s o f c o m petitio n w hen it acte d to lo w er th eir w ag es. A nd a lr e ad y th ere w ere m ore d is q uie tin g s ig ns to be re ad . T he L om be bro th ers ’ fa cto ry w as m ore th an a m ere m arv el of en gin eerin g an d a so urc e of w onderm en t to th e vis ito r: it beto ken ed th e co m in g o f la rg e-s c ale in dustr y a n d th e e m erg en ce o f e m plo yers w ho w ere im men se ly pow erfu l in div id ual acto rs in th e m ark et. T he ch ild re n in th e co tto n m ills c o uld su re ly n ot b e c o nsid ere d m ark et fa cto rs o f e q ual p ow er with th e e m plo yers w ho b ed ded , b oard ed , a n d e x plo ite d th em . B ut f o r a ll its dev ia tio ns f ro m t h e b lu ep rin t, e ig hte en th -c en tu ry E ngla n d a p pro ach ed , e v en i f it d id n ot w holly co nfo rm to , th e m odel th at A dam S m ith h ad in m in d. Busin ess was c o m petitiv e, th e a v era g e f a cto ry was s m all, p ric es did r is e a n d fa ll a s d em an d e b bed a n d ro se , a n d c h an ges in p ric es did in voke c h an ges in outp ut a n d o ccu patio n. T he w orld o f A dam S m ith h as b een c alle d a w orld o f ato m is tic co m petitio n, a w orld in w hic h no ag en t of th e pro ductiv e mech an is m , o n th e s id e o f la b or o r c ap ita l, w as p ow erfu l e n ough to in te rfe re with o r to re sis t th e p re ssu re s o f c o m petitio n. It w as a w orld in w hic h e ach ag en t w as f o rc ed t o s c u rry a fte r i ts s e lf -in te re st i n a v ast s o cia l f re e-fo r- a ll. And t o day ? D oes t h e c o m petitiv e m ark et m ech an is m s till o pera te ? This is n ot a q uestio n to w hic h it is p ossib le to g iv e a s im ple a n sw er. T he natu re o f th e m ark et h as c h an ged v astly s in ce th e e ig hte en th c en tu ry . W e n o lo nger liv e in a w orld o f a to m is tic c o m petitio n in w hic h n o m an c an a ff o rd to sw im a g ain st th e c u rre n t. T oday ’s m ark et m ech an is m is c h ara cte riz ed b y th e huge siz e of its partic ip an ts : gia n t co rp ora tio ns an d str o ng la b or unio ns obvio usly d o n ot b eh av e a s if th ey were in div id ual p ro prie to rs a n d w ork ers . Their very bulk en ab le s th em to sta n d out ag ain st th e pre ssu re s of co m petitio n, t o d is re g ard p ric e s ig nals , a n d t o c o nsid er w hat t h eir s e lf -in te re st sh all b e in th e lo ng ru n ra th er th an in th e im med ia te p re ss o f each d ay ’s buyin g a n d s e llin g. That th ese fa cto rs hav e w eak en ed th e guid in g fu nctio n of th e m ark et mech an is m is a p pare n t. B ut fo r a ll th e a ttr ib ute s o f m odern -d ay e co nom ic so cie ty , th e g re at fo rc es o f se lf -in te re st an d co m petitio n, h ow ev er w ate re d dow n o r h ed ged a b out, s till p ro vid e b asic r u le s o f b eh av io r t h at n o p artic ip an t in a m ark et sy ste m c an a ff o rd to d is re g ard e n tir e ly . A lth ough th e w orld in whic h w e liv e is n ot th at o f A dam S m ith , th e la w s o f th e m ark et c an s till b e dis c ern ed i f w e s tu dy i ts o pera tio ns. But t h e l a w s o f t h e m ark et a re o nly a d esc rip tio n o f t h e b eh av io r t h at g iv es so cie ty its c o hesiv en ess. S om eth in g e ls e m ust m ak e it g o. N in ety y ears a fte r The W ea lth o f N atio ns , K arl M arx w as to d is c o ver “la w s o f m otio n” th at desc rib ed h ow c ap ita lis m p ro ceed ed s lo w ly , u nw illin gly , b ut i n elu cta b ly t o i ts doom . B ut The W ea lth of N atio ns alr e ad y had its ow n la w s of m otio n. How ev er, a lto geth er u nlik e th e M arx is t p ro gnosis , A dam S m ith ’s w orld w en t slo w ly , q uite w illin gly , to w ard — alth ough, a s w e s h all s e e, n ev er q uite a ll th e way t o — Valh alla . Valh alla w ould h av e b een th e la st d estin atio n th at m ost o bse rv ers w ould hav e p re d ic te d . S ir Jo hn B yng, to urin g th e N orth C ountr y in 1 792, lo oked fro m h is c o ach w in dow a n d w ro te : “ W hy, h ere n ow , is a g re at f la rin g m ill … all t h e V ale i s d is tu rb ed … . S ir R ic h ard A rk w rig ht m ay h av e i n tr o duced M uch Wealth in to h is F am ily a n d in to h is C ountr y , b ut, a s a T ouris t, I e x ecra te h is Sch em es, w hic h h av in g c re p t in to e v ery P asto ra l V ale , h av e d estr o yed th e co urs e , a n d th e B eau ty o f N atu re .” “ O h! W hat a d og’s h ole is M an ch este r,” sa id S ir J o hn o n a rriv in g t h ere . In tr u th , m uch o f E ngla n d w as a d og’s h ole . T he th re e c en tu rie s o f tu rm oil whic h h ad p ro dded l a n d, l a b or, a n d c ap ita l i n to e x is te n ce s e em ed t o h av e b een only a p re p ara tio n fo r s till fu rth er u pheav al, fo r th e re cen tly fre ed a g en ts o f pro ductio n beg an to b e c o m bin ed in a n ew a n d u gly fo rm : th e fa cto ry . A nd with th e fa cto ry c am e n ew p ro ble m s. T w en ty y ears b efo re S ir Jo hn’s to ur, Ric h ard A rk w rig ht, w ho h ad g otte n t o geth er a l ittle c ap ita l p ed dlin g w om en ’s hair to m ak e w ig s, in ven te d (o r sto le ) th e sp in nin g th ro stle . B ut, hav in g co nstr u cte d h is m ach in e, h e fo und it w as n ot s o e asy to s ta ff it. L ocal la b or co uld n ot k eep u p w ith th e “ re g ula r c ele rity ” o f th e p ro cess— wag e-w ork w as still g en era lly d esp is e d , a n d s o m e c ap ita lis ts fo und th eir n ew -b uilt fa cto rie s burn ed to th e g ro und o ut o f s h eer b lin d h atr e d . A rk w rig ht w as f o rc ed to tu rn to c h ild re n — “th eir s m all f in gers b ein g a ctiv e.” F urth er- m ore , s in ce th ey w ere unuse d to th e in dep en den t lif e of fa rm in g or cra fts , ch ild re n ad ap te d th em se lv es m ore r e ad ily t o t h e d is c ip lin e o f f a cto ry l if e . T he m ove w as h aile d as a p hila n th ro pic g estu re — would n ot th e e m plo ym en t o f c h ild re n h elp to alle v ia te t h e c o nditio n o f t h e “ u npro fita b le p oor” ? For i f a n y p ro ble m a b so rb ed t h e p ublic m in d, b esid es i ts m ix ed a d m ir a tio n of an d horro r at th e fa cto ry , it w as th is om nip re se n t pro ble m of th e unpro fita b le p oor. I n 1 720, E ngla n d w as c ro w ded w ith a m illio n a n d a h alf o f th em — a s ta g gerin g f ig ure w hen w e r e aliz e th at h er to ta l p opula tio n w as o nly tw elv e or th ir te en m illio n. H en ce th e air w as fu ll of sc h em es fo r th eir dis p ositio n. D esp air in g s c h em es, m ostly . F or th e c o m mon c o m pla in t w as th e in era d ic ab le s lo th o f th e p au per, a n d th is w as m ix ed w ith c o nste rn atio n a t th e way in w hic h th e lo w er o rd ers a p ed th eir b ette rs . W ork peo ple w ere a ctu ally drin kin g te a! T he co m mon fo lk se em ed to p re fe r w heate n b re ad to th eir tr a d itio nal lo af o f ry e o r b arle y ! W here w ould all th is le ad to , ask ed th e th in kers o f th e d ay ; w ere n ot th e w an ts o f th e p oor (“ w hic h it w ould b e pru den ce to r e lie v e, b ut f o lly to c u re ,” a s th e s c an dalo us M an dev ille p ut it in 1723) e sse n tia l f o r th e w elf a re o f th e s ta te ? W hat w ould h ap pen to S ocie ty if th e i n dis p en sa b le g ra d atio ns o f s o cie ty w ere a llo w ed t o d is a p pear? Conste rn atio n s till d esc rib ed th e p re v ailin g a ttitu de o f h is d ay to w ard th e gre at, f e arfu l p ro ble m o f th e “ lo w er o rd ers ,” b ut it c erta in ly d id n ot d esc rib e Adam S m ith ’s p hilo so phy. “ N o s o cie ty c an s u re ly b e flo uris h in g a n d h ap py, of w hic h b y fa r th e g re ate r p art o f th e n um bers a re p oor a n d mis e ra b le ,” h e wro te . A nd n ot o nly d id h e h av e th e te m erity to m ak e s o r a d ic al a s ta te m en t, but he pro ceed ed to dem onstr a te th at so cie ty w as in fa ct co nsta n tly im pro vin g; th at it w as b ein g p ro pelle d , w illy -n illy , to w ard a p ositiv e g oal. I t was n ot m ovin g b ecau se a n yone w ille d it to , o r b ecau se P arlia m en t m ig ht pass la w s, o r E ngla n d w in a b attle . It m oved b ecau se th ere w as a c o nceale d dynam ic b en eath t h e s u rfa ce o f t h in gs w hic h p ow ere d t h e s o cia l w hole l ik e a n en orm ous e n gin e. For o ne s a lie n t f a ct s tr u ck A dam S m ith a s h e lo oked a t th e E nglis h s c en e. This w as th e tr e m en dous g ain in p ro ductiv ity w hic h s p ra n g fro m th e m in ute div is io n a n d sp ecia liz atio n o f la b or. E arly in The W ea lth o f N atio ns , S m ith co m men ts o n a p in f a cto ry : “ O ne m an d ra w s o ut t h e w ir e , a n oth er s tr a ig hts i t, a th ir d c u ts it, a fo urth p oin ts it, a fif th g rin ds it a t th e to p fo r re ceiv in g th e head ; t o m ak e t h e h ead r e q uir e s t w o o r t h re e d is tin ct o pera tio ns; t o p ut i t o n i s a p ecu lia r b usin ess; to w hite n it is a n oth er; it is e v en a tr a d e b y its e lf to p ut th em in to p ap er… . I h av e s e en a s m all m an ufa cto ry o f th is k in d w here te n men o nly w ere e m plo yed a n d w here s o m e o f th em c o nse q uen tly p erfo rm ed tw o or th re e dis tin ct opera tio ns. B ut th ough th ey w ere very poor, an d th ere fo re b ut in dif f e re n tly a cco m modate d w ith th e n ecessa ry m ach in ery , th ey co uld , w hen t h ey e x erte d t h em se lv es, m ak e a m ong t h em a b out t w elv e p ounds of p in s in a d ay. T here a re in a p ound u pw ard s o f fo ur th ousa n d p in s o f a mid dlin g s iz e. T hose t e n p ers o ns, t h ere fo re , c o uld m ak e a m ong t h em u pw ard s of f o rty -e ig ht t h ousa n d p in s i n a d ay … . B ut i f t h ey h ad a ll w ro ught s e p ara te ly an d in dep en den tly … th ey c erta in ly c o uld n ot e ach o f th em m ak e tw en ty , perh ap s n ot o ne p in a d ay … .” There i s h ard ly a n y n eed t o p oin t o ut h ow i n fin ite ly m ore c o m ple x p re se n t- day p ro ductio n m eth ods a re th an th ose o f th e e ig hte en th c en tu ry . S m ith , fo r all h is d is c la im ers , w as su ff ic ie n tly im pre sse d w ith a sm all fa cto ry o f te n peo ple to w rite a b out it; w hat w ould h e h av e th ought o f o ne e m plo yin g te n th ousa n d! B ut th e g re at g if t o f th e d iv is io n o f la b or is n ot its c o m ple x ity — in deed it sim plif ie s m ost to il. Its a d van ta g e lie s in its c ap acity to in cre ase what S m ith c alls “ th at u niv ers a l o pule n ce w hic h e x te n ds its e lf to th e lo w est ra n ks o f th e p eo ple .” T hat u niv ers a l o pule n ce o f th e e ig hte en th c en tu ry lo oks lik e a g rim e x is te n ce fro m o ur m odern v an ta g e p oin t. B ut if w e v ie w th e matte r in its h is to ric al p ers p ectiv e, if w e c o m pare th e lo t o f th e w ork in gm an in e ig hte en th -c en tu ry E ngla n d w ith th at o f h is p re d ecesso r a c en tu ry o r tw o befo re , i t i s c le ar t h at, m ean a s h is e x is te n ce w as, i t c o nstitu te d a c o nsid era b le ad van ce. S m ith m ak es t h e p oin t v iv id ly : Obse rv e th e a cco m modatio n o f th e m ost c o m mon a rtif ic er o r d ay la b oure r in a c iv iliz ed a n d th riv in g c o untr y , a n d y ou w ill p erc eiv e th at th e n um ber o f peo ple o f w hose in dustr y a p art, th ough b ut a s m all p art, h as b een e m plo yed in p ro cu rin g h im th is a cco m modatio n, e x ceed s a ll c o m puta tio n. T he w oolle n co at, fo r e x am ple , w hic h c o vers th e d ay -la b oure r, a s c o ars e a n d ro ugh a s it may s e em , i s t h e p ro duce o f t h e j o in t l a b our o f a g re at m ultitu de o f w ork m en . The s h ep herd , t h e s o rte r o f th e w ool, th e w ool- c o m ber o r c ard er, th e d yer, t h e sc rib ble r, th e sp in ner, th e w eav er, th e fu lle r, th e d re sse r, w ith m an y o th ers , must all jo in th eir dif f e re n t arts in ord er to co m ple te ev en th is hom ely pro ductio n. H ow m an y m erc h an ts an d carrie rs , besid es, m ust hav e been em plo yed … how m uch co m merc e an d nav ig atio n … how m an y sh ip – build ers , s a ilo rs , s a il- m ak ers , r o pe m ak ers … . Were w e t o e x am in e, i n t h e s a m e m an ner, a ll t h e d if f e re n t p arts o f h is d re ss an d h ouse h old fu rn itu re , th e c o ars e lin en sh ir t w hic h h e w ears n ex t to h is sk in , th e s h oes w hic h c o ver h is f e et, th e b ed w hic h h e lie s o n … th e k itc h en – gra te a t w hic h h e p re p are s h is v ic tu als , th e c o als w hic h h e m ak es u se o f fo r th at p urp ose , d ug f ro m t h e b ow els o f t h e e arth , a n d b ro ught t o h im p erh ap s b y a l o ng s e a a n d a l o ng l a n d c arria g e, a ll t h e o th er u te n sils o f h is k itc h en , a ll t h e fu rn itu re o f h is ta b le , th e k niv es a n d f o rk s, th e e arth en o r p ew te r p la te s u pon whic h h e s e rv es u p a n d d iv id es h is v ic tu als , th e d if f e re n t h an ds e m plo yed in pre p arin g h is b re ad a n d h is b eer, th e g la ss w in dow w hic h le ts in th e h eat a n d th e lig ht, a n d k eep s o ut th e w in d a n d th e r a in , w ith a ll th e k now le d ge a n d a rt re q uis ite f o r p re p arin g t h at b eau tif u l a n d h ap py i n ven tio n … ; i f w e e x am in e, I sa y, a ll th ose th in gs … w e s h all b e s e n sib le th at w ith out th e a ssis ta n ce a n d co opera tio n of m an y th ousa n ds, th e very m ean est pers o n in a civ iliz ed co untr y co uld not be pro vid ed , ev en acco rd in g to w hat w e very fa ls e ly im ag in e, th e easy an d sim ple man ner in whic h he is co m monly acco m modate d . C om pare d in deed w ith th e m ore e x tr a v ag an t lu xury o f th e gre at, h is a cco m modatio n m ust n o d oubt a p pear e x tr e m ely s im ple a n d e asy ; an d y et i t m ay b e t r u e, p erh ap s, t h at t h e a cco m modatio n o f a E uro pean p rin ce does n ot a lw ay s s o m uch e x ceed th at o f a n in dustr io us a n d f ru gal p easa n t, a s th e a cco m modatio n o f th e la tte r e x ceed s th at o f m an y a n A fric an k in g, th e ab so lu te m aste r o f t h e l iv es a n d l ib ertie s o fte n t h ousa n d n ak ed s a v ag es. What i s i t t h at d riv es s o cie ty t o t h is w onderfu l m ultip lic atio n o f w ealth a n d ric h es? P artly it is th e m ark et m ech an is m its e lf , fo r th e m ark et h arn esse s man ’s c re ativ e p ow ers in a m ilie u th at e n co ura g es h im , e v en fo rc es h im , to in ven t, i n novate , e x pan d, t a k e r is k s. B ut t h ere a re m ore f u ndam en ta l p re ssu re s beh in d th e r e stle ss a ctiv ity o f th e m ark et. I n f a ct, S m ith s e es tw o d eep -s e ate d la w s o f b eh av io r w hic h p ro pel th e m ark et s y ste m in a n a sc en din g s p ir a l o f pro ductiv ity . The f ir s t o f t h ese i s t h e L aw o f A ccu m ula tio n. Let us re m em ber th at A dam Sm ith liv ed at a tim e w hen th e ris in g in dustr ia l cap ita lis t co uld an d d id re aliz e a fo rtu ne fro m h is in vestm en ts . Ric h ard A rk w rig ht, a p pre n tic ed to a b arb er a s a y oung m an , d ie d in 1 792 le av in g a n e sta te o f £ 500,0 00. S am uel W alk er, w ho s ta rte d a f o rg e g oin g i n a n old n ails h op in R oth erh am , le ft a s te el fo undry o n th at s ite w orth £ 200,0 00. Jo sia h W ed gw ood, w ho s tu m ped a b out h is p otte ry fa cto ry o n a w ooden le g sc ra w lin g “ T his w on’t d o f o r J o s. W ed gw ood” w here v er h e s a w e v id en ce o f care le ss w ork , le ft an esta te o f £ 240,0 00 an d m uch la n ded p ro perty . T he In dustr ia l R ev olu tio n in its e arlie st s ta g es a lr e ad y p ro vid ed a v erita b le g ra b bag o f ric h es fo r w hoev er w as q uic k en ough, sh re w d en ough, in dustr io us en ough t o r id e w ith i ts c u rre n t. And th e o bje ct o f th e g re at m ajo rity o f th e r is in g c ap ita lis ts was f ir s t, la st, an d a lw ay s, to accu m ula te th eir s a v in gs. A t th e b eg in nin g o f th e n in ete en th cen tu ry , £ 2,5 00 w as c o lle cte d in M an ch este r fo r th e fo undatio n o f S unday sc h ools . T he s u m to ta l c o ntr ib ute d to th is w orth y c au se b y th e s in gle la rg est em plo yers in th e d is tr ic t, th e c o tto n s p in ners , w as £ 90. T he y oung in dustr ia l aris to cra cy had bette r th in gs to do w ith its m oney th an co ntr ib ute to unpro ductiv e ch aritie s— it had to accu m ula te , an d A dam S m ith ap pro ved whole h earte d ly . W oe to h im w ho d id n ot a ccu m ula te . A nd a s fo r o ne w ho en cro ach ed o n h is cap ita l— “lik e h im w ho p erv erts th e re v en ues o f so m e pio us fo undatio n to p ro fa n e p urp ose s, h e p ay s th e w ag es o f id le n ess w ith th ose f u nds w hic h th e f ru gality o f h is f o re fa th ers h ad , a s it w ere , c o nse cra te d to t h e m ain te n an ce o f i n dustr y .” But A dam S m ith d id n ot a p pro v e o f a ccu m ula tio n f o r a ccu m ula tio n’s s a k e. He w as, a fte r a ll, a p hilo so pher, w ith a p hilo so pher’s d is d ain f o r th e v an ity o f ric h es. R ath er, in th e accu m ula tio n o f cap ita l S m ith sa w a v ast b en efit to so cie ty . F or c ap ita l— if p ut t o u se i n m ach in ery — pro vid ed j u st t h at w onderfu l div is io n of la b or whic h multip lie s man ’s pro ductiv e en erg y. Hen ce accu m ula tio n b eco m es a n oth er o f S m ith ’s tw o-e d ged s w ord s: th e a v aric e o f priv ate g re ed a g ain r e d oundin g to th e w elf a re o f th e c o m munity . S m ith is n ot worrie d o ver th e p ro ble m th at w ill fa ce tw en tie th -c en tu ry e co nom is ts : w ill priv ate a ccu m ula tio ns a ctu ally fin d th eir w ay b ack in to m ore e m plo ym en t? For h im th e w orld is c ap ab le o f in defin ite im pro vem en t a n d th e s iz e o f th e mark et is lim ite d o nly b y its g eo gra p hic al e x te n t. A ccu m ula te a n d th e w orld will b en efit, sa y s S m ith . A nd c erta in ly in th e lu sty a tm osp here o f h is tim e th ere w as n o e v id en ce o f a n y u nw illin gness t o a ccu m ula te o n t h e p art o f t h ose who w ere i n a p ositio n t o d o s o . But— an d h ere i s a d if f ic u lty — accu m ula tio n w ould s o on l e ad t o a s itu atio n where fu rth er accu m ula tio n w ould b e im possib le . F or accu m ula tio n m ean t more m ach in ery , a n d m ore m ach in ery m ean t m ore d em an d f o r w ork m en . A nd th is i n t u rn w ould s o oner o r l a te r l e ad t o h ig her a n d h ig her w ag es, u ntil p ro fits —th e so urc e of accu m ula tio n— were eate n aw ay. H ow is th is hurd le su rm ounte d ? It is su rm ounte d by th e se co nd gre at la w of th e sy ste m : th e L aw of Popula tio n. To A dam S m ith , la b ore rs , lik e a n y o th er c o m modity , c o uld b e p ro duced acco rd in g to th e d em an d. If w ag es w ere h ig h, th e n um ber o f w ork peo ple would m ultip ly ; if w ag es fe ll, th e num bers of th e w ork in g cla ss w ould decre ase . S m ith p ut i t b lu ntly : “ … t h e d em an d f o r m en , l ik e t h at f o r a n y o th er co m modity , n ecessa rily r e g ula te s t h e p ro ductio n o f m en .” Nor is th is q uite so n aiv e a co ncep tio n as it ap pears at fir s t b lu sh . In Sm ith ’s d ay i n fa n t m orta lity a m ong t h e l o w er c la sse s w as s h ock in gly h ig h. “ It is n ot u nco m mon,” s a y s S m ith , “ … i n t h e H ig hla n ds o f S co tla n d f o r a m oth er who h as b orn e tw en ty c h ild re n n ot to h av e tw o a liv e.” In m an y p la ces in Engla n d, h alf th e c h ild re n d ie d b efo re th ey w ere f o ur, a n d a lm ost e v ery w here half th e c h ild re n liv ed o nly to th e a g e o f n in e o r te n . M aln utr itio n, e v il liv in g co nditio ns, co ld , an d dis e ase to ok a horre n dous to ll am ong th e poore r ele m en t. H en ce, a lth ough h ig her w ag es m ig ht h av e a ff e cte d t h e b ir th r a te o nly slig htly , th ey co uld be ex pecte d to hav e a co nsid era b le in flu en ce on th e num ber o f c h ild re n w ho w ould g ro w t o w ork in g a g e. Hen ce, i f t h e f ir s t e ff e ct o f a ccu m ula tio n w ould b e t o r a is e t h e w ag es o f t h e work in g c la ss, th is in tu rn w ould b rin g a b out a n in cre ase in th e n um ber o f work ers . A nd n ow th e m ark et m ech an is m ta k es o ver. J u st a s h ig her p ric es o n th e m ark et w ill b rin g ab out a la rg er p ro ductio n o f g lo ves an d th e la rg er num ber o f g lo ves in tu rn p re ss d ow n th e h ig her p ric es o f g lo ves, s o h ig her wag es w ill b rin g a b out a la rg er n um ber o f w ork ers , a n d th e in cre ase in th eir num bers w ill s e t u p a r e v ers e p re ssu re o n t h e l e v el o f t h eir w ag es. P opula tio n, lik e g lo ve p ro ductio n, i s a s e lf -c u rin g d is e ase — as f a r a s w ag es a re c o ncern ed . And th is m ean t th at a ccu m ula tio n m ig ht g o s a fe ly o n. T he ris e in w ag es whic h it cau se d an d whic h th re ate n ed to m ak e fu rth er accu m ula tio n unpro fita b le is te m pere d b y th e r is e in p opula tio n. A ccu m ula tio n le ad s to its ow n u ndoin g, a n d th en is r e sc u ed in th e n ic k o f tim e. T he o bsta cle o f h ig her wag es is u ndone b y th e g ro w th in p opula tio n w hic h th ose v ery h ig her w ag es mad e fe asib le . T here is so m eth in g fa sc in atin g in th is a u to m atic p ro cess o f ag gra v atio n a n d c u re , stim ulu s a n d re sp onse , in w hic h th e v ery fa cto r th at se em s to b e le ad in g th e s y ste m to its d oom is a ls o s ly ly b rin gin g a b out th e co nditio ns n ecessa ry f o r i ts f u rth er h ealth . And n ow o bse rv e th at S m ith h as c o nstr u cte d fo r so cie ty a g ia n t e n dle ss ch ain . A s r e g ula rly a n d a s in ev ita b ly a s a s e rie s o f in te rlo ck ed m ath em atic al pro positio ns, s o cie ty is s ta rte d o n a n u pw ard m arc h . F ro m a n y s ta rtin g p oin t th e p ro bin g m ech an is m o f th e m ark et fir s t e q ualiz es th e re tu rn s to la b or a n d cap ita l in a ll th eir d if f e re n t u se s, s e es to it th at th ose c o m moditie s d em an ded are pro duced in th e rig ht quan titie s, an d fu rth er en su re s th at pric es fo r co m moditie s a re c o nsta n tly c o m pete d d ow n to th eir c o sts o f p ro ductio n. B ut fu rth er th an th is , s o cie ty is d ynam ic . F ro m its s ta rtin g p oin t a ccu m ula tio n o f wealth w ill ta k e p la ce, a n d th is a ccu m ula tio n w ill r e su lt in in cre ase d f a cilitie s fo r p ro ductio n a n d in a g re ate r d iv is io n o f la b or. S o fa r, a ll to th e g ood. B ut accu m ula tio n w ill a ls o ra is e w ag es a s c ap ita lis ts b id fo r w ork ers to m an th e new fa cto rie s. As wag es ris e , fu rth er accu m ula tio n beg in s to lo ok unpro fita b le . T he s y ste m t h re ate n s t o l e v el o ff . B ut m ean w hile , w ork m en w ill hav e u se d th eir h ig her w ag es to re ar th eir c h ild re n w ith fe w er m orta litie s. Hen ce th e su pply of w ork m en w ill in cre ase . A s popula tio n sw ells , th e co m petitio n am ong w ork m en w ill pre ss dow n on w ag es ag ain . A nd so accu m ula tio n w ill c o ntin ue, a n d a n oth er sp ir a l in th e a sc en t o f so cie ty w ill beg in . This is n o b usin ess c y cle th at S m ith d esc rib es. I t is a lo ng-te rm p ro cess, a se cu la r e v olu tio n. A nd i t i s w onderfu lly c erta in . P ro vid ed o nly t h at t h e m ark et mech an is m is n ot ta m pere d w ith , e v ery th in g is in ex ora b ly d ete rm in ed b y th e pre ced in g lin k. A v ast re cip ro catin g m ach in ery is s e t u p w ith a ll o f s o cie ty in sid e it: o nly th e ta ste s o f th e p ublic — to g uid e p ro ducers — an d th e a ctu al physic al r e so urc es o f t h e n atio n a re o uts id e t h e c h ain o f c au se a n d e ff e ct. But o bse rv e th at w hat is fo re se en is n ot a n u nbounded im pro vem en t o f aff a ir s . T here w ill assu re d ly b e a lo ng p erio d o f w hat w e call eco nom ic gro w th — Sm ith d oes n ot u se th e te rm — but th e im pro vem en t h as its lim its . These d o n ot i m med ia te ly aff e ct t h e w ork in g m an . T ru e, t h e r is e i n p opula tio n will e v en tu ally fo rc e w ag es b ack to w ard s u bsis te n ce, b ut fo r m an y y ears , in Sm ith ’s o pin io n, t h e w ork in g c la ss w ould i m pro ve i ts l o t. But S m ith w as a b ove a ll a re alis t. In th e very lo ng ru n, w ell b ey ond th e horiz o n, h e s a w th at a g ro w in g p opula tio n w ould p ush w ag es b ack to th eir “n atu ra l” le v el. W hen w ould th at tim e c o m e? C le arly , it w ould a rriv e w hen so cie ty h ad ru n o ut o f u nuse d re so urc es a n d in tr o duced a s fin e a d iv is io n o f la b or a s p ossib le . I n a w ord , g ro w th w ould c o m e t o a n e n d w hen t h e e co nom y had e x te n ded i ts b oundarie s t o t h eir l im its , a n d t h en f u lly u tiliz ed i ts i n cre ase d eco nom ic “ sp ace.” But w hy c o uld n ot th at b oundary b e f u rth er e x pan ded ? T he a n sw er is th at Sm ith sa w th e all- im porta n t div is io n of la b or as a once-fo r- a ll, not a co ntin uin g, p ro cess. A s h as b een re cen tly p oin te d o ut, h e d id n ot se e th e org an iz atio nal an d te ch nolo gic al co re of th e div is io n of la b or as a se lf – gen era tin g p ro cess o f c h an ge, b ut a s a d is c re te a d van ce th at w ould im part its stim ulu s a n d t h en d is a p pear. T hus, i n t h e v ery l o ng r u n t h e g ro w th m om en tu m of s o cie ty w ould c o m e to a h alt— Sm ith o nce m en tio ns tw o h undre d y ears a s th e lo ngest p erio d o ver w hic h a s o cie ty c o uld h ope to f lo uris h . T here afte r th e la b ore r w ould re tu rn to h is su bsis te n ce w ag es, th e c ap ita lis t to th e m odest pro fits o f a sta b le m ark et, a n d th e la n dlo rd a lo ne m ig ht e n jo y a so m ew hat hig her in co m e a s f o od p ro ductio n r e m ain ed a t th e le v els r e q uir e d b y a la rg er, alth ough no lo nger gro w in g, popula tio n. For all its optim is tic bold ness, Sm ith ’s v is io n i s b ounded , c are fu l, s o ber— fo r t h e l o ng r u n, e v en s o berin g. No w onder, th en , th at th e b ook to ok h old s lo w ly . I t w as e ig ht y ears b efo re it w as q uote d in P arlia m en t, th e fir s t to d o s o b ein g C harle s J a m es F ox, th e most p ow erfu l m em ber o f C om mons (w ho a d m itte d la te r th at h e h ad n ev er actu ally re a d th e b ook). It w as n ot u ntil 1 800 th at th e b ook a ch ie v ed fu ll re co gnitio n. B y th at tim e it h ad g one th ro ugh n in e E nglis h e d itio ns a n d h ad fo und its w ay to E uro pe an d A m eric a. Its pro ta g onis ts cam e fro m an unex pecte d q uarte r. T hey w ere th e r is in g c ap ita lis t c la ss— th e v ery c la ss th at Sm ith h ad ex co ria te d f o r its “ m ean r a p acity ,” a n d o f w hose m em bers h e h ad sa id th at th ey “ n eith er a re , n or o ught to b e, th e ru le rs o f m an kin d.” A ll th is was ig nore d in f a v or o f th e g re at p oin t th at S m ith m ad e in h is in quir y : le t th e mark et a lo ne . What S m ith h ad m ean t b y th is w as o ne th in g; w hat h is p ro ponen ts m ad e him o ut to m ean w as a n oth er. S m ith , a s w e h av e s a id , w as n ot th e p ro ponen t of an y one cla ss. H e w as a sla v e to his sy ste m . H is w hole eco nom ic philo so phy s te m med f ro m h is u nquestio nin g f a ith in th e a b ility o f th e m ark et to g uid e t h e s y ste m t o i ts p oin t o f h ig hest r e tu rn . T he m ark et— th at w onderfu l so cia l m ach in e— would t a k e c are o f s o cie ty ’s n eed s if i t w as l e ft a lo ne , s o t h at th e la w s o f ev olu tio n m ig ht ta k e o ver to lif t so cie ty to w ard its p ro m is e d re w ard . S m ith w as n eith er a n tila b or n or a n tic ap ita l; if h e h ad a n y b ia s it w as in fa v or o f th e c o nsu m er. “ C onsu m ptio n is th e so le e n d a n d p urp ose o f a ll pro ductio n,” h e w ro te , an d th en p ro ceed ed to castig ate th ose sy ste m s th at pla ced t h e i n te re st o f t h e p ro ducer o ver t h at o f t h e c o nsu m in g p ublic . But in Sm ith ’s pan eg yric of a fre e an d unfe tte re d m ark et th e ris in g in dustr ia lis ts f o und th e th eo re tic al ju stif ic atio n th ey n eed ed to b lo ck th e f ir s t govern m en t a tte m pts to re m ed y th e s c an dalo us c o nditio ns o f th e tim es. F or Sm ith ’s th eo ry d oes u nquestio nab ly le ad to a d octr in e o f la is se z-fa ir e . T o Adam S m ith th e le ast govern m en t is certa in ly th e best: govern m en ts are sp en dth rif t, ir re sp onsib le , an d unpro ductiv e. A nd yet A dam S m ith is not necessa rily o ppose d — as h is p osth um ous a d m ir e rs m ad e h im o ut to b e— to govern m en t a ctio n t h at h as a s i ts e n d t h e p ro m otio n o f t h e g en era l w elf a re . H e warn s, fo r ex am ple , of th e stu ltif y in g eff e ct of m ass pro ductio n— “th e unders ta n din gs o f th e g re ate r p art o f m en are n ecessa rily fo rm ed in th eir em plo ym en ts . T he m an w hose w hole lif e is s p en t in p erfo rm in g a f e w s im ple opera tio ns … g en era lly b eco m es a s s tu pid a n d ig nora n t a s it is p ossib le f o r a hum an c re atu re t o b eco m e”— an d p ro phesie s a d eclin e i n t h e m an ly v ir tu es o f th e l a b ore r, “ u nle ss t h e g overn m en t t a k es s o m e p ain s t o p re v en t i t.” In deed , fa r fro m b ein g o ppose d to all g overn m en t u nderta k in gs, S m ith sp ecif ic ally str e sse s th re e th in gs th at g overn m en t sh ould d o in a so cie ty o f natu ra l lib erty . F ir s t, n ot su rp ris in gly , it sh ould p ro te ct th at so cie ty a g ain st “th e v io le n ce a n d in vasio n” o f o th er s o cie tie s. S eco nd, it s h ould p ro vid e a n “ex act a d m in is tr a tio n o f ju stic e” fo r a ll c itiz en s. A nd th ir d , g overn m en t h as th e duty of “ere ctin g an d m ain ta in in g th ose public in stitu tio ns an d th ose public w ork s w hic h m ay b e in th e h ig hest d eg re e a d van ta g eo us to a g re at so cie ty ,” b ut w hic h “ are o f s u ch a n atu re th at th e p ro fit c o uld n ev er r e p ay th e ex pen se t o a n y i n div id ual o r s m all n um ber o f i n div id uals .” Put in to to day ’s la n guag e, S m ith e x plic itly re co gniz es th e u se fu ln ess o f public in vestm en t f o r p ro je cts th at c an not b e u nderta k en b y th e p riv ate s e cto r —he m en tio ns r o ad s a n d e d ucatio n a s tw o e x am ple s. N eed le ss to s a y, th is is an id ea th at h as g ro w n c o nsid era b ly in s c o pe s in ce S m ith ’s d ay — one th in ks of f lo od c o ntr o l, e co lo gic al r e p air , s c ie n tif ic r e se arc h — but t h e i d ea i ts e lf , l ik e so m uch e ls e , i s i m plic it, n ot e x plic it, i n S m ith ’s u nderly in g v is io n. What S m ith is a g ain st is th e m ed dlin g o f th e g overn m en t w ith th e m ark et mech an is m . H e is ag ain st re str a in ts on im ports an d bountie s on ex ports , ag ain st g overn m en t la w s th at s h elte r in dustr y fro m c o m petitio n, a n d a g ain st govern m en t s p en din g f o r u npro ductiv e e n ds. N otic e t h at t h ese a ctiv itie s o f t h e govern m en t a ll b ear a g ain st th e p ro per w ork in g o f th e m ark et s y ste m . S m ith nev er fa ced th e p ro ble m th at w as to c au se su ch in te lle ctu al a g ony fo r la te r gen era tio ns o f w heth er th e g overn m en t is w eak en in g o r str e n gth en in g th at sy ste m w hen it s te p s in w ith w elf a re le g is la tio n. A sid e f ro m p oor r e lie f, th ere was v ir tu ally n o w elf a re le g is la tio n in S m ith ’s d ay — th e g overn m en t w as th e unab ash ed ally of th e govern in g cla sse s, an d th e gre at tu ssle w ith in th e govern m en t w as w heth er it s h ould b e th e la n dow nin g o r th e in dustr ia l c la sse s who s h ould m ost b en efit. T he q uestio n o f w heth er th e w ork in g c la ss s h ould hav e a v oic e in th e d ir e ctio n o f e co nom ic a ff a ir s sim ply d id n ot e n te r a n y re sp ecta b le p ers o n’s m in d. The g re at e n em y to A dam S m ith ’s s y ste m is n ot s o m uch g overn m en t per se as m onopoly in an y fo rm . “P eo ple of th e sa m e tr a d e se ld om m eet to geth er,” sa y s A dam S m ith , “b ut th e co nvers a tio n en ds in a co nsp ir a cy ag ain st th e p ublic , o r in s o m e d iv ers io n to r a is e p ric es.” A nd th e tr o uble w ith su ch goin gs-o n is not so m uch th at th ey are m ora lly re p re h en sib le in th em se lv es— th ey a re , a fte r a ll, o nly t h e i n ev ita b le c o nse q uen ce o f m an ’s s e lf – in te re st— as th at th ey im ped e th e f lu id w ork in g o f th e m ark et. A nd o f c o urs e Sm ith is r ig ht. I f th e w ork in g o f th e m ark et is tr u ste d to p ro duce th e g re ate st num ber o f g oods a t th e lo w est p ossib le p ric es, a n yth in g th at in te rfe re s w ith th e m ark et n ecessa rily lo w ers s o cia l w elf a re . I f, a s in S m ith ’s tim e, n o m aste r hatte r an yw here in E ngla n d can em plo y m ore th an tw o ap pre n tic es o r n o maste r c u tle r in S heff ie ld m ore th an o ne, th e m ark et s y ste m c an not p ossib ly yie ld its fu ll b en efits . If, a s in S m ith ’s tim e, p au pers a re tie d to th eir lo cal paris h es a n d p re v en te d fro m s e ek in g w ork w here w ork m ig ht b e fo und, th e mark et c an not a ttr a ct l a b or w here l a b or i s w an te d . I f, a s i n S m ith ’s t im e, g re at co m pan ie s a re g iv en m onopolie s o f fo re ig n tr a d e, th e p ublic c an not re aliz e th e f u ll b en efits o f c h eap er f o re ig n p ro duce. Hen ce, s a y s S m ith , a ll t h ese i m ped im en ts m ust g o. T he m ark et m ust b e l e ft fre e to fin d its ow n natu ra l le v els of pric es an d w ag es an d pro fits an d pro ductio n; w hate v er i n te rfe re s w ith t h e m ark et d oes s o o nly a t t h e e x pen se o f th e tr u e w ealth o f th e n atio n. B ut b ecau se a n y a ct o f th e g overn m en t— ev en su ch la w s a s th ose re q uir in g th e w hite w ash in g o f fa cto rie s o r p re v en tin g th e sh ack lin g o f ch ild re n to m ach in es— co uld b e in te rp re te d as h am perin g th e fre e o pera tio n o f th e m ark et. The W ea lth o f N atio ns w as lib era lly q uote d to oppose t h e f ir s t h um an ita ria n l e g is la tio n. T hus, b y a s tr a n ge i n ju stic e, t h e m an who w arn ed th at th e gra sp in g eig hte en th -c en tu ry in dustr ia lis ts “g en era lly hav e an in te re st to deceiv e an d ev en to oppre ss th e public ” cam e to be re g ard ed a s th eir e co nom ic p atr o n s a in t. E ven to day, in b lith e d is re g ard o f h is actu al p hilo so phy, S m ith is g en era lly re g ard ed a s a co nse rv a tiv e e co nom is t, where as in f a ct h e w as m ore a v ow ed ly h ostile to th e motiv es o f b usin essm en th an a re m ost c o nte m pora ry l ib era l e co nom is ts . In a se n se th e v is io n o f A dam S m ith is a te stim ony to th e eig hte en th – cen tu ry belie f in th e in ev ita b le tr iu m ph of ra tio nality an d ord er over arb itr a rin ess a n d c h ao s. D on’t t r y t o d o g ood, s a y s S m ith . L et g ood e m erg e a s th e b y-p ro duct o f s e lf is h ness. H ow lik e th e p hilo so pher to p la ce s u ch f a ith in a v ast s o cia l m ach in ery a n d to r a tio naliz e s e lf is h in stin cts in to s o cia l vir tu es! There i s n oth in g h alf h earte d a b out S m ith ’s a b id in g t r u st i n t h e c o nse q uen ce o f his p hilo so phic al b elie fs . H e u rg es th at ju dges s h ould b e p aid b y th e litig an ts ra th er th an b y th e s ta te , s in ce in th at w ay th eir s e lf -in te re st w ill le ad th em to ex ped ite th e c ase s b ro ught b efo re th em . H e se es little fu tu re fo r th e n ew ly em erg in g b usin ess o rg an iz atio ns c alle d jo in t- s to ck c o m pan ie s ( c o rp ora tio ns), sin ce it s e em s h ig hly im pro bab le th at s u ch im pers o nal b odie s c o uld m uste r th e n ecessa ry s e lf -in te re st to p urs u e c o m ple x a n d a rd uous u nderta k in gs. E ven th e g re ate st h um an ita ria n m ovem en ts , su ch a s th e a b olitio n o f sla v ery , a re defe n ded i n h is o w n t e rm s; b est a b olis h s la v ery , s a y s A dam S m ith , s in ce t o d o so w ill p ro bab ly b e c h eap er i n t h e e n d. The c o m ple x ir ra tio nal w orld is th us r e d uced to a k in d o f r a tio nal s c h em e where h um an p artic le s a re m ag netiz ed in a s im ple p ola rity to w ard p ro fit a n d aw ay fro m lo ss. T he g re at sy ste m w ork s, n ot b ecau se m an d ir e cts it, b ut becau se s e lf -in te re st a n d c o m petitio n l in e u p t h e f ilin gs i n t h e p ro per w ay ; t h e most th at m an can d o is to h elp th is n atu ra l so cia l m ag netis m alo ng, to re m ove w hate v er b arrie rs sta n d b efo re th e fre e w ork in g-o ut o f th is so cia l physic s, a n d t o c ease h is m is g uid ed e ff o rts t o e sc ap e f ro m i ts t h ra lld om . And yet, fo r all its eig hte en th -c en tu ry fla v or, its belie f in ra tio nality , natu ra l la w , an d th e m ech an iz ed ch ain o f h um an actio n an d re actio n, th e world o f A dam S m ith is n ot w ith out its w arm er v alu es. D o n ot f o rg et th at th e gre at in te n ded b en efic ia ry o f th e s y ste m is th e c o nsu m er— not th e p ro ducer. For t h e f ir s t t im e i n t h e p hilo so phy o f e v ery day l if e , t h e c o nsu m er i s k in g. Of t h e w hole , w hat h as s u rv iv ed ? Not th e g re at s c h em e o f e v olu tio n. W e s h all s e e th at p ro fo undly a lte re d b y th e g re at e co nom is ts t o f o llo w . B ut l e t u s n ot r e g ard t h e w orld o f A dam S m ith as m ere ly a p rim itiv e a tte m pt to a rriv e a t fo rm ula tio ns th at w ere b ey ond h is gra sp . S m ith w as th e e co nom is t o f p re in dustr ia l c ap ita lis m ; h e d id n ot liv e to se e th e m ark et sy ste m th re ate n ed b y en orm ous en te rp ris e s, o r h is la w s o f accu m ula tio n a n d p opula tio n u pse t b y s o cio lo gic al d ev elo pm en ts fif ty y ears off . W hen S m ith liv ed an d w ro te , th ere h ad n ot y et b een a re co gniz ab le phen om en on th at m ig ht b e c alle d a “ b usin ess c y cle .” T he w orld h e w ro te ab out actu ally ex is te d , an d his sy ste m atiz atio n of it pro vid es a brillia n t an aly sis o f i ts e x pan siv e p ro pen sitie s. Yet so m eth in g m ust hav e been m is sin g fro m S m ith ’s co ncep tio n. F or alth ough h e sa w a n e v olu tio n fo r so cie ty , h e d id n ot se e a re v olu tio n— th e In dustr ia l R ev olu tio n. S m ith d id n ot se e in th e u gly fa cto ry sy ste m , in th e new ly tr ie d c o rp ora te f o rm o f b usin ess o rg an iz atio n, o r in th e w eak a tte m pts of jo urn ey m en to fo rm p ro te ctiv e o rg an iz atio ns, th e fir s t a p peara n ce o f n ew an d d is ru ptiv ely p ow erfu l so cia l fo rc es. In a se n se h is sy ste m p re su ppose s th at eig hte en th -c en tu ry E ngla n d w ill re m ain unch an ged fo re v er. O nly in quan tity w ill it g ro w : m ore p eo ple , m ore g oods, m ore w ealth ; its q uality w ill re m ain u nch an ged . H is a re t h e d ynam ic s o f a s ta tic c o m munity ; i t g ro w s b ut i t nev er m atu re s. But, a lth ough th e s y ste m o f e v olu tio n h as b een v astly a m en ded , th e g re at pan ora m a o f th e m ark et re m ain s a s a m ajo r a ch ie v em en t. T o b e s u re , S m ith did n ot “ d is c o ver” th e m ark et; o th ers h ad p re ced ed h im in p oin tin g o ut h ow th e in te ra ctio n o f s e lf -in te re st a n d c o m petitio n b ro ught a b out th e p ro vis io n o f so cie ty . B ut S m ith w as th e fir s t to u nders ta n d th e fu ll p hilo so phy o f a ctio n th at s u ch a c o ncep tio n d em an ded , th e f ir s t to f o rm ula te th e e n tir e s c h em e i n a wid e a n d s y ste m atic fa sh io n. H e w as th e m an w ho m ad e E ngla n d, a n d th en th e w hole W este rn w orld , unders ta n d ju st how th e m ark et kep t so cie ty to geth er, a n d th e f ir s t to b uild a n e d if ic e o f s o cia l o rd er o n th e u nders ta n din g he ach ie v ed . L ate r eco nom is ts w ill em bro id er S m ith ’s desc rip tio n of th e mark et a n d w ill in quir e in to th e s e rio us d efe cts th at s u bse q uen tly a p peare d in it. N one w ill im pro ve o n th e r ic h ness a n d lif e w ith w hic h S m ith im bued th is asp ect o f t h e w orld . For Sm ith ’s en cy clo ped ic sc o pe an d know le d ge th ere can be only ad m ir a tio n. I t w as o nly in th e e ig hte en th c en tu ry th at s o h uge, a ll- e m bra cin g, se cu re , c au stic , a n d p ro fo und a b ook c o uld h av e b een w ritte n . In deed , The Wea lth o f N atio ns a n d The T heo ry o f M ora l S en tim en ts , to geth er w ith h is f e w oth er e ssa y s, re v eal th at S m ith w as m uch m ore th an ju st a n e co nom is t. H e was a p hilo so pher- p sy ch olo gis t- h is to ria n -s o cio lo gis t who c o nceiv ed a v is io n th at in clu ded hum an motiv es an d his to ric “sta g es” an d eco nom ic mech an is m s, a ll o f w hic h e x pre sse d th e p la n o f th e G re at A rc h ite ct o f N atu re (a s S m ith c alle d h im ). F ro m th is v ie w poin t, The W ea lth o f N atio ns is m ore th an a m aste rw ork o f p olitic al e co nom y. I t is p art o f a h uge c o ncep tio n o f th e hum an a d ven tu re i ts e lf . More o ver, Wea lth co nsta n tly sta rtle s us w ith its pie rc in g obse rv atio ns. Sm ith a n tic ip ate d V eb le n b y a h undre d a n d f if ty y ears w hen h e w ro te , “ W ith th e g re ate r p art o f ric h p eo ple , th e c h ie f e n jo ym en t o f ric h es c o nsis ts in th e para d e o f r ic h es, w hic h in th eir e y e is n ev er s o c o m ple te a s w hen th ey a p pear to p osse ss th ose d ecis iv e m ark s o f o pule n ce w hic h n obody c an p osse ss b ut th em se lv es.” H e w as a s ta te sm an a h ead o f h is tim e w hen h e w ro te , “ If a n y o f th e p ro vin ces o f th e B ritis h E m pir e c an not b e m ad e to c o ntr ib ute to w ard s th e su pport o f th e w hole e m pir e , it is s u re ly tim e th at G re at B rita in s h ould fre e hers e lf f ro m th e e x pen se o f d efe n din g th ose p ro vin ces in tim e o f w ar, a n d o f su pportin g a n y p art o f th eir c iv il o r m ilita ry e sta b lis h m en ts in tim e o f p eace, an d en deav our to acco m modate h er fu tu re v ie w s an d d esig ns to th e re al med io crity o f h er c ir c u m sta n ces.” Perh ap s n o eco nom is t w ill ev er ag ain so u tte rly en co m pass h is ag e as Adam S m ith . C erta in ly n one w as e v er s o s e re n e, s o d ev oid o f c o ntu m acy, s o pen etr a tin gly c ritic al w ith out r a n co r, a n d s o o ptim is tic w ith out b ein g u to pia n . To b e s u re , h e s h are d t h e b elie fs o f h is d ay ; i n f a ct, h e h elp ed t o f o rg e t h em . I t was a n a g e o f h um an is m a n d r e aso n; b ut w hile b oth c o uld b e p erv erte d f o r t h e cru ele st a n d m ost v io le n t p urp ose s, S m ith w as n ev er c h au vin is t, a p olo gis t, o r co m pro m is e r. “F or to w hat purp ose ,” he w ro te in The T heo ry of M ora l Sen tim en ts , “ is a ll t h e t o il a n d b ustle o f t h is w orld ? W hat i s t h e e n d o f a v aric e an d a m bitio n, o f th e p urs u it o f w ealth , o f p ow er, a n d p re -e m in en ce?” The Wea lth o f N atio ns p ro vid es h is a n sw er: a ll th e g ru bby s c ra b blin g fo r w ealth an d g lo ry h as i ts u ltim ate j u stif ic atio n i n t h e w elf a re o f t h e c o m mon m an . At th e en d o f h is lif e , S m ith w as rip e w ith h onors an d re sp ect. B urk e tr a v ele d to E din burg h to se e h im ; h e w as ele cte d L ord R ecto r at h is o ld Univ ers ity of G la sg ow ; he sa w Wea lth tr a n sla te d in to D an is h , Fre n ch , Germ an , I ta lia n , S pan is h . O nly O xfo rd ig nore d h im ; it n ev er d eig ned to g iv e him a n h onora ry d eg re e. A t o ne tim e P itt th e y ounger, th en P rim e M in is te r, was m eetin g w ith A ddin gto n, W ilb erfo rc e, a n d G re n ville , a n d A dam S m ith had b een in vite d to atte n d. A s th e o ld p hilo so pher w alk ed in to th e ro om , ev ery one ro se . “ B e s e ate d , g en tle m en ,” h e s a id . “ N o,” re p lie d P itt, “ w e w ill sta n d u ntil y ou a re f ir s t s e ate d , f o r w e a re a ll y our s c h ola rs .” In 1 790 S m ith d ie d ; h e w as s ix ty -s e v en . C urio usly , h is p assin g a ttr a cte d re la tiv ely little notic e; perh ap s peo ple w ere to o busy w orry in g ab out th e Fre n ch R ev olu tio n an d th e re p erc u ssio ns it m ig ht hav e on th e E nglis h co untr y sid e. He was burie d in th e Can ongate ch urc h yard with an unpre te n tio us to m bsto ne; it s ta te s th at A dam S m ith , a u th or o f The W ea lth o f Natio ns , l ie s h ere . I t w ould b e h ard t o c o nceiv e o f a m ore d ura b le m onum en t.
Please provide me with Plagiarism Report.Class reading and Chapters are attached belowIn Class, materials must be used only. No Outside source.QUESTION Write a 5-7 page paper (double spaced, 12 point
9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 1/9 IBRAHIM M. OWEISS In his Prolegomena (The Muqaddimah), ‘Abd al-Rahman Ibn 1332-1406), commonly particular the science of civilization (al-‘umran). His signi in the history of economic thought as a major forerunner , to Adam Smith, whose great works were published some Not but he also Before Ibn Khaldun, Plato and his contemporary Xenophon presented, account of the techniques of specialization, particularly more work per hour. Following Plato, Aristotle proposed his Adam Smith was that of the Scholastics on religious and moral perceptions for undertaken in accordance with such laws. Ibn Khaldun was cognizant of these ideas, including the one relating relationship between moral expounded in his citation and discussion who ruled Khurasan with his descendants until A.D. 1 From the rudimentary thoughts of T ahir 2 theory of taxation which has affected modern economic elsewhere. This paper attempts to give Ibn Khaldun his for gotten and long history of substance and depth. Centuries of the seventeenth century-Sir William 1772-1823), Thomas R. Malthus (A.D. 1766-1834), Karl Marx 1883-1946), to Labor Theory of Value, Economics of Labor , Labor Accumulation With the exception of Joseph A. Schumpeter , who discovered death, 3 4 and Charles Issawi, major Western and David Ricardo 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 2/9 Adam Smith and as further developed used in its production. On the basis of this production of labour” 5 and introduced his surplus value signifying the unjusti capitalists, who exploit the ef forts of the labor market economy, who According to Ibn Khaldun, labor is the source of value. He gave presenting it presented 6 Ibn Khaldun’s contribution was later Political Discourses, published purchased by labour .” 7 with goods is purchased by labour , as indeed save us this toil. They contain the value of at the time to contain the value of an equal quantity . The value possesses it, and quantity of labour which exchangeable value of all commodities.” 8 work, is carefully analyzed, one can Prolegomena (The Muqaddimah). According to Ibn Khaldun, labor is the source of value. It is necessary for all case (capital) acquired.” 9 Ibn Khaldun divided all earnings into two categories, ribh kasb (earning a living). Ribh is when a man works for himself and sells his objects to others; natural Kasb is earned when a man works for himself. common mistake in ribh. Ribh may either mean context. In this ribh means gross earning because the cost of in the sale price Whether ribh or kasb, all earnings are value realized though the value of objects includes the cost of other inputs and an opposite known as cities, Whereas labor may be interpreted from Ibn Khaldun’s ideas as both and pro exchange through barter or through and pro Long before David Ricardo published his signi The Principles of Political Ibn Khaldun gave the original explanation labor earnings. They and the extent to which the ruler precious, that is, if the demand for it High earnings in one craft attract others to it, a dynamic phenomenon available supply of long-term adjustments within was attacked by John Maynard Keynes in his famous Khaldun’s analysis has not only proved to be historically economists. 10 Ibn Khaldun succinctly observed, explained, and analyzed how earnings even for the same 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 3/9 town’s degree of af and the crystallization of productive them in England and in Bengal 11 compared earnings in Fez with those of Tlemcen. 1 2 contribution and exchange of products decline in productivity could lead civilization yields lar ge pro [pro 13 It was also Ibn Khaldun, long before Adam Smith, who made a strong choice. Among the most oppressive measures, and the ones For labour is a commodity , as we have no source or made to do forced work in their own occupation, they of their income. 14 T o maximize both earnings and levels of satisfaction, skilled abilities dictate. Through natural talents and acquired and, Demand, Supply , Prices, and Pro In addition to his original contribution to the economics interplay of several tools of economic analysis, such is demand, Demand for an object is based on the utility of acquiring it and motive therefore planted the Robert Malthus, Alfred Marshall, John Hicks, and others. spending, sales fall and Demand for a certain commodity also depends upon the extent to his ruling concept known in modern economic for their products increases.” 15 marketplace. As is commonly known, modern price theory states that cost is the price of foodstuf fs in the cost of production. [In] the coastal and hilly regions, whose soil is those production, prices ….The position is just the reverse in the land agriculture; hence in that country 16 Besides individual and state demand and cost of production, price of the wealthy , and relationship between income and consumption consumption 17 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 4/9 Ibn Khaldun also made an original contribution in his concept reward in 1921. 18 it was Ibn Khaldun, not Frank merchandise and goods, storing them, and waiting of (these goods). This is called pr o .” 19 In another context, Ibn Khaldun stated again the same idea: and experienced people in the cities know that pro 20 Pro face of future uncertainties, a risk-bearer result of speculation which is carried out by introduced a gospel for traders, “Buy cheap and sell dear ,” 21 translation of Muqaddimah of Ibn Khaldun, Franz Rosenthal stated in Fischer appeared, Buy LowSell High: Guidance for the General Reader T rade T echniques .” 22 If Ibn Khaldun’s gospel is applied to cost analysis, it becomes price of at a discount or , foreign trade. Nevertheless, Ibn disruptive to markets. It is therefore advisable methods of market intervention. Such policies are economically from the affected. Ibn Khaldun the high-priced goods sell less in the disrupts the formulation increase in demand, restrictions the components of a total cost. After his growing Khaldun stated the following: Because of the demand for (luxury articles), they addition, the city , and the conveniences become and because the government labor thus civilization city). A great deal of money is spent. Under these circumstances, great deal of money for expenditures, to of life for themselves and their families, 21 As to the impact of restricted supply on the price level, Ibn their prices go up.” 2 4 By carefully reading the above two passages, it becomes obvious cost-push and systematically identi Macr oeconomics, Gr owth, Taxes, Role of Governments, In macroeconomics, Ibn Khaldun laid the foundations demand,” 25 population increases, there taxes. The upward civilization from them increases, and, as a result, multiplied in the town. Production there than before. And so it goes with the second and thir d increase.” 26 People’s “wealth, grow , The customs and ways multiply , and all the various kinds of crafts them.” 27 The concept Maynard Keynes. However , it 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 5/9 Modern national income accounts were also developed and expanded Expenditures of was the equality between them. 28 expenditure is lar ge, and vice versa. favourably situated, and the city grows.” 29 Ibn Khaldun introduced the pioneering theory of growth based on (Man) obtains (some pro these things are only contributory . if they correspond 30 Ibn Khaldun gave his account of the stages of economic development, “cooperation in economic skilled labor congregates and long as there is an extra ef fort turn, combined production and the development of crafts efforts, whereas with less human ef fort there may people’s standard of living. Governments play an important role in growth and in the country’s goods and services environment of incentives for defeating. Even though Ibn Khaldun regards them of what is contemporarily known as cost through their big purchases. Government expenditures stimulate hiked through the economic activities 31 program for the poor , the widows, the government should spend its tax revenue wisely preserve them from harm.” 32 Ibn Khaldun was the several Reagan. “Our true other . An economy stilled by will never produce enough jobs or enough tax decrease, a cut in tax rates of Ibn Khaldun, a Muslim philosopher back in dynasty taxation yields lar ge revenues from small assessments. from large yes, would reduce 33 According to Ibn Khaldun, tax revenues of the ruling dynasty increase with easy , not rate of taxation, a Arthur Laf fer and others. The developed by Ibn Khaldun in the fourteenth 34 “When tax assessments and imposts upon the subjects are low , Cultural enterprises number of individual imposts and individual assessments, increases”; 35 resulting, in the attempt to con 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 6/9 in loss of incentives, government because it is a form of oppression, In macroeconomics Ibn Khaldun also contributed to the theory of of wealth but measure of value, a value for all capital other things are acquired, it 36 The real form of wealth is not money , capital accumulation in real terms. It was, wealth, even though he reali7ed that the latter may he acquired role than goods or of services, the Foreign T rade Ibn Khaldun also contributed to the analytical mind, he to Ibn Khaldun, people’s satisfaction, The merchant who knows his business will travel only (General need) makes for a lar ge demand for be able to take advantage more valuable when merchants transport it from one country to another . 37 The italicized word, valuable, indicates Ibn valuable by being transported from country A to country B and all other costs are taken into account, then it is (1) cheaper quality , serve to economize competition to other low-cost products. produce other goods or may add another layer of capital positively better quality than purchase it. In the meantime, internal attempt to improve their production or accept a reduction the quality of internal products or a diversion as in the trade increase in quantity existing one. Furthermore, producers, if it is feasible, to produce Ibn Khaldun was conscious of what was later termed the “opportunity valuable labor to improving poor soils should be put to the best provides further incentives Ibn Khaldun’s originality in his perceptive observations and analysis particular , since the publication of Political Discourses by David Hume in 1752. But the subject was planted by Ibn Khaldun four centuries 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 7/9 Ibn Khaldun and Adam Smith In spite of Ibn Khaldun’s overall contribution to the the “father of economics.” Schumpeter’s view of Smith’s 38 “Personally , not share such a view , for I still consider Adam Smith one to presented these ideas more original than Adam Smith, laid down before him, such as Plato’s account Husayn’s treatment of government’s role. Still, it was Ibn numerous areas economic thought. Despite Ibn Khaldun’s contributions, some economic ideas as well choice, as presented Khaldun. “Smith’s great economic freedom for all individuals.” 39 Khaldun and of Adam Smith, it must be left to the economic two great thinkers who were four centuries apart. However , I would contact. Even there were several channels through thought. Adam Smith graduated from Glasgow University, where he was in in turn affected by 40 known as Lord Shaftesbury in eighteenth century , and been directly or indirectly af fected by Ibn research at Oxford University’s library , where he may having been aware of the author’s name. It was not uncommon in delivered lasted from the eleventh Muslim scholars through a multiplicity name of a Muslim author. The protracted war waged by the Crusaders created a strong antagonistic immune and which lasted for centuries, probably Smith may have been directly or indirectly exposed to Ibn Khaldun’s Europe. During this tour may have been in Adam Smith could also have been exposed to the economic contributions in boundaries at its peak in the sixteenth century Africa-a new bridge was erected linking intellectuals in the Continent the empire, revising manuscripts then transmitted from one generation In prosperity, and power , Sultan Selim 1, after having successfully took back a case of a “transfer The impact of Ibn Khaldun was extensive and profound, not only among intellectuals interest in his works, his 41 exactly forty-six years before the publication of Adam Smith’s The W ealth of Nations. Concluding Remarks 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 8/9 Even if Adam Smith was not directly exposed to Ibn original seeds of classical economics and even modern economic established as the following passage from Arnold In his chosen Universal History he created 42 Through his great sense and knowledge of history , together with places, Ibn Khaldun left a wealth of contributions for depth in his coverage of value and its relationship to the rise and fall of dynasties; his perceptions treatment subjects. His unprecedented of economics. Notes 1. Charles Issawi, An Arab Philosophy of History, Selections 1406) (London: 2. Ibid., p. 89. The letter appears in the third chapter , section Prolegomena. See Ibn Khaldun, The Muqaddimah, tr. by Franz Rosenthal, 3 vols., Foundation by Princeton University The Muqaddimah. 3. Joseph A. Schumpeter , History of Economic Analysis, edited published after 4. Joseph J. Spengler, “Economic Thought in Islam: Ibn Khaldun,” Comparative Studies in Society and History , vol. no. 3 (April 1964). 5. Karl Marx, Zur Kritik der Politischen Ökonomie, p. A History of Economic Thought, 4th ed. (London: Faber and Faber , 1978), p. 266. 6. The Muqaddimah , 2:311ff. 7. David Hume, Political Discourses (Edinbur g: Printed A. Kincaid, 1752), p. 12. 8. Adam Smith, An Inquiry into the Natur e and Causes of the ed. by Edwin Cannan (New Y ork: Random House, 9. The Muqaddimah, 2:313. 10. Iohn Maynard Kevnes, General Theory of Employment, Inter est (New York: Harcourt, Brace and Co., 1936), pp. 11. Adam Smith, An Inquiry , pp. 67-73. 12. The Muqaddimah, 2:273-274. 13. Ibid., p. 282. 14. Ibn Khaldun, An Arab Philosophy of History , (Issawi’s 9/5/22, 12:38 PM “Ibn Khaldun, the Father of Economics” https://faculty.georgetown.edu/imo3/ibn.htm 9/9 15. Ibid., p. 72. 16. Ibid., pp. 73-74. 17. Cf. Milton Friedman, A Theory of Consumption Function (Princeton: 1 8. Frank H. Knight, Risk, Uncertainty , and Pro (New 19. The Muqaddimah, 2:340. 20. Ibid., 2:339. 21. Ibid., 2:337. 22. Ibid., 2:337 (see footnote 52). 23. Ibid., 2:279-280. 24. Ibid., 2:338. 25. Keynes, General Theory , pp. 23-34, 113-131, 52-61. 26. 7he Muqaddimah, 2:273. 27. Ibid., 2:297. 28. Ibid., 2:274. 29. Ibid., 2:275. 30. Ibid., 2:31 1-12. 31. The Muqaddimah , 2:92. 32. Ibn Khaldun was mostly in Arab Philosophy , p. 89. See also The Muqaddimah, 2:140-141. 33. President Reagan quoted Ibn Khaldun twice, on September 2, Public Papers of (Washington 1981), pp. 745, 871. 34. Arthur B. Laf fer and Marc A. Miles, International Economics (New York and London: Scott, Foresman 35. The Muqaddimah, 2:89-90. 36. Ibid., 2:313. 37. Ibid., 2:337-338. 38. Joseph A. Schumpeter , History . pp. 185-94, 474. 39. Overton H. Taylor, A History of Economic Thought (New 40. Antony Ashley Cooper (3rd Earl of Shaftesbury), Characteristics vol. 2, Inquiry Concerning 6th ed. (London: J. Purser , 1737). 1. Spengler, “Economic Thought,” p. 305. 2. Arnold J. T oynbee, A Study of History (London: Oxford 1. Back to biography
Please provide me with Plagiarism Report.Class reading and Chapters are attached belowIn Class, materials must be used only. No Outside source.QUESTION Write a 5-7 page paper (double spaced, 12 point
vii The V ic to ria n W orld a n d t h e U nderw orld o f Eco n om ic s K arl M arx p ro nounced h is s e n te n ce o f d oom o n c ap ita lis m i n t h e Manife sto o f 1 848; th e sy ste m w as d ia g nose d a s th e v ic tim o f a n in cu ra b le d is e ase , a n d a lth ough n o tim eta b le w as g iv en , it w as p re su m ed to b e c lo se e n ough to its f in al d eath s tr u ggle f o r t h e n ex t o f k in — th e C om munis ts — to l is te n a v id ly f o r t h e la st g asp th at w ould sig nal th eir in herita n ce o f p ow er. E ven b efo re th e a p peara n ce o f Capita l i n 1 867, t h e d eath w atc h h ad b eg un, a n d w ith e ach b out o f s p ecu la tiv e fe v er o r e ach s ie g e o f in dustr ia l d ep re ssio n, th e h opefu l d re w n eare r to th e death bed an d to ld each oth er th at th e m om en t of Fin al R ev olu tio n w ould n ow b e s o on a t h an d. But t h e s y ste m d id n ot d ie . T ru e, m an y o f t h e M arx is t l a w s o f m otio n w ere v erif ie d b y th e m arc h o f e v en ts : b ig b usin ess d id g ro w b ig ger a n d re cu rre n t d ep re ssio ns an d unem plo ym en t did pla g ue so cie ty . B ut alo ng w ith th ese c o nfir m atio ns of th e pro gnosis of doom , an oth er hig hly im porta n t an d p orte n to usly p hra se d M arx is t sy m pto m w as re m ark ab le b y its a b se n ce: th e “ in cre asin g m is e ry ” o f t h e p ro le ta ria t f a ile d t o i n cre ase . Actu ally , th ere h as b een a lo ng d eb ate a m ong M arx is ts a s to w hat M arx m ean t b y th at p hra se . If h e m ean t o nly th at m ore a n d m ore o f th e w ork in g c la ss would ex perie n ce th e “m is e ry ” of beco m in g pro le ta ria n s— wag e w ork ers — he w as rig ht, a s w e h av e s e en . B ut if h e m ean t th at th eir p hysic al m is e ry w ould w ors e n , h e w as w ro ng. In deed , a R oyal C om mis sio n c o nven ed to lo ok in to th e slu m p o f 1 886 e x pre sse d p artic u la r sa tis fa ctio n w ith th e c o nditio n o f th e w ork in g c la sse s. A nd t h is w as n ot j u st t h e p atr o niz in g c an t o f c la ss a p olo gis ts . C onditio ns were b ette r— perc ep tib ly an d sig nif ic an tly b ette r. L ookin g b ack o n th e situ atio n f ro m th e 1 880s, S ir R obert G if f e n w ro te : “ W hat w e h av e to c o nsid er is th at f if ty y ears a g o, t h e w ork in g m an w ith w ag es o n t h e a v era g e a b out h alf , o r n ot m uch m ore th an h alf w hat th ey are n ow , h ad at tim es to co nte n d w ith a f lu ctu atio n in th e p ric e o f b re ad w hic h im plie d sh eer sta rv atio n. P erio dic s ta rv atio n w as, in fa ct, th e co nditio n of th e m asse s of w ork in g m en t h ro ughout th e kin gdom fif ty years ag o.” B ut by th e tim e G if f e n w ro te , alth ough pric es had ris e n , w ag es had ris e n fa ste r. For th e fir st tim e , th e Englis h w ork in g-m an w as m ak in g e n ough to k eep b ody a n d s o ul to geth er— a so rry c o m men ta ry o n t h e p ast, b ut a h opefu l a u gury f o r t h e f u tu re . And n ot o nly h ad w ag es g one u p, b ut th e v ery s o urc e o f s u rp lu s v alu e h ad dim in is h ed : h ours w ere fa r sh orte r. A t th e Ja rro w S hip yard s a n d th e N ew Castle C hem ic al W ork s, fo r e x am ple , th e w ork w eek h ad fa lle n fro m s ix ty – one to fif ty -fo ur h ours , w hile e v en in th e s w eate d te x tile m ills , th e s tin t w as re d uced to o nly fif ty -s e v en h ours . In deed th e m ill o w ners c o m pla in ed th at th eir w ag e c o sts h ad r is e n b y b ette r th an 2 0 p erc en t. B ut w hile p ro gre ss w as ex pen siv e, it p aid in ta n gib le d iv id en ds. F or as co nditio ns am elio ra te d , th e mutte rin gs o f 1 848 d ie d d ow n. “ Y ou c an not g et th em to ta lk o f p olitic s so lo ng a s t h ey a re w ell e m plo yed ,” t e stif ie d a S ta ff o rd sh ir e m an ufa ctu re r o n t h e attitu de o f h is w ork in g f o rc e. Even M arx a n d E ngels h ad t o r e co gniz e t h e t r e n d. “ T he E nglis h p ro le ta ria t is a ctu ally b eco m in g m ore a n d m ore b ourg eo is ,” m ourn ed E ngels i n a l e tte r t o Marx , “ so th at th e u ltim ate a im o f th is m ost b ourg eo is o f a ll n atio ns w ould ap pear to be th e posse ssio n, alo ngsid e th e bourg eo is , of a bourg eo is aris to cra cy a n d a b ourg eo is p ro le ta ria t.” Cle arly , M arx w as p re m atu re in h is e x pecta tio n o f im pen din g d oom . F or th e f a ith fu l, o f c o urs e , th e d is c o ncertin g tu rn o f e v en ts c o uld b e s w allo w ed in th e c o m fo rtin g k now le d ge th at “ in ev ita b le ” s till m ean t in ev ita b le , a n d th at a matte r o f a g en era tio n o r tw o c am e to little in th e g ra n d m arc h o f h is to ry . B ut fo r th e n on-M arx is t s u rv ey ors o f th e s c en e, th e g re at V ic to ria n b oom m ean t so m eth in g e ls e . T he w orld m ore a n d m ore a p peare d f u ll o f h ope a n d p ro m is e , an d th e f o re b odin gs o f a d is se n te r lik e K arl M arx s e em ed m ere ly th e r a v in gs of a d is c o nte n te d ra d ic al. H en ce th e in te lle ctu al b om bsh ell th at M arx h ad pre p are d w en t o ff in a lm ost to ta l s ile n ce; in ste ad o f a s to rm o f a b use , M arx met t h e f a r m ore c ru sh in g i g nom in y o f i n dif f e re n ce. For e co nom ic s h ad c ease d to b e th e p ro lif e ra tio n o f w orld v ie w s th at, in th e h an ds o f n ow a p hilo so pher, n ow a f in an cia l tr a d er, n ow a r e v olu tio nary , se em ed to illu m in ate th e w hole a v en ue d ow n w hic h s o cie ty w as m arc h in g. I t becam e i n ste ad t h e s p ecia l p ro vin ce o f p ro fe sso rs , w hose i n vestig atio ns t h re w out p in poin t b eam s ra th er th an th e w id e-s e arc h in g b eaco ns o f th e earlie r eco nom is ts . There w as a r e aso n f o r t h is : a s w e h av e s e en , V ic to ria n E ngla n d h ad c au ght th e ste ad y tr a d e w in ds of la te -n in ete en th -c en tu ry pro gre ss an d optim is m . Im pro vem en t w as in th e a ir , a n d s o q uite n atu ra lly th ere s e em ed le ss c au se to ask d is tu rb in g q uestio ns a b out th e n atu re o f th e v oyag e. H en ce th e V ic to ria n boom gav e ris e to a ro ste r of elu cid ato rs , m en w ho w ould ex am in e th e work in gs o f th e s y ste m in g re at d eta il, b ut n ot m en w ho w ould e x pre ss d oubt as to its b asic m erits o r m ak e tr o uble so m e p ro gnostic atio ns a s to its e v en tu al fa te . A n ew p ro fe sso rd om to ok o ver th e m ain lif e o f e co nom ic th ought. Its co ntr ib utio ns w ere o fte n i m porta n t, y et n ot v ita l. F or i n t h e m in ds o f m en l ik e Alf re d M ars h all, S ta n le y Je v ons, Jo hn B ate s C la rk , an d th e pro lif e ra tin g fa cu ltie s th at s u rro unded th em , th ere w ere n o w olv es in th e e co nom ic w orld an ym ore , a n d th ere fo re n o lif e -a n d-d eath a ctiv itie s fo r e co nom ic th eo ry to elu cid ate . T he w orld w as p eo ple d e n tir e ly w ith a g re eab le , i f i m ag in ary , s h eep . The sh eep w ere nev er m ore cle arly delin eate d th an in a little volu m e en title d Math em atic a l P sy ch ic s , w hic h ap peare d in 1881, ju st tw o years befo re M arx d ie d . It w as n ot writte n b y th e g re ate st o f a cad em ic ia n s, b ut perh ap s by th e m ost re v ealin g of th em — a str a n ge, sh y pro fe sso r nam ed Fra n cis Y sid ro E dgew orth , a n ep hew o f t h at M aria E dge-w orth w ho h ad o nce pla y ed c h ara d es w ith R ic ard o. Edgew orth w as u ndoubte d ly a b rillia n t s c h ola r. I n h is f in al e x am in atio ns a t Oxfo rd , w hen h e w as a sk ed a p artic u la rly a b str u se q uestio n, h e i n quir e d o f h is ex am in ers , “ S hall I a n sw er b rie fly , o r a t le n gth ?” a n d th en p ro ceed ed to h old fo rth f o r h alf a n h our, p unctu atin g h is r e p ly w ith e x cu rs io ns in to G re ek w hile his e x am in ers g ap ed . But E dgew orth w as n ot fa sc in ate d w ith e co nom ic s b ecau se it ju stif ie d o r ex pla in ed o r c o ndem ned th e w orld , o r b ecau se it o pen ed n ew v is ta s, b rig ht o r glo om y, i n to t h e f u tu re . T his o dd s o ul w as f a sc in ate d b ecau se e co nom ic s d ealt with quantitie s an d becau se an yth in g th at dealt w ith quan titie s co uld be tr a n sla te d in to math em atic s! The pro cess of tr a n sla tio n re q uir e d th e ab an donm en t o f th at te n sio n-fra u ght w orld o f th e e arlie r e co nom is ts , b ut it yie ld ed in r e tu rn a w orld o f s u ch n eat p re cis io n a n d lo vely e x actn ess th at th e lo ss s e em ed a m ply c o m pen sa te d . To b uild u p s u ch a m ath em atic al m ir ro r o f r e ality , t h e w orld o bvio usly h ad to b e s im plif ie d . E dgew orth ’s s im plif ic atio n w as th is a ssu m ptio n: every m an is a p le a su re m ach in e . J e re m y B en th am h ad o rig in ate d th e c o ncep tio n in th e early n in ete en th c en tu ry u nder th e b eg uilin g title o f th e F elic if ic C alc u lu s, a philo so phic al v ie w o f h um an ity a s s o m an y liv in g p ro fit- a n d-lo ss c alc u la to rs , each b usily a rra n gin g h is lif e to m ax im iz e th e p le asu re o f h is p sy ch ic a d din g mach in e. T o th is g en era l p hilo so phy E dgew orth n ow a d ded th e p re cis io n o f math em atic s t o p ro duce a k in d o f P an glo ssia n B est o f A ll P ossib le W orld s. Of a ll m en to h av e a d opte d s u ch a v ie w o f s o cie ty , E dge-w orth s e em s a most u nlik ely c h oic e. H e h im se lf w as a s i ll- c o nstr u cte d a p le asu re m ach in e a s can b e im ag in ed . N eu ro tic ally sh y, h e te n ded to fle e fro m th e p le asu re s o f hum an co m pan y to th e p riv acy o f h is clu b; u nhap py ab out th e b urd en o f mate ria l th in gs, h e re ceiv ed fe w o f th e p le asu re s th at fo r m ost p eo ple flo w fro m p osse ssio ns. H is r o om s w ere b are , h is l ib ra ry w as t h e p ublic o ne, a n d h is sto ck of m ate ria l wealth did not in clu de cro ck ery , or sta tio nery , or ev en sta m ps. P erh ap s h is g re ate st s o urc e o f p le asu re w as in th e c o nstr u ctio n o f h is lo vely i m ag in ary e co nom ic X an ad u. But re g ard le ss o f h is m otiv es, E dgew orth ’s p le asu re -m ach in e a ssu m ptio n bore w onderfu l i n te lle ctu al f ru it. F or i f e co nom ic s w as d efin ed t o b e t h e s tu dy of h um an p le asu re -m ech an is m s co m petin g fo r sh are s o f so cie ty ’s sto ck o f ple asu re , th en it c o uld b e s h ow n— with a ll th e ir re fu ta b ility o f th e d if f e re n tia l calc u lu s— th at i n a w orld o f p erfe ct c o m petitio n e ach p le asu re m ach in e w ould ach ie v e t h e h ig hest a m ount o f p le asu re t h at c o uld b e m ete d o ut b y s o cie ty . In o th er w ord s, if th is w as n ot y et quite th e b est o f a ll p ossib le w orld s, it co uld b e. U nfo rtu nate ly , th e w orld w as n ot o rg an iz ed a s a g am e o f p erfe ct co m petitio n; m en d id h av e t h e l a m en ta b le h ab it o f s tic k in g t o geth er i n f o olis h dis re g ard o f th e b en efic en t c o nse q uen ces o f s tu bborn ly fo llo w in g th eir s e lf – in te re st; tr a d e unio ns, fo r ex am ple , w ere in dir e ct co ntr o vers io n to th e prin cip le o f e ach f o r h im se lf , a n d t h e u nden ia b le f a ct o f i n eq ualitie s o f w ealth an d p ositio n d id m ak e th e s ta rtin g p ositio n o f th e g am e s o m eth in g le ss th an ab so lu te ly n eu tr a l. But n ev er m in d, s a id E dgew orth . N atu re h as ta k en c are o f th at to o. W hile tr a d e u nio ns m ig ht g ain in th e sh ort ru n th ro ugh c o m bin atio n, it c o uld b e sh ow n th at in th e lo ng ru n th ey m ust lo se — th ey w ere only a tr a n sie n t im perfe ctio n in th e id eal s c h em e o f th in gs. A nd if h ig h b ir th a n d g re at w ealth se em ed a t f ir s t to p re ju dic e th e o utc o m e o f th e e co nom ic g am e, th at c o uld b e re co ncile d w ith m ath em atic al p sy ch ic s, to o. F or w hile a ll in div id uals w ere ple asu re m ach in es, s o m e w ere bette r p le asu re m ach in es th an o th ers . M en , f o r ex am ple , w ere b ette r e q uip ped to ru n u p th eir p sy ch ic b an k a cco unts th an wom en , a n d th e d elic ate s e n sib ilitie s o f th e “ aris to cra cy o f s k ill a n d ta le n t” were m ore re sp onsiv e to th e ple asu re s of good liv in g th an th e clo dlik e ple asu re m ach in es o f th e la b orin g cla sse s. H en ce, th e calc u lu s o f h um an math em atic s c o uld s till f u nctio n a d van ta g eo usly ; in deed it p ositiv ely ju stif ie d th ose d iv is io ns o f s e x a n d s ta tu s w hic h o ne s a w a b out h im i n t h e l iv in g w orld . But m ath em atic al psy ch ic s did m ore th an ra tio naliz e th e te n ets of co nse rv atis m . E dgew orth actu ally belie v ed th at his alg eb ra ic in sig ht in to hum an a ctiv ity m ig ht y ie ld h elp fu l r e su lts i n t h e w orld o f f le sh a n d b lo od. H is an aly sis i n volv ed s u ch t e rm s a s t h ese : “C onsid era tio ns so ab str a ct,” w ro te E dgew orth , “it w ould o f co urs e b e rid ic u lo us to flin g u pon th e flo odtid e o f p ra ctic al p olitic s. B ut th ey a re n ot perh ap s o ut o f p la ce w hen w e re m ount to th e little rills o f se n tim en t an d se cre t s p rin gs o f m otiv e w here e v ery c o urs e o f a ctio n m ust b e o rig in ate d .” “T he little rills o f se n tim en t,” in deed ! W hat w ould A dam S m ith h av e th ought o f th is c o nvers io n o f h is p ush y m erc h an ts , h is g re ed y jo urn ey m en , an d his m ultip ly in g la b orin g cla sse s in to so m an y cate g orie s of delic ate ple asu re -s e ek ers ? In fa ct, H en ry S id gw ic k , a c o nte m pora ry o f E dgew orth ’s an d a d is c ip le o f J. S . M ill, an grily an nounced th at h e ate h is d in ner n ot becau se h e h ad to te d u p th e s a tis fa ctio ns to b e g ain ed th ere fro m , b ut b ecau se he w as h ungry . B ut th ere w as n o u se p ro te stin g: th e s c h em e o f m ath em atic al psy ch ic s w as so neat, so beg uilin g, so bere ft of tr o uble so m e hum an in tr a n sig en ces, a n d so h ap pily u nbesm ir c h ed w ith c o nsid era tio ns o f h um an str iv in g a n d s o cia l c o nflic t, t h at i ts s u ccess w as i m med ia te . Edgew orth ’s w as not th e only su ch atte m pt to deh um an iz e politic al eco nom y. E ven durin g M arx ’s lif e tim e a w hole m ath em atic al sc h ool of eco nom ic s h ad g ro w n u p. I n G erm an y a n e co nom is t n am ed v on T hünen c am e up w ith a f o rm ula t h at y ie ld ed , h e c la im ed , t h e p re cis e j u st w ag e o f l a b or: Von T hünen l ik ed it w ell e n ough t o h av e i t e n gra v ed o n h is t o m bsto ne; w e do n ot k now w hat th e w ork in gm en th ought o f it. In F ra n ce a d is tin guis h ed eco nom is t n am ed L eo n W alr a s p ro ved th at o ne c o uld d ed uce b y m ath em atic s th e e x act p ric es t h at w ould j u st e x actly c le ar t h e m ark et; o f co urs e , i n o rd er t o do th is , o ne h ad to h av e th e e q uatio n f o r e v ery s in gle e co nom ic g ood o n th e mark et an d th en th e ab ility to so lv e a pro ble m in w hic h th e num ber of eq uatio ns w ould ru n in to th e hundre d s of th ousa n ds— in deed , in to th e millio ns. B ut n ev er m in d th e d if f ic u ltie s; th eo re tic ally th e p ro ble m c o uld b e done. A t th e U niv ers ity o f M an ch este r, a p ro fe sso r n am ed W . S ta n le y J e v ons wro te a tr e atis e o n p olitic al e co nom y in w hic h th e s tr u ggle f o r e x is te n ce w as re d uced t o “ a C alc u lu s o f P le asu re a n d P ain .” “ M y t h eo ry o f E co nom ic s … i s pure ly m ath em atic al in c h ara cte r,” w ro te Je v ons, a n d h e tu rn ed o ut o f h is fo cu s e v ery a sp ect o f e co nom ic lif e w hic h w as n ot re d ucib le to th e jig sa w pre cis io n o f h is s c h em e. P erh ap s e v en m ore n ote w orth y, h e p la n ned to w rite (a lth ough h e d id n ot l iv e t o d o s o ) a b ook c alle d Prin cip le s o f E co nom ic s: i t i s sig nif ic an t th at politic al eco nom y w as now calle d eco nom ic s, an d its ex positio ns w ere b eco m in g t e x ts . It w as n ot a ll fo olis h ness, a lth ough to o m uch o f it w as. E co nom ic s, a fte r all, d oes c o ncern th e a ctio ns o f a g gre g ate s o f p eo ple , a n d h um an a g gre g ate s, lik e a g gre g ate s o f a to m s, d o t e n d t o d is p la y s ta tis tic al r e g ula ritie s a n d l a w s o f pro bab ility . T hus, a s th e p ro fe sso ria t tu rn ed its e y es to th e e x plo ra tio n o f th e id ea o f eq uilib riu m —th e sta te to w ard w hic h th e m ark et w ould te n d a s th e re su lt o f th e ra n dom c o llis io ns o f in div id uals a ll se ek in g to m ax im iz e th eir utilitie s— it d id in fa ct e lu cid ate s o m e te n den cie s o f th e s o cia l u niv ers e . T he eq uatio ns o f L eo n W alr a s a re still u se d to d ep ic t th e a ttr ib ute s o f a so cia l sy ste m a t r e st. The q uestio n is , d oes a s y ste m “ at re st” a ctu ally d ep ic t th e re alitie s— th e fu ndam en ta l re alitie s— of th e so cia l u niv ers e ? T he e arlie r e co nom is ts , fro m Sm ith th ro ugh M ill an d o f co urs e M arx , h ad a co m pellin g im ag e in th eir min ds o f a s o cie ty th at w as b y its n atu re exp ansiv e . T ru e, its e x pan sio n m ig ht en co unte r b arrie rs , o r m ig ht r u n o ut o f s te am , o r m ig ht d ev elo p i n to e co nom ic dow ntu rn s, but th e cen tr a l fo rc e of th e eco nom ic w orld w as noneth ele ss in se p ara b le f ro m a p olitic al a n d p sy ch olo gic al t e n den cy t o w ard g ro w th . It w as th is b asic c o ncep tio n th at w as la ck in g in th e n ew c o ncen tr a tio n o n eq uilib riu m as th e m ost in te re stin g, m ost re v ealin g asp ect of th e sy ste m . Sudden ly c ap ita lis m w as n o lo nger se en a s a n h is to ric so cia l v eh ic le u nder co nsta n t te n sio n b ut a s a s ta tic , r a th er h is to ry le ss, m ode o f o rg an iz atio n. T he driv in g p ro puls io n o f th e sy ste m — th e p ro puls io n th at h ad fa sc in ate d a ll its prio r in vestig ato rs — was now overlo oked , ig nore d , fo rg otte n . W hate v er asp ects o f a c ap ita lis t e co nom y w ere illu m in ed in th e n ew p ers p ectiv e, its his to ric m is sio n w as n ot. And s o , a s a c o unte rp art to th is p ale w orld o f e q uatio ns, a n u nderw orld o f eco nom ic s flo uris h ed . T here h ad a lw ay s b een s u ch a n u nderw orld , a s tr a n ge lim bo o f c ra n ks a n d h ere tic s, w hose d octr in es h ad f a ile d to a tta in th e s ta tu re of re sp ecta b ility . O ne su ch w as th e ir re p re ssib le B ern ard M an dev ille , w ho sh ock ed th e e ig hte en th c en tu ry w ith a w itty d em onstr a tio n th at v ir tu e w as vic e an d vic e vir tu e. M an dev ille m ere ly poin te d out th at th e pro flig ate ex pen ditu re o f t h e s in fu l r ic h g av e w ork t o t h e p oor, w hile t h e s tin gy r e ctitu de of th e vir tu ous pen ny pin ch er did not; hen ce, sa id M an dev ille , priv ate im mora lity m ay re d ound to th e p ublic w elf a re , w here as p riv ate u prig htn ess may b e a s o cia l b urd en . T he s o phis tic ate d l e sso n o f h is Fable o f th e B ees w as to o m uch fo r th e eig hte en th cen tu ry to sw allo w ; M an dev ille ’s book w as co nvic te d a s a p ublic n uis a n ce b y a g ra n d ju ry in M id dle se x in 1 723, a n d Man dev ille h im se lf w as ro undly castig ate d b y A dam S m ith an d ev ery one els e . But w here as th e e arlie r e ccen tr ic s a n d c h arla ta n s w ere la rg ely b an is h ed b y th e o pin io ns o f stu rd y th in kers lik e S m ith o r R ic ard o, n ow th e u nderw orld cla im ed its re cru its fo r a d if f e re n t re aso n. T here w as sim ply n o lo nger a n y ro om in th e o ff ic ia l w orld o f e co nom ic s fo r th ose w ho w an te d to ta k e th e whole g am ut o f h um an b eh av io r f o r t h eir f o ru m , a n d t h ere w as l ittle t o le ra n ce in th e stu ff y w orld o f V ic to ria n co rre ctn ess fo r th ose w hose d ia g nosis o f so cie ty le ft ro om fo r m ora l d oubtin gs o r se em ed to in dic ate th e n eed fo r ra d ic al r e fo rm . And so th e u nderw orld to ok o n n ew lif e . M arx w en t th ere b ecau se h is doctr in e w as u nple asa n t. M alth us w en t th ere b ecau se h is id ea o f “g en era l glu ts ” w as a n a rith m etic al ab su rd ity a n d b ecau se h is d oubts a b out t h e b en efits of s a v in g w ere t o ta lly a t v aria n ce w ith t h e V ic to ria n a d m ir a tio n f o r t h rif t. T he Uto pia n s w en t th ere becau se w hat th ey w ere ta lk in g ab out w as arra n t nonse n se an d w asn ’t “eco nom ic s” an yw ay, an d fin ally an yone w en t th ere whose d octr in es f a ile d to a cco rd w ith th e e le g an t w orld th at th e a cad em ic ia n s ere cte d i n t h eir c la ssro om s a n d f o ndly b elie v ed e x is te d o uts id e t h em . It w as a f a r m ore i n te re stin g p la ce, t h is u nderw orld , t h an t h e s e re n e r e alm s ab ove. It a b ounded w ith w onderfu l p ers o nalitie s, a n d in it s p ro ute d a w eir d an d lu xuria n t ta n gle o f id eas. T here w as, fo r e x am ple , a m an w ho h as b een alm ost fo rg otte n in th e m arc h o f e co nom ic id eas. H e is F re d eric B astia t, a n eccen tr ic F re n ch m an , w ho liv ed fro m 1 801 to 1 850, a n d w ho in th at sh ort sp ace o f t im e a n d a n e v en s h orte r s p ace o f l ite ra ry l if e — six y ears — bro ught t o bear o n e co nom ic s t h at m ost d ev asta tin g o f a ll w eap ons: r id ic u le . L ook a t t h is mad house o f a w orld , sa y s B astia t. It g oes to en orm ous eff o rts to tu nnel undern eath a m ounta in i n o rd er t o c o nnect t w o c o untr ie s. A nd t h en w hat d oes it d o? H av in g l a b ore d m ig htily t o f a cilita te t h e i n te rc h an ge o f g oods, i t s e ts u p cu sto m s g uard s o n b oth sid es o f th e m ounta in a n d m ak es it a s d if f ic u lt a s possib le f o r m erc h an dis e t o t r a v el t h ro ugh t h e t u nnel! Bastia t h ad a g if t fo r p oin tin g o ut a b su rd itie s; h is little b ook Eco nom ic Sophis m s is as clo se to hum or as eco nom ic s has ev er co m e. W hen , fo r ex am ple , th e Paris -M ad rid ra ilr o ad w as bein g deb ate d in th e Fre n ch Asse m bly , o ne M . S im io t arg ued th at it sh ould h av e a g ap at B ord eau x, becau se a b re ak in th e lin e th ere w ould re d ound g re atly to th e w ealth o f th e Bord eau x p orte rs , c o m mis sio nair e s, h ote lk eep ers , b arg em en , a n d t h e l ik e, a n d th us, b y e n ric h in g B ord eau x, w ould e n ric h F ra n ce. B astia t s e iz ed o n th e id ea with a v id ity . F in e, h e s a id , b ut le t’s n ot s to p a t B ord eau x a lo ne. “ If B ord eau x has a r ig ht to p ro fit b y a g ap … th an A ngoulê m e, P oitie rs , T ours , O rlé an s … sh ould a ls o d em an d g ap s a s b ein g fo r th e g en era l in te re st… . In th is w ay w e sh all s u cceed in h av in g a ra ilw ay c o m pose d o f s u ccessiv e g ap s, a n d w hic h may b e d en om in ate d a Neg ativ e R ailw ay.” Bastia t w as a w it i n t h e w orld o f e co nom ic s, b ut h is p riv ate lif e w as t r a g ic . Born in B ay onne, h e w as o rp han ed a t a n e arly a g e a n d, w ors e y et, c o ntr a cte d tu berc u lo sis . H e s tu die d a t a u niv ers ity , a n d t h en t r ie d b usin ess, b ut h e h ad n o head fo r c o m merc ia l d eta ils . H e tu rn ed to a g ric u ltu re , b ut h e fa re d e q ually bad ly th ere ; lik e T ols to i’s w ell- m ean in g c o unt, th e m ore h e in te rfe re d in th e ru nnin g o f h is f a m ily e sta te , th e w ors e it d id . H e d re am ed o f h ero is m , b ut h is milita ry a d ven tu re s h ad a D on Q uix ote tw is t: w hen th e B ourb ons w ere ru n out o f F ra n ce in 1 830, B astia t ro unded u p six h undre d y oung m en a n d le d th em to s to rm a r o yalis t c ita d el, r e g ard le ss o f c o st. P oor B astia t— th e f o rtr e ss meek ly h au le d d ow n i ts f la g a n d i n vite d e v ery one i n f o r a f e ast i n ste ad . It s e em ed t h at h e w as d oom ed t o d is a p poin tm en t. B ut h is e n fo rc ed i d le n ess tu rn ed h is in te re sts to e co nom ic s, a n d h e b eg an to r e ad a n d d is c u ss th e to pic s of th e d ay. A n eig hborin g c o untr y g en tle m an u rg ed h im to p ut h is id eas o n pap er, a n d B astia t w ro te a n a rtic le o n fre e tr a d e a n d s e n t it in to a P aris ia n jo urn al. H is th oughts w ere orig in al an d his sty le w onderfu lly sh arp . T he artic le w as p rin te d , an d o vern ig ht th is m ild sc h ola r o f th e p ro vin ces w as fa m ous. He cam e to P aris . “H e h ad n ot h ad tim e to call in th e assis ta n ce o f a Paris ia n h atte r a n d ta ilo r,” w rite s M . d e M olin ari, “ an d w ith h is lo ng h air , h is tin y h at, h is a m ple fro ck co at a n d h is fa m ily u m bre lla , y ou w ould h av e b een ap t to m is ta k e h im f o r a n h onest p easa n t w ho c am e to to w n f o r th e f ir s t tim e to s e e t h e m etr o polis .” But th e c o untr y sc h ola r h ad a p en th at b it. E very d ay h e re ad th e P aris pap ers i n w hic h t h e d ep utie s a n d m in is te rs o f F ra n ce a rg ued f o r a n d d efe n ded th eir p olic ie s o f s e lf is h ness a n d b lin d s e lf -in te re st; t h en h e w ould a n sw er w ith a re jo in der th at ro ck ed P aris w ith la u ghte r. F or e x am ple , w hen th e C ham ber of D ep utie s i n th e 1 840s le g is la te d h ig her d utie s o n a ll f o re ig n g oods i n o rd er to b en efit F re n ch in dustr y , B astia t tu rn ed o ut th is m aste rp ie ce o f e co nom ic sa tir e : PE TIT IO N O F T H E M ANUFA CTU RER S O F C A NDLES, W AXLIG HTS, LA M PS, CA NDLEST IC K S, ST R EET LA M PS, SN UFFE R S, EX TIN GUIS H ER S, A ND O F TH E PR O DUCER S O F O IL , TA LLO W , RESIN , A LC O HOL, A ND G EN ER A LLY E V ER Y TH IN G C O NNEC TED WIT H L IG HTIN G T O M ESSIE U RS T H E M EM BER S O F T H E C HAM BER O F D EPU TIE S G EN TLEM EN , … W e are su ff e rin g fro m th e in to le ra b le co m petitio n of a fo re ig n riv al, pla ced , it w ould se em , in a co nditio n so fa r su perio r to o ur o w n fo r th e pro ductio n o f l ig ht, t h at h e a b so lu te ly in undate s o ur natio nal m ark et w ith it a t a p ric e f a b ulo usly r e d uced … . T his r iv al … i s n o o th er t h an t h e s u n. What w e p ra y fo r, is , th at it m ay p le ase y ou to p ass a la w o rd erin g th e sh uttin g u p o f a ll w in dow s, sk ylig hts , d orm er- w in dow s, o uts id e a n d in sid e sh utte rs , c u rta in s, b lin ds, b ull’s -e y es; in a w ord o f a ll o pen in gs, h ole s, c h in ks, an d f is su re s. … I f y ou s h ut u p a s m uch a s p ossib le a ll a ccess to n atu ra l lig ht a n d c re ate a dem an d f o r a rtif ic ia l l ig ht, w hic h o f o ur F re n ch m an ufa ctu re rs w ill n ot b en efit by i t? … I f m ore ta llo w is c o nsu m ed , th en th ere m ust b e m ore o xen a n d s h eep … if more o il is c o nsu m ed , th en w e s h all h av e e x te n ded c u ltiv atio n o f th e p oppy, of t h e o liv e … o ur h eath s w ill b e c o vere d w ith r e sin ous t r e es. Mak e y our c h oic e, b ut b e lo gic al; f o r a s lo ng a s y ou e x clu de, a s y ou d o, ir o n, co rn , f o re ig n f a b ric s, in p ro portio n a s th eir p ric es a p pro xim ate to z ero , w hat in co nsis te n cy it w ould b e to a d m it th e lig ht o f th e s u n, th e p ric e o f w hic h is alr e ad y a t ze ro d urin g t h e e n tir e d ay ! A m ore dra m atic — if fa n ta stic — defe n se of fre e tr a d e has nev er been writte n . B ut it w as n ot o nly a g ain st p ro te ctiv e ta rif f s th at B astia t p ro te ste d : th is m an la u ghed a t e v ery f o rm o f e co nom ic d ouble -th in kin g. I n 1 848, w hen th e S ocia lis ts b eg an to p ro pound th eir id eas f o r th e s a lv atio n o f s o cie ty w ith more re g ard fo r p assio n th an p ra ctic ab ility , B astia t tu rn ed a g ain st th em th e sa m e w eap ons th at h e h ad u se d a g ain st th e ancie n r é g im e . “ E very one w an ts to liv e a t th e e x pen se o f th e s ta te ,” h e w ro te . “ T hey f o rg et th at th e s ta te liv es at t h e e x pen se o f e v ery one.” But h is s p ecia l ta rg et, h is m ost h ate d “ so phis m ,” w as th e r a tio naliz atio n o f priv ate g re ed u nder th e p re te n tio us c o ver o f a p ro te ctiv e ta rif f e re cte d f o r th e “n atio nal g ood.” H ow h e lo ved to d em olis h th e s p ecio us th in kin g th at a rg ued fo r b arrie rs to tr a d e u nder th e g uis e o f lib era l e co nom ic s! W hen th e F re n ch min is tr y p ro pose d to r a is e th e d uty o n im porte d c lo th to “ p ro te ct” th e F re n ch work in gm an , B astia t r e p lie d w ith t h is d elic io us p ara d ox: “P ass a l a w t o t h is e ff e ct,” w ro te B astia t t o t h e M in is te r o f C om merc e. “ N o one s h all h en cefo rth b e p erm itte d to e m plo y a n y b eam s o r r a fte rs b ut s u ch a s are p ro duced a n d f a sh io ned b y b lu nt h atc h ets … . W here as a t p re se n t w e g iv e a hundre d b lo w s o f th e a x e, w e s h all th en g iv e th re e h undre d . T he w ork w hic h we now do in an hour w ill th en re q uir e th re e hours . W hat a pow erfu l en co ura g em en t w ill th us b e g iv en to la b or! … W hoev er sh all h en cefo rth desir e to h av e a r o of to c o ver h im m ust c o m ply w ith o ur e x actio ns, ju st a s a t pre se n t w hoev er d esir e s c lo th es t o h is b ack m ust c o m ply w ith y ours .” His c ritic is m s, fo r a ll th eir p en etr a tin g m ock ery , m et w ith little p ra ctic al su ccess. H e w en t to E ngla n d to m eet th e le ad ers o f th e f re e-tr a d e m ovem en t th ere a n d r e tu rn ed to o rg an iz e a f re e-tr a d e a sso cia tio n in P aris . I t la ste d o nly eig hte en m onth s— Bastia t w as n ev er a n y g ood a s a n o rg an iz er. But 1848 w as now at han d an d B astia t w as ele cte d to th e N atio nal Asse m bly . B y th en th e d an ger s e em ed to h im th e o th er e x tr e m e— th at m en would p ay to o m uch a tte n tio n to th e im perfe ctio ns o f th e s y ste m a n d w ould blin dly ch oose so cia lis m in its ste ad . H e b eg an a b ook en title d Eco nom ic Harm onie s in w hic h h e w as to s h ow th at th e a p pare n t d is o rd er o f th e w orld was a d is o rd er o f t h e s u rfa ce o nly ; th at u ndern eath , th e i m petu s o f a t h ousa n d dif f e re n t se lf -s e ek in g ag en ts b ecam e tr a n sm ute d in th e m ark etp la ce in to a hig her s o cia l g ood. B ut h is h ealth w as n ow d is a str o usly b ad . H e c o uld b are ly bre ath e, a n d h is f a ce w as liv id w ith th e r a v ag es o f h is d is e ase . H e m oved to Pis a , w here h e re ad in th e p ap ers o f h is ow n d eath a n d o f th e c o m monpla ce ex pre ssio ns o f r e g re t w hic h a cco m pan ie d i t: r e g re t a t t h e p assin g o f “ th e g re at eco nom is t,” th e “ illu str io us a u th or.” H e w ro te a f rie n d: “ T han k G od I a m n ot dead . I a ssu re y ou I s h ould b re ath e m y la st w ith out p ain a n d a lm ost w ith jo y if I w ere c erta in o f le av in g to th e f rie n ds w ho lo ve m e, n ot p oig nan t r e g re ts , but a g en tle , a ff e ctio nate , so m ew hat m ela n ch oly re m em bra n ce o f m e.” H e str u ggle d to f in is h h is b ook b efo re h e h im se lf s h ould b e f in is h ed . B ut it w as to o la te . In 1 850 h e p asse d a w ay, w his p erin g a t th e e n d s o m eth in g th at th e lis te n in g p rie st t h ought w as “ T ru th , t r u th … .” He is a very sm all fig ure in th e eco nom ic co nste lla tio n. H e w as en orm ously c o nse rv ativ e b ut n ot in flu en tia l, e v en a m ong c o nse rv ativ es. H is fu nctio n, it s e em s, w as to p ric k th e p om positie s o f h is tim e; b ut b en eath th e ra ille ry a n d th e w it lie s th e m ore d is tu rb in g q uestio n: d oes th e s y ste m a lw ay s mak e s e n se ? A re th ere p ara d oxes w here th e p ublic a n d p riv ate w eals c o llid e? Can w e tr u st th e a u to m atic m ech an is m o f p riv ate in te re st w hen it is p erv erte d at e v ery tu rn b y th e f a r f ro m a u to m atic m ech an is m o f th e p olitic al s tr u ctu re it ere cts ? The q uestio ns w ere n ev er s q uare ly f a ced in th e E ly sia n f ie ld s a b ove. T he off ic ia l w orld o f e co nom ic s t o ok l ittle n otic e o f t h e p ara d oxes p ro pose d b y i ts je ste r. I n ste ad i t s a ile d s e re n ely o n t o w ard t h e d ev elo pm en t o f t h e q uan tita tiv e nic etie s of a ple asu re -s e ek in g w orld , an d th e questio ns ra is e d by B astia t re m ain ed u nan sw ere d . C erta in ly m ath em atic al p sy ch ic s w as h ard ly th e to ol with w hic h to u nlo ck th e d ile m ma o f th e N eg ativ e R ailw ay a n d th e B lu nt Hatc h et; S ta n le y Je v ons, w ho w ith E dgew orth w as th e g re at p ro ponen t o f mak in g e co nom ic s a “ sc ie n ce,” a d m itte d , “ A bout p olitic s, I c o nfe ss m yse lf in a f o g.” U nfo rtu nate ly , h e w as n ot a lo ne. And so th e underw orld co ntin ued to pro sp er. In 1879 it gain ed an Am eric an re cru it, a b eard ed , g en tle , fie rc ely se lf -s u re m an , w ho sa id th at “P olitic al E co nom y… a s c u rre n tly ta u ght is h opele ss a n d d esp air in g. B ut th is [is ] b ecau se s h e h as b een d eg ra d ed a n d s h ack le d ; h er tr u th s d is lo cate d ; h er harm onie s ig nore d ; th e w ord s h e w ould u tte r g ag ged in h er m outh , a n d h er pro te st a g ain st w ro ng tu rn ed in to a n in dors e m en t o f in ju stic e.” A nd th at w as not a ll. F or th is h ere tic m ain ta in ed n ot o nly th at e co nom ic s h ad f a ile d to s e e th e a n sw er to th e r id dle o f p overty a lth ough it w as c le arly la id o ut b efo re h er ey es, b ut th at w ith h is re m ed y, a w hole n ew w orld sto od re ad y to u nfo ld : “W ord s f a il th e th ought! I t is th e G old en A ge o f w hic h p oets h av e s u ng a n d hig h-ra is e d se ers hav e to ld in m eta p hor! … It is th e cu lm in atio n of Chris tia n ity — th e c ity o f G od w ith i ts w alls o f j a sp er a n d i ts g ate s o f p earl! ” The n ew co m er w as H en ry G eo rg e. N o w onder h e w as in th e u nderw orld , fo r h is e arly c are er m ust c erta in ly h av e se em ed a n u nco uth p re p ara tio n fo r se rio us th in kin g to th e c lo is te re d k eep ers o f th e tr u e d octr in e. H en ry G eo rg e had been ev ery th in g in lif e : ad ven tu re r, gold pro sp ecto r, w ork er, sa ilo r, co m posito r, jo urn alis t, g overn m en t b ure au cra t, an d le ctu re r. H e h ad n ev er ev en g one t o c o lle g e; a t t h ir te en h e h ad l e ft s c h ool t o s h ip o ut a s f o re m ast b oy on th e 5 86-to n Hin doo b ound f o r A ustr a lia a n d C alc u tta . A t a tim e w hen h is co nte m pora rie s w ere l e arn in g L atin , h e h ad b ought a p et m onkey a n d w atc h ed a m an f a ll f ro m t h e r ig gin g, a n d b eco m e a t h in , i n te n se , i n dep en den t b oy w ith a w an derlu st. B ack fro m th e E ast, h e tr ie d a jo b in a p rin tin g fir m in h is hom eto w n o f P hila d elp hia , a n d th en a t n in ete en , s h ip ped o ut a g ain , th is tim e to C alif o rn ia , w ith t h e t h ought o f g old i n m in d. Befo re h e l e ft, h e r a te d h im se lf o n a p hre n olo gic al c h art: Am ativ en ess… … … … … … … … … … . l a rg e Philo pro gen itiv en ess… … … … … … … .m odera te Adhesiv en ess… … … … … … … … … … .l a rg e In hab itiv en ess… … … … … … … … … … l a rg e Concen tr a tiv en ess… … … … … … … … … sm all an d so on, w ith a ra tin g of “fu ll” on A lim en ta tiv en ess, “sm all” on Acq uis itiv en ess, “ la rg e” o n S elf -e ste em , a n d “ sm all” o n M ir th fu ln ess. I t w as not a b ad e stim ate in s o m e r e sp ects — alth ough it is o dd to s e e C au tio n r a te d “la rg e,” fo r w hen G eo rg e re ach ed S an F ra n cis c o in 1 858 h e s k ip ped a sh ore , alth ough he h ad s ig ned o n fo r a y ear, a n d h ead ed fo r V ic to ria a n d g old . H e fo und g old — but it w as f o ol’s g old , a n d h e d ecid ed th e lif e a t s e a w as th e lif e fo r h im a fte r a ll. In ste ad — his b um p o f C oncen tr a tiv en ess b ein g sm all— he becam e a ty pese tte r in a S an F ra n cis c o s h op, th en a w eig her in a ric e m ill, th en , i n h is o w n w ord s, “ a t r a m p.” A noth er t r e k t o t h e g old f ie ld s w as e q ually unre w ard in g, a n d h e r e tu rn ed t o S an F ra n cis c o i m poveris h ed . He m et A nnie F ox, a n d e lo ped w ith h er; sh e w as a se v en te en -y ear- o ld in nocen t an d he a han dso m e young la d w ith a B ill C ody m usta ch e an d poin te d b eard . T he t r u stin g y oung M is s F ox t o ok w ith h er a b ulk y p ack ag e o n her s e cre t m arria g e flig ht; th e y oung a d ven tu re r th ought it m ig ht b e je w els , but i t t u rn ed o ut t o b e o nly t h e House h old B ook o f P oetr y a n d o th er v olu m es. There f o llo w ed y ears o f th e m ost w re tc h ed p overty . H en ry G eo rg e w as a n odd-jo b p rin te r, a n d w ork w as h ard to c o m e b y a n d ill p aid a t b est. W hen Annie h ad h er se co nd c h ild , G eo rg e w ro te : “ I w alk ed a lo ng th e str e et a n d mad e u p m y m in d to g et m oney f ro m th e f ir s t m an w hose a p peara n ce m ig ht in dic ate h e h ad it to g iv e. I sto pped a m an — a str a n ger— an d to ld h im I wan te d $ 5. H e ask ed m e w hat I w an te d it fo r. I to ld h im m y w if e w as co nfin ed a n d th at I h ad n oth in g to g iv e h er to e at. H e g av e m e th e m oney. I f he h ad n ot, I t h in k I w as d esp era te e n ough t o h av e k ille d h im .” Now — at ag e tw en ty -s ix — he beg an to w rite . H e la n ded a jo b in th e co m posin g r o om o f t h e S an F ra n cis c o Tim es a n d s e n t a p ie ce u psta ir s t o N oah Bro oks, th e e d ito r. B ro oks su sp ecte d th at th e b oy h ad c o pie d it, b ut w hen noth in g re se m blin g it a p peare d in a n y o f th e o th er n ew sp ap ers fo r se v era l day s h e p rin te d it, a n d th en w en t d ow nsta ir s to lo ok fo r G eo rg e. H e fo und him , a slig ht y oung m an , ra th er u nders iz ed , sta n din g o n a b oard to ra is e him se lf t o t h e h eig ht o f h is t y pe c ase . G eo rg e b ecam e a r e p orte r. With in a fe w y ears h e le ft th e Tim es to jo in th e S an F ra n cis c o Post , a cru sa d in g jo urn al. G eo rg e b eg an to w rite a b out m atte rs o f m ore th an r o utin e in te re st: a b out th e C hin ese c o olie s a n d th eir in den tu re , a n d a b out th e la n d gra b bin g o f th e r a ilr o ad s a n d th e m ach in atio ns o f th e lo cal tr u sts . He w ro te a lo ng l e tte r t o J . S . M ill i n F ra n ce o n t h e i m mig ra tio n q uestio n a n d w as g ra ced with a lo ng aff ir m ativ e re p ly . A nd in betw een his new ly fo und politic al in te re sts h e h ad tim e fo r v en tu re s in th e b est jo urn alis tic tr a d itio n: w hen th e sh ip Sunris e c am e to to w n w ith a h ush ed -u p s to ry a b out a c ap ta in a n d m ate who h ad h ounded th eir c re w u ntil tw o m en h ad le ap ed o verb oard to th eir death , G eo rg e a n d th e Post fe rre te d o ut th e s to ry a n d b ro ught th e o ff ic ers to ju stic e. The n ew sp ap er w as s o ld , a n d H en ry G eo rg e w an gle d h im se lf a p olitic al sin ecu re — In sp ecto r o f G as M ete rs . I t w as n ot t h at h e w an te d a l if e o f l e is u re ; ra th er, h e h ad b eg un to r e ad th e g re at e co nom is ts a n d h is c en tr a l in te re st w as now c le arly f o rm ed — alr e ad y h e w as a k in d o f l o cal a u th ority . H e n eed ed t im e to stu dy a n d to w rite a n d to d eliv er le ctu re s to th e w ork in g c la sse s o n th e id eas o f t h e g re at M ill. When t h e U niv ers ity o f C alif o rn ia e sta b lis h ed a c h air o f p olitic al e co nom y, he w as w id ely c o nsid ere d a s a s tr o ng c an did ate f o r t h e p ost. B ut t o q ualif y h e had to d eliv er a le ctu re b efo re fa cu lty a n d stu den ts , a n d G eo rg e w as ra sh en ough to v oic e s u ch s e n tim en ts a s th is : “ T he n am e o f p olitic al e co nom y h as been co nsta n tly in voked ag ain st ev ery eff o rt of th e w ork in g cla sse s to in cre ase th eir w ag es,” a n d th en to c o m pound th e s h ock h e a d ded : “ F or th e stu dy o f p olitic al eco nom y, y ou n eed n o sp ecia l k now le d ge, n o ex te n siv e lib ra ry , n o c o stly la b ora to ry . Y ou d o n ot e v en n eed te x tb ooks n or te ach ers , if you w ill b ut t h in k f o r y ours e lv es.” That w as th e beg in nin g an d th e en d of his acad em ic care er. A m ore su ita b le can did ate w as fo und fo r th e post, an d G eo rg e w en t back to pam phle te erin g a n d s tu dy. A nd t h en s u dden ly , “ in d ay lig ht a n d i n a c ity s tr e et, th ere c am e t o m e a t h ought, a v is io n, a c all— giv e i t w hat n am e y ou p le ase … . It w as t h at t h at i m pelle d m e t o w rite Pro gre ss a nd P overty , a n d t h at s u sta in ed me w hen e ls e I s h ould h av e f a ile d . A nd w hen I h ad f in is h ed th e la st p ag e, in th e d ead o f n ig ht, w hen I w as e n tir e ly a lo ne, I f lu ng m yse lf o n m y k nees a n d wep t l ik e a c h ild .” As m ig ht b e ex pecte d , it w as a b ook w ritte n fro m th e h eart, a cry o f min gle d p ro te st a n d h ope. A nd a s m ig ht a ls o b e e x pecte d , i t s u ff e re d f ro m t o o much p assio n a n d to o little pro fe ssio nal c ir c u m sp ectio n. B ut w hat a c o ntr a st to th e d ull te x ts o f th e d ay — no w onder th e g uard ia n s o f e co nom ic s c o uld n ot se rio usly c o nsid er a n a rg um en t t h at w as c o uch ed i n s u ch a s ty le a s t h is : Tak e now … so m e hard -h ead ed busin ess m an , w ho has no th eo rie s, but know s h ow t o m ak e m oney. S ay t o h im : “ H ere i s a l ittle v illa g e; i n t e n y ears i t will b e a g re at c ity — in te n y ears th e r a ilr o ad w ill h av e ta k en th e p la ce o f th e sta g e co ach , th e ele ctr ic lig ht of th e can dle ; it w ill ab ound w ith all th e mach in ery a n d i m pro vem en ts t h at s o e n orm ously m ultip ly t h e e ff e ctiv e p ow er of l a b or. W ill, i n t e n y ears , i n te re st b e a n y h ig her? ” He w ill t e ll y ou, “ N o!” “W ill t h e w ag es o f c o m mon l a b or b e a n y h ig her … ? ” He w ill t e ll y ou, “ N o, t h e w ag es o f c o m mon l a b or w ill n ot b e a n y h ig her… .” “W hat, t h en , w ill b e h ig her? ” “R en t, th e valu e of la n d. G o, get yours e lf a pie ce of gro und, an d hold posse ssio n.” And if , u nder s u ch c ir c u m sta n ces, y ou ta k e h is a d vic e, y ou n eed d o n oth in g more . Y ou m ay s it d ow n a n d s m oke y our p ip e; y ou m ay lie a ro und lik e th e la zza ro ni o f N ap le s o r th e le p ero s o f M ex ic o ; y ou m ay g o u p in a b allo on o r dow n a h ole in th e g ro und; a n d w ith out d oin g o ne s tr o ke o f w ork , w ith out ad din g o ne io ta o f w ealth to th e c o m munity , in te n y ears y ou w ill b e r ic h ! I n th e new city you m ay hav e a lu xurio us m an sio n, but am ong its public build in gs w ill b e a n a lm sh ouse . We n eed n ot s p ell o ut t h e w hole e m otio nally c h arg ed a rg um en t; t h e c ru x o f it l ie s i n t h is p assa g e. H en ry G eo rg e i s o utr a g ed a t t h e s p ecta cle o f m en w hose in co m es— so m etim es fa b ulo us in co m es— deriv e n ot fro m th e se rv ic es th ey hav e r e n dere d t h e c o m munity , b ut m ere ly f ro m t h e f a ct t h at t h ey h av e h ad t h e good f o rtu ne t o h old a d van ta g eo usly s itu ate d s o il. Ric ard o, o f c o urs e , s a w a ll th is lo ng b efo re h im . B ut a t b est, R ic ard o h ad only c la im ed th at th e te n den cy o f a g ro w in g s o cie ty to e n ric h th e h old ers o f its la n d w ould r e d ound to th e m is fo rtu ne o f th e c ap ita lis t. T o H en ry G eo rg e, th is w as o nly th e e n te rin g w ed ge. T he in ju stic e o f re n ts n ot o nly ro bbed th e cap ita lis t o f h is h onest p ro fit b ut w eig hed o n t h e s h ould ers o f t h e w ork in gm an as w ell. M ore d am ag in g y et, h e fo und it to b e th e c au se o f th ose in dustr ia l “p aro xysm s,” a s h e c alle d th em , th at fro m tim e to tim e s h ook s o cie ty to its ro ots . The a rg um en t w as n ot t o o c le arly d elin eate d . P rim arily i t r e ste d o n t h e f a ct th at s in ce re n t w as a ssu m ed fro m th e s ta rt to b e a k in d o f s o cia l e x to rtio n, natu ra lly it re p re se n te d a n u nfa ir d is tr ib utio n o f p ro duce to la n dlo rd s a t th e ex pen se o f w ork ers a n d in dustr ia lis ts . A nd a s fo r p aro xysm s— well, G eo rg e was c o nvin ced th at re n t le d in ev ita b ly to w ild s p ecu la tio n in la n d v alu es (a s in deed it d id o n th e W est C oast) a n d ju st a s in ev ita b ly to a n e v en tu al c o lla p se whic h w ould b rin g t h e r e st o f t h e s tr u ctu re o f p ric es t u m blin g d ow n b esid e i t. Hav in g d is c o vere d t h e t r u e c au se s o f p overty a n d t h e f u ndam en ta l c h eck t o pro gre ss, it w as sim ple fo r G eo rg e to p ro pose a re m ed y— a sin gle m assiv e ta x . It w ould b e a ta x o n la n d, a ta x th at w ould a b so rb a ll re n ts . A nd th en , with th e c an cer re m oved fro m th e b ody o f so cie ty , th e m ille n iu m c o uld b e allo w ed t o c o m e. T he s in gle t a x w ould n ot o nly d is p en se w ith t h e n eed f o r a ll oth er k in ds o f t a x es, b ut i n a b olis h in g r e n t i t w ould “ ra is e w ag es, i n cre ase t h e earn in gs o f c ap ita l, e x tir p ate p au peris m , a b olis h p overty , g iv e re m unera tiv e em plo ym en t to w hoev er w is h es it, a ff o rd f re e s c o pe to h um an p ow ers , p urif y govern m en t, a n d c arry c iv iliz atio n to y et n oble r h eig hts .” I t w ould b e— th ere is n o o th er w ord — th e u ltim ate p an acea. It i s a n e lu siv e t h esis w hen w e s e ek t o e v alu ate i t. O f c o urs e i t i s n aiv e, a n d th e eq uatio n of re n t w ith sin co uld hav e occu rre d only to so m eo ne as messia n ic as G eo rg e him se lf . Sim ila rly , to put th e bla m e fo r in dustr ia l dep re ssio ns on la n d sp ecu la tio n is to blo w up one sm all asp ect of an ex pan din g e co nom y q uite o ut o f p ro portio n to re ality : la n d s p ecu la tio ns c an be tr o uble so m e, b ut s e v ere d ep re ssio ns h av e ta k en p la ce in c o untr ie s w here la n d v alu es w ere a n yth in g b ut i n fla te d . So w e n eed n ot lin ger h ere . B ut w hen w e c o m e to th e c en tr a l b ody o f th e th esis , w e m ust p au se . F or w hile G eo rg e’s m ech an ic al d ia g nosis i s s u perfic ia l an d f a u lty , h is b asic c ritic is m o f s o cie ty is a m ora l a n d n ot a m ech an is tic o ne. Why, ask s H en ry G eo rg e, sh ould re n t ex is t? W hy sh ould a m an ben efit mere ly fro m th e fa ct o f o w ners h ip , w hen h e m ay re n der n o s e rv ic es to th e co m munity in e x ch an ge? W e m ay ju stif y th e re w ard s o f a n in dustr ia lis t b y desc rib in g h is p ro fits a s th e p riz e f o r h is f o re sig ht a n d in gen uity , b ut w here is th e fo re sig ht o f a m an w hose g ra n dfa th er o w ned a p astu re o n w hic h , tw o gen era tio ns l a te r, s o cie ty s a w f it t o e re ct a s k ysc ra p er? The q uestio n i s p ro vocativ e, b ut i t i s n ot s o e asy t o c o ndem n t h e i n stitu tio n of r e n t o ut o f h an d. F or la n dlo rd s a re n ot th e o nly p assiv e b en efic ia rie s o f th e gro w th o f s o cie ty . T he s to ck hold er in a n e x pan din g c o m pan y, th e w ork m an whose p ro ductiv ity is e n han ced b y te ch nic al p ro gre ss, th e c o nsu m er w hose re al in co m e ris e s a s th e n atio n p ro sp ers , a ll th ese a re a ls o b en efic ia rie s o f co m munal a d van cem en t. T he u nearn ed g ain s th at a ccru e to a w ell- s itu ate d la n dlo rd a re e n jo yed in d if f e re n t fo rm s b y a ll o f u s. T he p ro ble m is n ot ju st th at o f la n d re n ts , b ut o f a ll u n earn ed in co m e; a n d w hile th is is c erta in ly a se rio us p ro ble m , it c an not b e a d eq uate ly a p pro ach ed th ro ugh la n d o w ners h ip alo ne. And th en th e re n t p ro ble m is n ot so d ra stic a s it w as v ie w ed b y H en ry Geo rg e. A sm all, b ut ste ad y flo w o f re n ts g oes to fa rm ers , h om eo w ners , modest c itiz en s. A nd e v en in th e m onopolis tic a re a o f r e n ta l in co m es— in th e re al- e sta te opera tio ns of a m etr o polis — a sh if tin g an d flu id m ark et is in opera tio n. R en ts a re n ot f ro zen in a rc h aic f e u dal p atte rn s, b ut c o nsta n tly p ass fro m h an d to h an d a s la n d is b ought a n d so ld , a p pra is e d a n d re ap pra is e d . Suff ic e it to p oin t o ut th at r e n ta l in co m e in th e U nite d S ta te s h as s h ru nk f ro m 6 p erc en t o f t h e n atio nal i n co m e i n 1 929 t o l e ss t h an 2 p erc en t t o day. But n o m atte r w heth er th e th esis h eld to geth er lo gic ally o r w heth er its mora l co ndem natio n w as fu lly ju stif ie d . T he book str u ck a tr e m en dously re sp onsiv e c h ord . Pro gre ss a nd P overty b ecam e a b est- s e lle r, a n d o vern ig ht Hen ry G eo rg e w as c ata p ulte d in to n atio nal p ro m in en ce. “ I c o nsid er Pro gre ss and P overty a s th e b ook o f th is h alf -c en tu ry ,” sa id th e re v ie w er in th e S an Fra n cis c o Arg onaut , a n d th e N ew Y ork Trib une c la im ed th at it h ad “ n o e q ual sin ce th e p ublic atio n o f th e Wea lth o f N atio ns b y A dam S m ith .” E ven th ose public atio ns lik e th e Exa m in er an d Chro nic le , w hic h calle d it “th e m ost pern ic io us tr e atis e o n p olitic al e co nom y th at h as b een p ublis h ed fo r m an y a day,” o nly s e rv ed t o e n han ce i ts f a m e. Geo rg e w en t to E ngla n d; h e re tu rn ed a fte r a le ctu re to ur a n in te rn atio nal fig ure . H e w as d ra fte d to r u n f o r m ay or o f N ew Y ork , a n d in a th re e-c o rn ere d ra ce h e b eat T heo dore R oose v elt an d o nly n arro w ly lo st to th e T am man y can did ate . The s in gle t a x w as a r e lig io n t o h im b y n ow . H e o rg an iz ed L an d a n d L ab or Clu bs an d le ctu re d to en th usia stic au die n ces h ere an d in G re at B rita in . A frie n d a sk ed h im , “ D oes th is m ean w ar? C an y ou, u nle ss d ealin g w ith c ra v en co nditio ns a m ong m en , h ope t o t a k e l a n d a w ay f ro m i ts o w ners w ith out w ar? ” “I d o n ot s e e,” s a id G eo rg e, “ th at a m usk et n eed b e fir e d . B ut if n ecessa ry , war b e i t, t h en . T here w as n ev er a h olie r c au se . N o, n ev er a h olie r c au se !” “H ere w as th e g en tle st a n d k in dest o f m en ,” c o m men ts h is frie n d, J a m es Russe ll T ay lo r, “w ho w ould sh rin k fro m a gun fir e d in an ger, re ad y fo r univ ers a l w ar ra th er th an th at h is g osp el s h ould n ot b e a ccep te d . It w as th e co ura g e … w hic h m ak es o ne a m ajo rity .” Need le ss to sa y, th e w hole doctr in e w as an ath em a to th e w orld of re sp ecta b le opin io n. A C ath olic prie st w ho had asso cia te d him se lf w ith Geo rg e in h is m ay ora lty fig ht w as te m pora rily e x co m munic ate d ; th e P ope him se lf a d dre sse d a n e n cy clic al to th e la n d q uestio n; a n d w hen G eo rg e s e n t him a n e la b ora te ly p rin te d a n d b ound r e p ly , it w as ig nore d . “ I w ill n ot in su lt my re ad ers b y d is c u ssin g a p ro je ct so ste ep ed in in fa m y,” w ro te G en era l Fra n cis A . W alk er, a le ad in g p ro fe ssio nal e co nom is t in th e U nite d S ta te s; b ut while o ff ic ia ld om lo oked a t h is b ook w ith s h ock o r w ith a m use d c o nte m pt, th e m an h im se lf s tr u ck h om e t o h is a u die n ce. Pro gre ss a nd P overty s o ld m ore co pie s th an a ll th e e co nom ic te x ts p re v io usly p ublis h ed in th e c o untr y ; in Engla n d, h is n am e b ecam e a h ouse h old w ord . N ot o nly t h at, b ut t h e i m port o f his id eas— alb eit u su ally in w ate re d fo rm — becam e p art o f th e herita g e o f men lik e W oodro w W ils o n, Jo hn D ew ey, L ouis B ra n deis . In deed th ere is a dev ote d f o llo w in g o f H en ry G eo rg e’s s till a ctiv e t o day. In 1 897, o ld , u nw ell, b ut still in dom ita b le , h e p erm itte d h im se lf to b e dra fte d fo r a s e co nd m ay ora lty ra ce, k now in g fu ll w ell th at th e s tr a in o f th e cam paig n m ig ht b e to o m uch fo r h is fa ilin g h eart. It w as; h e w as calle d “m ara u der,” “assa ila n t of oth er peo ple ’s rig ht,” “ap ostle of an arc h y an d destr u ctio n,” an d h e d id d ie , o n th e ev e o f th e ele ctio n. H is fu nera l w as atte n ded b y th ousa n ds. H e w as a r e lig io us m an ; le t u s h ope th at h is s o ul w en t str a ig ht to heav en . A s fo r his re p uta tio n— th at w en t str a ig ht in to th e underw orld o f e co nom ic s, a n d th ere h e e x is ts to day ; a lm ost- M essia h , s e m i- cra ck pot, an d dis tu rb in g questio ner of th e m ora lity of our eco nom ic in stitu tio ns. But so m eth in g els e w as goin g on in th e underw orld , so m eth in g m ore im porta n t th an H en ry G eo rg e’s fu lm in atio ns ag ain st re n t an d his ecsta tic vis io n o f a C ity o f G od to b e b uilt o n th e f o undatio n o f th e s in gle ta x . A n ew an d v ig oro us sp ir it w as sw eep in g E ngla n d a n d th e C ontin en t a n d e v en th e Unite d S ta te s, a sp ir it th at m an if e ste d its e lf in th e pro lif e ra tio n of su ch slo gan s a s “ T he A nglo -S ax on r a ce i s i n fa llib ly d estin ed t o b e t h e p re d om in an t fo rc e i n t h e h is to ry a n d c iv iliz atio n o f t h e w orld .” T he s p ir it w as n ot c o nfin ed to E ngla n d: a cro ss th e C han nel, V ic to r H ugo d ecla re d , “ F ra n ce is n eed ed b y hum an ity ”; in Russia th e sp okesm an fo r ab so lu tis m , Konsta n tin Pobyed onosts e v, p ro cla im ed th at R ussia ’s f re ed om f ro m th e ta in t o f W este rn decad en ce h ad g iv en h er th e a cco la d e o f le ad ers h ip f o r th e E ast. I n G erm an y th e K ais e r w as e x pla in in g h ow der a lte G ott w as o n t h eir s id e; a n d i n t h e N ew World , T heo dore R oose v elt w as m ak in g h im se lf t h e A m eric an s p okesm an f o r a s im ila r p hilo so phy. The ag e of im peria lis m had beg un, an d th e m ap m ak ers w ere busy ch an gin g t h e c o lo rs t h at d en ote d o w ners h ip o f t h e d ark er c o ntin en ts . B etw een 1870 a n d 1 898 B rita in a d ded 4 m illio n s q uare m ile s a n d 8 8 m illio n p eo ple to its e m pir e ; F ra n ce g ain ed n early th e s a m e a re a o f te rrito ry , w ith 4 0 m illio n so uls atta ch ed ; G erm an y w on a m illio n m ile s an d 16 m illio n co lo nia ls ; Belg iu m to ok 9 00,0 00 m ile s a n d 3 0 m illio n p eo ple ; e v en P ortu gal jo in ed th e ra ce, w ith 8 00,0 00 m ile s o f n ew l a n ds a n d 9 m illio n i n hab ita n ts . In t r u th , t h re e g en era tio ns h ad c h an ged t h e f a ce o f t h e e arth . B ut m ore t h an th at, th ey h ad w itn esse d a n e q ually re m ark ab le c h an ge in th e a ttitu de w ith whic h th e W est v ie w ed th at p ro cess o f c h an ge. I n th e d ay s o f A dam S m ith , it will b e re m em bere d , th e S co ts p hilo so pher re g ard ed w ith s c o rn th e a tte m pts of m erc h an ts to p la y th e r o le o f k in gs, a n d h e u rg ed th e in dep en den ce o f th e Am eric an C olo nie s. A nd S m ith ’s c o nte m pt fo r c o lo nie s w as w id ely s h are d : Ja m es M ill, th e f a th er o f J o hn S tu art M ill, c alle d th e c o lo nie s “ a v ast s y ste m of o utd oor re lie f fo r th e u pper c la sse s,” a n d e v en D is ra eli in 1 852 h ad p ut him se lf o n re co rd a s b elie v in g th at “ th ese w re tc h ed c o lo nie s a re m ills to nes aro und o ur n eck s.” But n ow a ll th is h ad c h an ged . B rita in h ad a cq uir e d h er e m pir e , a s it h ad fre q uen tly been re m ark ed , in a fit of ab se n t- m in ded ness, but ab se n tm in ded ness was re p la ced by sin gle -m in ded ness as th e pace of im peria lis m a ccele ra te d . L ord R ose b ery e p ito m iz ed th e s e n tim en t o f th e d ay when h e c alle d th e B ritis h E m pir e “ th e g re ate st s e cu la r a g en cy fo r g ood th e world has ev er know n.” “Y es,” sa id M ark Tw ain , w atc h in g a Ju bile e pro cessio n fo r Q ueen Vic to ria w hic h pro udly dis p la y ed th e pom p of Engla n d’s p osse ssio ns, “ th e E nglis h a re m en tio ned i n S crip tu re — ‘B le sse d a re th e m eek , f o r t h ey s h all i n herit t h e e arth .’ ” By m ost p eo ple , t h e r a ce f o r e m pir e w as a p pro vin gly r e g ard ed . I n E ngla n d, Kip lin g w as its p oet la u re ate , an d th e p opula r se n tim en t w as th at o f th e music -h all s o ng: We d on’t w an t t o f ig ht, b ut b y j in go i f w e d o, We’v e g ot t h e s h ip s, w e’v e g ot t h e m en , w e’v e g ot t h e m oney t o o! Anoth er, r a th er d if f e re n t n od o f a p pro val c am e f ro m t h ose w ho a g re ed w ith Sir C harle s C ro ssth w aite th at th e r e al q uestio n b etw een B rita in a n d S ia m w as “w ho w as to g et th e tr a d e w ith th em , a n d h ow w e c o uld m ak e th e m ost o f th em , s o a s t o f in d f re sh m ark ets f o r o ur g oods a n d a ls o e m plo ym en t fo r t h ose su perflu ous a rtic le s o f t h e p re se n t d ay, o ur b oys.” And t h en , t o o, t h e p ro cess o f e m pir e b uild in g b ro ught w ith i t p ro sp erity f o r th e em pir e b uild ers . N o sm all p art o f th e g ain in w ork in g-c la ss am en itie s whic h h ad s o p le ase d th e C om mitte e o n D ep re ssio n w as th e r e su lt o f s w eate d la b or o vers e as: t h e c o lo nie s w ere n ow t h e p ro le ta ria t’s p ro le ta ria t. N o w onder im peria lis m w as a p opula r p olic y. Thro ughout a ll o f th is , th e o ff ic ia ld om o f e co nom ic s sto od to o ne sid e, watc h in g th e p ro cess o f im peria l g ro w th w ith e q uan im ity , a n d c o nfin in g its re m ark s to th e e ff e ct th at n ew p osse ssio ns m ig ht h av e o n th e c o urs e o f tr a d e. Again it w as th e c ritic s o f th e u nderw orld th at f o cu se d a tte n tio n o n th is n ew phen om en on of his to ry . For, as th ey lo oked at th e w orld w id e ra ce fo r dom in atio n, th ey s a w s o m eth in g v ery d if f e re n t fro m th e m ere e x citin g c la sh of p olitic s o r t h e i n ex plic ab le w him s o f p ers o nalitie s i n p ow er. They s a w a w hole n ew d ir e ctio n t o t h e d rif t o f c ap ita lis m ; i n f a ct, t h ey s a w im peria lis m a s s ig nalin g a c h an ge in th e f u ndam en ta l c h ara cte r o f c ap ita lis m its e lf . S till m ore sig nif ic an t, th ey div in ed in th e new re stle ss pro cess of ex pan sio n th e m ost d an gero us te n den cy th at c ap ita lis m h ad y et re v eale d — a te n den cy t h at l e d t o w ar. It w as a m ild -m an nere d h ere tic w ho f ir s t m ad e th is c h arg e, th e p ro duct, a s he d esc rib ed h im se lf , o f “ th e m id dle s tr a tu m o f th e m id dle c la ss o f a m id dle – siz ed to w n o f th e M id la n ds.” Jo hn A . H obso n w as a fra il little m an , m uch worrie d o ver h is h ealth a n d p la g ued b y a n im ped im en t in h is s p eech w hic h mad e h im n erv ous a b out l e ctu rin g. B orn i n 1 858, h e p re p are d f o r a n a cad em ic care er at O xfo rd ; an d b y all w e k now o f h is b ack gro und an d p ers o nality (w hic h is n ot m uch , fo r th is sh y a n d re tir in g m an m an ag ed su ccessfu lly to av oid Who’s W ho) , h e w as d estin ed fo r th e c lo is te re d a n onym ity o f E nglis h public -s c h ool l if e . Tw o f a cto rs i n te rv en ed . H e r e ad t h e w ork s o f R usk in , t h e B ritis h c ritic a n d essa y is t w ho m ock ed a t t h e b ourg eo is V ic to ria n c an ons o f m oneta ry v alu e a n d who tr u m pete d , “ W ealth is lif e !” F ro m R usk in , H obso n a cq uir e d a n id ea o f eco nom ic s a s a h um an is t ra th er th an a n im pers o nal sc ie n ce; a n d h e tu rn ed fro m th e r e fin em en t o f o rth odox d octr in e to p re ach in g th e v ir tu es o f a w orld where co opera tiv e la b or guild s w ould giv e a hig her valu e to hum an pers o nality th an th e c ra ss w orld o f w ag es a n d p ro fits . H is s c h em e, H obso n in sis te d , w as “ as c erta in a s a p ro positio n i n E uclid .” As a U to pia n h e m ig ht h av e b een r e sp ecta b le ; th e E nglis h lik e e ccen tr ic s. It w as a s a h ere tic , a tr a m ple r o n th e v ir tu es o f tr a d itio n, th at h e b ecam e a n eco nom ic p aria h . C han ce t h re w h im i n to t h e c o m pan y o f a p ers o n c alle d A . F . Mum mery , a n in dep en den t th in ker, a s u ccessfu l b usin essm an , a n d a n in tr e p id mounta in c lim ber ( h e w as to m eet h is d eath in 1 895 o n th e h eig hts o f N an ga Parb at) . “ M y in te rc o urs e w ith h im , I n eed h ard ly s a y,” w rite s H obso n, “ d id not lie o n th is p hysic al p la n e. B ut h e w as a m en ta l clim ber as w ell… .” Mum mery h ad s p ecu la te d a s to th e c au se o f th ose p erio dic s lu m ps in tr a d e whic h h ad w orrie d t h e b usin ess c o m munity a s f a r b ack a s t h e e arly e ig hte en th cen tu ry , a n d h e h ad a n id ea a s to th eir o rig in , w hic h w as, a s H obso n p ut it, co nsid ere d b y th e p ro fe sso rd om “ as e q uiv ale n t in r a tio nality to a n a tte m pt to pro ve th e f la tn ess o f th e e arth .” F or M um mery , h eark en in g b ack to M alth us, th ought th at th e c au se o f d ep re ssio n la y in th e f a ct o f e x cessiv e sa vin g , in th e ch ro nic in ab ility of th e busin ess sy ste m to dis tr ib ute en ough purc h asin g pow er t o b uy i ts o w n p ro ducts b ack . Hobso n a rg ued a t fir s t a n d th en b ecam e c o nvin ced th at M um mery w as rig ht. T he tw o w ro te The P hysio lo gy o f In dustr y , s e ttin g fo rth th eir h ere tic al notio n th at s a v in gs m ig ht u nderm in e p ro sp erity . T his w as to o m uch fo r th e off ic ia l w orld t o s w allo w . H ad n ot a ll t h e g re at e co nom is ts , f ro m A dam S m ith onw ard , s tr e sse d th e f a ct th at s a v in g w as o nly o ne s id e o f th e g old en c o in o f accu m ula tio n? D id n ot e v ery a ct o f s a v in g a u to m atic ally a d d to th e fu nd o f cap ita l w hic h w as u se d to p ut m ore p eo ple to w ork ? T o s a y th at s a v in g m ig ht re su lt in u nem plo ym en t w as n ot o nly n onse n se o f th e m ost a rra n t k in d, b ut it was positiv ely in im ic al to one of th e le g s of so cia l sta b ility — th rif t. T he eco nom ic w orld w as sh ock ed : th e L ondon U niv ers ity E xte n sio n L ectu re s fo und th at th ey c o uld m an ag e to d is p en se w ith M r. H obso n’s p re se n ce; th e Charity O rg an iz atio n S ocie ty w ith dre w a n in vita tio n to sp eak . T he sc h ola r had b eco m e a h ere tic a n d t h e h ere tic n ow b ecam e, p erfo rc e, a n o utc ast. All t h is s e em s c o nsid era b ly r e m oved f ro m t h e p ro ble m o f i m peria lis m . B ut id eas germ in ate in dev io us w ay s. H obso n’s ex clu sio n fro m th e w orld of re sp ecta b ility le d h im in to th e p ath o f so cia l c ritic is m , a n d th e so cia l c ritic now t u rn ed h is a tte n tio n t o t h e g re at p olitic al p ro ble m o f t h e d ay : A fric a. The back gro und of th e A fric an pro ble m w as co m ple x an d em otio nal. Dutc h s e ttle rs h ad s e t u p th eir in dep en den t s ta te s in th e T ra n sv aal c o untr y in 1836, s o lid c o m munitie s o f “ K aff ir – flo ggin g, B ib le -re ad in g” f a rm ers . B ut th e la n d th ey c h ose , w id e a n d s u nny a n d e x hila ra tin g a s it w as, h id m ore w ealth th an it d is p la y ed . I n 1 869 d ia m onds w ere d is c o vere d ; in 1 885 g old . W ith in a fe w y ears th e p ace o f a n o xcart s e ttle m en t w as tr a n sfo rm ed in to th e f re n zie d ex cite m en t o f a co m munity o f sp ecu la to rs . C ecil R hodes ap peare d o n th e sc en e w ith h is p ro je cts o f r a ilr o ad s a n d in dustr y ; in a m om en t o f m ad ness h e sa n ctio ned a ra id in to th e T ra n sv aal a n d th e lo ng-s tr a in ed te m pers o f b oth Englis h a n d D utc h b urs t t h eir b onds. T he B oer W ar b eg an . Hobso n h ad a lr e ad y g one to A fric a. T his “ tim id est o f G od’s c re atu re s,” a s he calle d him se lf , tr a v ele d to C ap eto w n an d Jo han nesb urg , ta lk ed w ith Kru ger a n d S m uts , a n d fin ally d in ed w ith R hodes h im se lf o n th e e v e o f th e Tra n sv aal ra id . R hodes w as a c o m plic ate d a n d p erp le x in g p ers o nality . T w o years b efo re h is A fric an a d ven tu re , a j o urn alis t h ad q uote d h im a s s a y in g: “I w as in th e E ast E nd o f L ondon y este rd ay a n d a tte n ded a m eetin g o f th e unem plo yed . I l is te n ed t o t h e w ild s p eech es, w hic h w ere j u st a c ry f o r ‘ b re ad ,’ ‘b re ad ,’ ‘b re ad ,’ an d o n m y w ay h om e I p ondere d o ver th e sc en e… . M y ch eris h ed id ea is a s o lu tio n f o r th e s o cia l p ro ble m s; i.e ., in o rd er to s a v e th e 40,0 00,0 00 in hab ita n ts o f th e U nite d K in gdom fro m a b lo ody c iv il w ar, w e co lo nia l s ta te sm en m ust a cq uir e n ew la n ds to s e ttle th e s u rp lu s p opula tio n, to pro vid e n ew m ark ets fo r th e g oods p ro duced by th em in th e fa cto rie s a n d min es. T he E m pir e , a s I h av e a lw ay s s a id , i s a b re ad a n d b utte r q uestio n.” We d o n ot k now w heth er h e e x pounded th e s a m e s e n tim en ts to H obso n; th e p ro bab ility is th at h e d id . B ut it w ould h av e m ad e little d if f e re n ce. F or what H obso n s a w in A fric a d oveta ile d in th e m ost u nex pecte d w ay w ith th e eco nom ic h ere sy o f w hic h h e a n d M um mery h ad b een c o nvic te d : th e th eo ry of o vers a v in g. He re tu rn ed to B rita in to w rite a b out jin gois m a n d th e w ar in A fric a, a n d th en in 1902 he pre se n te d th e w orld w ith a book in w hic h his A fric an obse rv atio ns w ere s tr a n gely m eld ed w ith h is h ere tic al v ie w s. The b ook w as c alle d Im peria lis m ; it w as a d ev asta tin g v olu m e. F or h ere was t h e m ost i m porta n t a n d s e arin g c ritic is m t h at h ad e v er b een l e v ie d a g ain st th e p ro fit s y ste m . T he w ors t t h at M arx h ad c la im ed w as t h at t h e s y ste m w ould destr o y i ts e lf ; w hat H obso n s u ggeste d w as t h at i t m ig ht d estr o y t h e w orld . H e sa w th e pro cess of im peria lis m as a re le n tle ss an d re stle ss te n den cy of cap ita lis m to re sc u e its e lf fro m a se lf -im pose d dile m ma, a te n den cy th at necessa rily in volv ed fo re ig n co m merc ia l co nquest an d th at th ere b y in esc ap ab ly in volv ed a co nsta n t ris k of w ar. N o m ore pro fo und m ora l in dic tm en t o f c ap ita lis m h ad e v er b een p ose d . What w as t h e s u bsta n ce o f H obso n’s c h arg e? It w as a n a rg um en t a lm ost M arx ia n in its im pers o nality a n d in ex ora b le dev elo pm en t (a lth ough H obso n h ad n o s y m path y fo r th e M arx is ts a n d th eir aim s). I t c la im ed t h at c ap ita lis m f a ced a n i n so lu ble i n te rn al d if f ic u lty a n d t h at it w as f o rc ed t o t u rn t o i m peria lis m , n ot o ut o f a p ure l u st f o r c o nquest, b ut t o en su re i ts o w n e co nom ic s u rv iv al. That in te rn al c ap ita lis t d if f ic u lty w as a n a sp ect o f th e s y ste m w hic h h ad re ceiv ed su rp ris in gly little atte n tio n in th e past— cap ita lis m ’s uneq ual dis tr ib utio n o f w ealth . T he fa ct th at th e w ork in gs o f th e p ro fit s y ste m v ery ofte n re su lte d in a lo psid ed d is tr ib utio n o f w ealth h ad lo ng b een a to pic fo r mora l c o ncern , b ut its eco nom ic c o nse q uen ces w ere le ft fo r H obso n to p oin t out. The c o nse q uen ce h e s a w w as m ost s u rp ris in g. T he in eq uality o f in co m es le d t o t h e s tr a n gest o f d ile m mas— a p ara d oxic al s itu atio n i n w hic h n eith er r ic h nor p oor c o uld c o nsu m e e n ough g oods. T he p oor c o uld n ot c o nsu m e e n ough becau se t h eir i n co m es w ere t o o s m all, a n d t h e r ic h c o uld n ot c o nsu m e e n ough becau se th eir in co m es w ere to o b ig ! I n o th er w ord s, s a id H obso n, in o rd er to cle ar its o w n m ark et, a n e co nom y m ust c o nsu m e e v ery th in g th at it m ak es: each g ood m ust h av e a b uyer. N ow , if th e p oor c an not a ff o rd to ta k e m ore th an t h e b are e sse n tia ls , w ho i s t h ere t o t a k e t h e r e st? O bvio usly , t h e r ic h . B ut while th e r ic h h av e th e m oney, th ey la ck th e p hysic al c ap acity f o r th at m uch co nsu m ptio n: a m an w ith a m illio n-d olla r in co m e w ould h av e to c o nsu m e goods w orth a th ousa n d tim es th ose b ought b y a m an w ith o nly a th ousa n d dolla rs t o s p en d. And so , a s a c o nse q uen ce o f a n in eq uita b le d iv is io n o f w ealth , th e ric h were fo rc ed to s a v e. T hey s a v ed n ot o nly b ecau se m ost o f th em w is h ed to , an yw ay, b ut b ecau se t h ey c o uld n ot v ery w ell h elp t h em se lv es— th eir i n co m es were s im ply t o o l a rg e t o b e c o nsu m ed . It w as th is sa v in g th at le d to tr o uble . T he a u to m atic sa v in gs o f th e ric h str a ta o f s o cie ty h ad to b e p ut to u se , if th e e co nom y w as n ot to s u ff e r fro m th e dis a str o us eff e cts of an in su ff ic ie n cy of purc h asin g pow er. B ut th e questio n w as how to p ut th e sa v in gs to w ork . T he c la ssic al a n sw er w as to in vest th em in e v er m ore f a cto rie s a n d m ore p ro ductio n a n d th us to a sc en d to an e v en h ig her le v el o f o utp ut a n d p ro ductiv ity : S m ith , R ic ard o, M ill, a ll th e gre at e co nom is ts a g re ed o n th is s o lu tio n to th e p ro ble m . B ut H obso n s a w a dif f ic u lty in th e w ay. F or if th e m ass o f th e p eo ple w ere alr e a dy h av in g tr o uble b uyin g a ll t h e g oods t h ro w n o n t h e m ark et b ecau se t h eir i n co m es w ere to o s m all, h ow , h e a sk ed , c o uld a s e n sib le c ap ita lis t in vest in e q uip m en t th at would th ro w still m ore g oods o n a n o verc ro w ded m ark et? W hat w ould b e gain ed fro m in vestin g s a v in gs in a n oth er s h oe fa cto ry , le t u s s a y, w hen th e mark et w as alr e ad y sw am ped w ith m ore sh oes th an co uld be re ad ily ab so rb ed ? W hat w as t o b e d one? Hobso n’s a n sw er w as d ev ilis h ly n eat. T he a u to m atic sa v in gs o f th e ric h co uld be in veste d in one w ay th at w ould put th em to use w ith out th e tr o uble so m e acco m pan im en t o f m ore p ro ductio n at h om e. T hey co uld b e in veste d o vers e as. And th is is th e g en esis o f im peria lis m . I t is , w ro te H obso n, “ th e e n deav or of t h e g re at c o ntr o lle rs o f i n dustr y t o b ro ad en t h e c h an nel f o r t h e f lo w o f t h eir su rp lu s w ealth b y s e ek in g f o re ig n m ark ets a n d f o re ig n i n vestm en ts t o t a k e o ff th e g oods a n d c ap ita l t h ey c an not u se a t h om e.” The r e su lt is d is a str o us. F or it is n ot o ne n atio n o nly w hic h is s e n din g its su rp lu s w ealth a b ro ad . A ll n atio ns a re in th e s a m e b oat. H en ce th ere e n su es a ra ce to partitio n th e w orld , w ith each natio n tr y in g to fe n ce off fo r its in vesto rs th e ric h est an d m ost lu cra tiv e m ark ets it can se iz e. T hus A fric a beco m es a h uge m ark et (a n d a so urc e o f c h eap ra w m ate ria ls ) to b e sp lit am ong th e c ap ita lis ts o f E ngla n d a n d G erm an y a n d Ita ly a n d B elg iu m ; A sia beco m es a r ic h p ie to b e c arv ed u p a m ong th e J a p an ese a n d th e R ussia n s a n d th e D utc h . In dia b eco m es a d um pin g g ro und fo r B ritis h in dustr y , a n d C hin a beco m es a n I n dia f o r J a p an . Im peria lis m th us p av es th e w ay to w ar— not b y s w ash buck lin g a d ven tu re s or hig h tr a g ed y, but th ro ugh a so rd id pro cess in w hic h cap ita lis t natio ns co m pete fo r o utle ts fo r th eir u nem plo yed w ealth . A le ss-in sp ir in g c au se fo r blo odsh ed c o uld h ard ly b e i m ag in ed . Need le ss to sa y, su ch a th eo ry of vio le n ce an d str u ggle fo und little en co ura g em en t in th e o ff ic ia l w orld o f e co nom is ts . H obso n, it w as s a id , k ep t “m uddlin g e co nom ic s u p w ith o th er th in gs” a n d sin ce th ose “ o th er th in gs” were h ard ly s u ggestiv e o f a w orld o rg an iz ed a ro und th e p urs u it o f p le asu re , th e o ff ic ia l w orld r e g ard ed t h e t h eo ry o f i m peria lis m a s a d is p la y o f t h e s o rt o f bad m an ners o ne w ould e x pect o f a m an w hose e co nom ic s o utr a g ed su ch co m mon-s e n se d octr in es a s t h e s o cia l b en efic en ce o f t h rif t. But w hile th e d octr in e w as s c ru pulo usly a v oid ed b y th ose w ho m ig ht h av e su bje cte d it to an in te llig en t, if critic al, sc ru tin y, it was em bra ced whole h earte d ly b y a n oth er s e ctio n o f th e u nderw orld : th e M arx is ts . T he id ea, afte r all, w as not en tir e ly orig in al w ith H obso n; varia n ts of it had been work ed out by a G erm an eco nom is t nam ed Rodbertu s, an d by Rosa Luxem burg , a fie ry G erm an re v olu tio nis t. B ut H obso n’s tr e atm en t w as bro ad er a n d d eep er, a n d it w as e m bro id ere d in to th e o ff ic ia l c lo ak o f M arx is t doctr in e by none oth er th an th eir le ad in g th eo re tic ia n — an ex ile nam ed Vla d im ir I lic h U ly an ov, b ette r k now n a s L en in . The th eo ry em erg ed fro m its b ap tis m so m ew hat ch an ged . H obso n h ad puzzle d o ver th e q uestio n o f w hy c ap ita lis t n atio ns s o a v id ly s o ught c o lo nie s afte r d ecad es o f m ore o r le ss in dif f e re n ce to th em . H is th eo ry o f im peria lis m was not a dogm a, an d still le ss an ir o ncla d pre d ic tio n of ab so lu te ly in esc ap ab le w ar. I n deed , h e e x pre sse d th e h ope th at r iv al im peria lis m s m ig ht arra n ge a k in d o f fin al s e ttle m en t o f th e w orld a n d e x is t p eaceab ly s id e b y sid e o n a l iv e-a n d-le t- liv e b asis . But in M arx is t g arb , th e th eo ry to ok o n to nes b oth m ore m en acin g a n d more in ex ora b le . N ot o nly w as im peria lis m p la ced as th e cap sto ne o f th e Marx is t e co nom ic a rc h , b ut it w as b ro ad en ed a n d w id en ed b ey ond H obso n’s fra m ew ork u ntil it a cco unte d fo r th e w hole so cia l c o m ple x io n o f la tte r- d ay cap ita lis m . A nd w hat a f rig hte n in g p ic tu re e m erg ed ! Im peria lis m , th e hig hest phase of cap ita lis t dev elo pm en t, im men se ly in cre ase s t h e p ro ductiv e f o rc es o f t h e w orld e co nom y, s h ap es t h e e n tir e w orld in its o w n im ag e, a n d d ra g s a ll c o lo nie s, a ll r a ces, a ll p eo ple s in to th e s p here of fin an ce c ap ita lis t e x plo ita tio n. A t th e sa m e tim e th e m onopolis t fo rm o f cap ita l in cre asin gly d ev elo ps e le m en ts o f p ara sitic d eg en era tio n a n d d ecay … . Im peria lis m p ile s u p u nto ld w ealth f ro m t h e i m men se s u perp ro fits i t s q ueezes out of th e m illio ns of co lo nia l w ork ers an d peasa n ts . In th is pro cess, im peria lis m c re ate s t h e t y pe o f t h e d ecay in g, p ara sitic ally d eg en era tin g r e n tie r sta te a n d e n tir e s tr a ta o f p ara site s w ho liv e b y c o upon c lip pin g. T he e p och o f im peria lis m , whic h co m ple te s th e pro cess of cre atin g th e mate ria l pre re q uis ite s of so cia lis m (c o ncen tr a tio n of th e m ean s of pro ductio n, so cia liz atio n o f la b our o n a g ig an tic sc ale , th e str e n gth en in g o f w ork ers ’ org an iz atio ns) a t th e s a m e tim e m ak es th e c o ntr a d ic tio ns b etw een th e “ G re at Pow ers ” sh arp er, a n d p ro vokes w ars w hic h re su lt in th e b re ak dow n o f th e sin gle w orld e co nom y. T hus im peria lis m is d ecay in g, d yin g c ap ita lis m . It is th e la st sta te o f cap ita lis t d ev elo pm en t as a w hole ; it is th e o nse t o f th e so cia lis t w orld r e v olu tio n. The w rite r is B ukharin ; th e o ccasio n, th e T hir d In te rn atio nal; th e d ate , 1928. W rite r, o ccasio n, a n d d ate n otw ith sta n din g, th e v oic e w e h ear is th at o f Len in . A nd m ore dis tu rb in g yet, L en in ’s co ncep tio n of a ra v ag in g an d ra v ag ed cap ita lis m , in te rn ally co rru pt an d ex te rn ally pre d ato ry , w as th e fo rm al S ovie t e x pla n atio n o f th e w orld in w hic h w e liv e u ntil th e d em is e o f th e S ovie t U nio n. Of th e f a ct o f im peria lis m th ere is n o d oubt. N o o ne w ho is f a m ilia r w ith th e h is to ry o f t h e l a te n in ete en th a n d e arly t w en tie th c en tu rie s c an f a il t o m ark th e lin e o f p lu nder, te rrito ria l ag gra n diz em en t, an d o ppre ssiv e co lo nia lis m th at ru ns lik e a te llta le th re ad th ro ugh th e e n dle ss in cid en ts o f in te rn atio nal je alo usy , fric tio n, a n d w ar. If it is n o lo nger fa sh io nab le to re g ard th e F ir s t World W ar as “p ure ly ” an im peria lis t co nflic t, th ere is no doubt th at im peria lis t j o ck ey in g f o r p ositio n d id m uch t o b rin g i t i n to b ein g. But c o nquest a n d c o lo nie s a re a s o ld a s a n cie n t E gypt, a n d a s th e S ovie t in vasio ns o f H ungary , C zech oslo vak ia , a n d A fg han is ta n h av e m ad e c le ar in modern tim es, th ey w ill c o ntin ue w heth er c ap ita lis m is th ere to fu rn is h a n ex cu se o r n ot. T he q uestio n t h at t h e eco nom ic t h eo ry o f i m peria lis m m ak es u s fa ce is w heth er th e co nquests o f th e la st fif ty y ears h av e b een d if f e re n tly motiv ate d fro m th e c o nquests th at c am e b efo re o r m ay fo llo w a fte r. It is a sim ple m atte r to unders ta n d th e th ir s t fo r pow er of th e dynastic sta te . Im peria lis m a sk s u s to c o nsid er w heth er th e m ore im pers o nal fo rc es o f th e mark et e co nom y c an l e ad t o t h e s a m e e n d r e su lt. The a p olo gis ts fo r th e c o lo nia l s y ste m c la im ed th at it c o uld n ot. In 1 868, Bis m arc k h im se lf w ro te : “ A ll th e a d van ta g es c la im ed f o r th e m oth er c o untr y are f o r th e m ost p art illu sio ns. E ngla n d is a b an donin g its c o lo nia l p olic y ; s h e fin ds it to o c o stly .” A nd o th er d efe n ders o f th e s y ste m e ch oed h is re m ark s: th ey poin te d out th at co lo nie s “d id n’t pay ”; th at co lo niz atio n was not underta k en g la d ly , b ut t h at i t w as f o rc ed o n t h e g re at p ow ers b y v ir tu e o f t h eir civ iliz in g m is sio n in th e w orld ; th at c o lo nie s g ain ed m ore th an th e m oth er co untr y , a n d s o o n. But th ey sim ply m is se d th e p oin t. T ru e, so m e c o lo nie s d id n ot p ay — in 1865 a C om mitte e o f C om mons a ctu ally re co m men ded th e a b an donm en t o f all B ritis h h old in gs s a v e o n th e w est c o ast o f A fric a o n th e g ro und th at th ey were h ig hly u npro fita b le v en tu re s. B ut w hile all co lo nie s d id n ot y ie ld a pro fit, so m e c o lo nie s w ere fa b ulo usly re w ard in g: th e te a g ard en s in C ey lo n, fo r ex am ple , w ould re tu rn 50 perc en t div id en ds on in veste d cap ita l in a ban ner y ear. A nd w hile all in dustr y d id n ot b en efit fro m o vers e as m ark ets , so m e im porta n t in dustr ie s c o uld h ard ly h av e e x is te d w ith out th em : th e c la ssic case in p oin t is th e d ep en den ce o f th e B ritis h c o tto n in dustr y o n th e In dia n mark et. A nd f o r E ngla n d a s a w hole , f o re ig n in vestm en t c erta in ly p ro vid ed a pro fita b le o utle t fo r sa v in gs: b etw een 1 870 an d 1 914, one-h alf o f E nglis h sa v in gs w ere in veste d a b ro ad , a n d th e flo w o f d iv id en ds a n d in te re st fro m fo re ig n i n vestm en ts p ro vid ed 1 0 p erc en t o f t h e B ritis h n atio nal i n co m e. To b e s u re , th ere w ere o th er m otiv es g en ero usly m ix ed in w ith th e p ure ly eco nom ic , an d th e eco nom ic co m pen sa to ry eff e ct o f im peria lis m w as n ot quite s o s im ple a s J . A . H obso n h ad d esc rib ed it. B ut b y a n d la rg e, o ne c o uld hard ly fin d a n e x pla n atio n fo r th e th ru st o f E uro pean p ow er in to A fric a a n d Asia th at d id n ot c o nta in s o m e fla v or o f e co nom ic a d van ta g e. In th e c ase o f Holla n d, f o r e x am ple , t h e h uge p la n ta tio ns o f J a v a a n d S um atr a o ff e re d a f ie ld fo r p ro fita b le in vestm en t o f g re at im porta n ce f o r D utc h c ap ita l; in th e c ase o f Mala y a, in valu ab le an d ch eap ra w m ate ria ls pro vid ed Jo hn B ull w ith a lu cra tiv e in te rn atio nal m onopoly ; in th e c ase o f th e M id dle E ast, th ere w ere oil a n d th e s tr a te g ic c o ntr o l o ver s h ip pin g th ro ugh th e S uez C an al. “ W hat o ur in dustr ie s la ck … w hat th ey la ck m ore a n d m ore , is m ark ets ,” s a id a F re n ch min is te r in 1 885; an d in 1 926 D r. S ch ach t, th en p re sid en t o f th e G erm an Reic h sb an k, d ecla re d : “ T he fig ht fo r ra w m ate ria ls p la y s th e m ost im porta n t ro le in w orld p olitic s, a n e v en g re ate r ro le th an b efo re th e w ar. G erm an y’s only so lu tio n is her acq uis itio n o f co lo nie s.” F ro m co untr y to co untr y th e motiv es m ig ht d if f e r, b ut th e c o m mon d en om in ato r o f e co nom ic g ain w as to be f o und i n a ll. Does th is m ean th at im peria lis m is in deed an in se p ara b le part of cap ita lis m ? T he a n sw er is n ot a s im ple o ne. C erta in ly c ap ita lis m h as b een a n ex pan siv e sy ste m fro m its e arlie st d ay s, a sy ste m w hose d riv in g fo rc e h as been th e e ff o rt to a ccu m ula te e v er la rg er a m ounts o f c ap ita l its e lf . T here fo re fro m e arly o n, w e f in d th at c ap ita lis t f ir m s h av e lo oked to f o re ig n la n ds, b oth fo r m ark ets an d fo r ch eap ra w m ate ria ls ; an d eq ually im porta n t, th e govern m en ts o f c ap ita lis t n atio ns h av e u su ally s u pporte d a n d p ro te cte d th eir priv ate e n te rp ris e rs i n t h ese o vers e as v en tu re s. This m uch o f t h e i m peria lis t s c en ario s e em s b ey ond q uestio n. B ut w e h av e co m e to lo ok o n th is p ro cess o f c ap ita lis t e x pan sio n in a s o m ew hat d if f e re n t fa sh io n f ro m th at o f H obso n o r L en in . T he d riv in g f o rc e d oes n ot s e em to b e lo dged in a p ile u p o f u ndig este d sa v in gs at h om e th at re q uir e in vestm en t ab ro ad . R ath er, th e underly in g pro puls iv e m ech an is m ap pears to be th e ex tr a o rd in ary cap acity o f th e cap ita lis t m ode o f eco nom ic o rg an iz atio n to dis p la ce o th er m odes, a n d to e sta b lis h its e lf in n oncap ita lis t s e ttin gs. T here is so m eth in g ab out th e te ch nolo gic al orie n ta tio n, th e eff ic ie n cy, th e sh eer dynam is m o f c ap ita lis t w ay s o f p ro ductio n th at m ak es th e e x pan sio n o f th e sy ste m “ ir re sis tib le .” Thus w e te n d to day to se e th e pro cess of im peria lis m as part of th e in te rn atio naliz a tio n o f c a pita l , a p ro cess th at b eg an e v en b efo re c ap ita lis m was fu lly fo rm ed a n d th at h as n ot y et ru n its c o urs e . B ut h ere a n im porta n t dis tin ctio n m ust b e m ad e b etw een th e in te rn atio naliz atio ns o f d if f e re n t e ra s. Im peria lis m o f th e k in d th at h elp ed b rin g o n W orld W ar I w as n ot ju st th e tr a n sp la n ta tio n o f c ap ita lis t m odes o f p ro ductio n in to A fric a a n d A sia a n d Latin A m eric a. It w as th is p lu s u ndis g uis e d p olitic al in te rfe re n ce, te rrif ic ex plo ita tio n, m ilita ry fo rc e, a n d a g en era l d is re g ard fo r th e in te re sts o f th e poore r n atio ns. W hat is s o s tr ik in g a b out la te n in ete en th – o r e arly tw en tie th – cen tu ry B ritis h in vestm en t in In dia , fo r e x am ple , is th at it w as la rg ely b ase d on a n d r u le d b y E ngla n d’s need s, n ot I n dia ’s r e q uir e m en ts . I n th e c ase o f th e Belg ia n C ongo o r t h e N eth erla n ds I n die s, “ la rg ely ” c an b e r e ad “ en tir e ly .” Som e p art o f th is o ld -fa sh io ned im peria lis m r e m ain s, a lth ough its o utw ard man if e sta tio ns h av e c h an ged . T he S eco nd W orld W ar b ro ught a g en era l e n d to th e r e la tio nsh ip o f c o lo nia lis m w ith in w hic h th e o ld er e co nom ic h eg em ony ex erte d its s w ay. W here th ere w ere o nly s u pin e c o lo nie s b efo re th e w ar, th ere em erg ed in dep en den t n atio ns afte r it; an d alth ough m an y o f th ese n atio ns were ( a n d s till a re ) im poveris h ed a n d w eak , th eir n atio nal s ta tu s h as m ad e it im possib le f o r th e E uro pean n atio ns to e x erc is e th e s a m e c av alie r d om in atio n th at w as c o m monpla ce i n t h e f ir s t h alf o f t h e c en tu ry . Thin gs h av e b een s o m ew hat d if f e re n t i n t h e c ase o f t h e U nite d S ta te s. H ere milita ry fo rc e h as b een a p plie d a g ain st u nderd ev elo ped n atio ns m an y tim es sin ce th e w ar— ag ain st C uba, V ie tn am , N ic ara g ua, an d Ira q am ong oth er in sta n ces— so th at th e U nite d S ta te s h as in herite d th e u nen via b le title o f th e main im peria lis t p ow er in th e w orld . B ut th e m otiv es th at h av e p ro m pte d o ur im peria lis t ad ven tu re s are n ot th ose th at se n t th e M arin es in to th e b an an a re p ublic or th e gunboats in to C hin a in th e nin ete en th cen tu ry . It is not Am eric an p ro perty th at w e h av e b een p ro te ctin g, b ut A m eric an id eo lo gy. Rath er lik e th e E nglis h d urin g th e p erio d o f th e F re n ch R ev olu tio n, u ntil th e Sovie t deb acle our govern m en t fe lt its e lf th re ate n ed by an im men se re v olu tio nary f o rc e— th e f o rc e o f w orld w id e c o m munis m , w hose m ost lik ely re cru its s e em ed to b e th e f ra il a n d u nsta b le n atio ns o f th e T hir d W orld . A s a re su lt, w e h av e r e acte d t o n early e v ery s o cia lis t t e n den cy i n t h ose n atio ns a s i f it w ere th e e n te rin g w ed ge o f a fo re ig n-d om in ate d C om munis t re g im e, a n d hav e s u pporte d e v ery re actio nary g overn m en t in th ose n atio ns a s p art o f th e sa m e s tr u ggle a g ain st c o m munis m . How t h is d efe n siv e-m in ded , a g gre ssiv e-o rie n te d p olic y w ill e n d r e m ain s t o be s e en . P erh ap s th e U nite d S ta te s w ill b e a b le to m ain ta in a w orld s a fe fo r cap ita lis m by brin gin g eco nom ic or m ilita ry fo rc e to bear on so cia lis t govern m en ts th at a p pear in th e u nderd ev elo ped w orld . P erh ap s s u ch a polic y will e n d in o ur o w n fru str a tio n a n d d em ora liz atio n. W hate v er th e o utc o m e, how ev er, th is a sp ect o f im peria lis m b ears m ore re la tio n to th e p ro ble m o f pro te ctin g a g re at k in gdom f ro m th e in flu en ce o f o uts id ers — a p ro ble m a s o ld as a n cie n t C hin a o r R om e— th an to th e d ir e ct s u pport f o r b usin ess e n te rp ris e s th at w as th e fra n k m otiv e fo r th e im peria l th ru st o f th e la st c en tu ry . It is a dir e ct p olitic al, r a th er t h an a n i n dir e ct e co nom ic , f o rm o f f o re ig n d om in atio n. Mean w hile , th ere is a s e co nd a sp ect to th e c h an gin g fa ce o f im peria lis m th at is unm is ta k ab ly eco nom ic . It is th e sp ecta cu la r em erg en ce of th e multin atio nal co rp ora tio n as th e p rin cip al ag en cy b y w hic h cap ita l m oves fro m i ts h om e c o untr y o vers e as. The m ultin atio nals are gia n t co rp ora tio ns, su ch as C oca-C ola , IB M , Mic ro so ft, an d R oyal D utc h Shell, w hose m an ufa ctu rin g or pro cessin g opera tio ns a re l o cate d i n m an y n atio ns. A m ultin atio nal w ill d rill f o r o il i n t h e Mid dle E ast o r A fric a, r e fin e it in E uro pe o r A m eric a, a n d s e ll it in J a p an ; o r it m ay ex tr a ct o re in A ustr a lia , p ro cess it in Ja p an , an d sh ip th e fin is h ed beam s t o t h e U nite d S ta te s. Multin atio nals h av e b ro ught t w o c h an ges t o t h e o vera ll i n te rn atio naliz atio n of c ap ita l. F ir s t, t h ey h av e c h an ged i ts g eo gra p hic f lo w s. I n t h e d ay s o f c la ssic im peria lis m , as w e hav e se en , th e obje ctiv e of cap ita lis t ex pan sio n w as fo cu se d m ain ly o n g ain in g a ccess to ra w m ate ria ls o r to m ark ets fo r b asic co m moditie s, lik e te x tile s. T he m ultin atio nals h av e tu rn ed a w ay fro m th ese basic c o m moditie s to w ard th e s o rts o f h ig h-te ch nolo gy g oods in w hic h th ey are w orld le ad ers , su ch as co m pute rs an d p harm aceu tic als . T he re su lt h as been a s tr ik in g s h if t in th e o vers e as a llo catio n o f c ap ita l. I n 1 897 a lm ost h alf of A m eric an o vers e as c ap ita l w as in veste d in p la n ta tio ns, r a ilw ay s, o r m in in g pro pertie s. T oday o nly a s m all fra ctio n o f o ur fo re ig n in vestm en t is in th ose fie ld s. I n ste ad , t h e b ulk o f o ur o vers e as c ap ita l h as m oved i n to m an ufa ctu rin g, an d th re e-q uarte rs o f th e f lo w o f in te rn atio nal in vestm en t g oes to E uro pe a n d Can ad a a n d o th er d ev elo ped c ap ita lis t la n ds. S o, to o, th e g re at p re p ondera n ce of F re n ch o r J a p an ese o r G erm an in te rn atio nal in vestm en t s e ek s o ut lo catio ns in th e d ev elo ped w orld (in clu din g th e U nite d S ta te s), ra th er th an in th e o ld co lo nia l p arts o f t h e g lo be. A s e co nd e co nom ic c o nse q uen ce o f th e r is e o f th e m ultin atio nals h as b een th eir r e m ark ab le a b ility t o c o m bin e h ig h t e ch nolo gy w ith c h eap a n d u ntr a in ed la b or. The in cre d ib ly co m plic ate d mech an is m s th at underlie modern eco nom ic lif e , su ch as co m pute r p arts o r te le v is io n su basse m blie s, can b e pro duced in th e H ong K ongs a n d S outh K ore as a n d T haila n ds o f th e w orld , usin g sc ie n tif ic m ach in es o pera te d b y m en an d w om en ju st o ff th e p ad dy fie ld s. Fro m th e poin t of vie w of im peria lis m , th e upsh ot of th is is a perp le x in g o ne. T he ab ility to tr a n sp la n t w hole p ro ductio n p ro cesse s in to are as o f th e w orld th at o nly y este rd ay w ere p easa n t e co nom ie s h as s u cceed ed to a n u npre ced en te d d eg re e in e x portin g th e s o cia l in stitu tio ns o f c ap ita lis m . Ju st as th e fa cto rs o f p ro ductio n th em se lv es em erg ed fro m a p re cap ita lis t so cia l se ttin g durin g th e gre at eco nom ic re v olu tio n w e w itn esse d in our open in g c h ap te rs , s o in o ur tim es a n ew e co nom ic re v olu tio n is b rin gin g th e mark et eco nom y in to re g io ns th at w ere fo rm erly o nly p assiv e, n ot activ e fo rc es in th e w orld e co nom y. T o th at e x te n t, m odern im peria lis m h as b een a gre at f o rc e f o r t h e v ita liz atio n o f c ap ita lis m a b ro ad . At th e sa m e tim e, th e new im peria lis m has gre atly in te n sif ie d th e co m petitiv en ess o f th e s y ste m in its d ev elo ped h om ela n ds. T his is n ot o nly th e re su lt o f th e in te rp en etr a tio n o f e ach o th er’s m ark ets th at w e d is c u sse d ab ove, b ut b ecau se th e m an ufa ctu rin g o utp osts o f th e m ultin atio nals in th e underd ev elo ped re g io ns c an fir e a rtille ry b arra g es o f lo w -c o st c o m moditie s back i n to t h eir m oth erla n ds. A s n o n atio n k now s b ette r t h an t h e U nite d S ta te s, TV s e ts m ad e in H ong K ong o r T aiw an , o r a u to m obile s m ad e in S outh K ore a or a sse m ble d i n M ex ic o , c an e asily u nders e ll t h e s a m e p ro ducts m an ufa ctu re d in C alif o rn ia o r t h e M id w est. It is to o s o on to fo re te ll th e c o nse q uen ces o f th is in te rn atio naliz atio n a n d in te n sif ic atio n o f c o m petitio n o r w hat m ay b e th e o utc o m e o f th e fin an cia l an d p olitic al c ris e s th at h av e a p peare d — not su rp ris in gly — in n early a ll th e Asia n “tig ers .” W hat se em s b ey ond d oubt is th at w e h av e m oved in th e dir e ctio n o f a g lo bal eco nom y in w hic h n ew w orld -s tr a d dlin g en te rp ris e s co ex is t u neasily w ith o ld er n atio nal b oundarie s an d p re ro gativ es. It is an ir o nic en din g to o ur co nsid era tio n o f th e p ro ble m o f im peria lis m th at th e movem en t w hose o rig in s w ere c o nnecte d w ith a lle v ia tin g th e p re ssu re s o n cap ita l h as e n ded u p b y m ak in g t h em w ors e . Jo hn H obso n d ie d in 1 940; in th e L ondon Tim es a p ro perly c ir c u m sp ect obitu ary duly note d both his pre sc ie n t id eas an d his la ck of gen era l re co gnitio n. For u nre co gniz ed h e w as. T he m ost r e n ow ned e co nom is t o f th e V ic to ria n world was an eco nom is t utte rly unlik e Hobso n: Alf re d M ars h all— as co nsid ere d , m id dle -o f-th e-ro ad , a n d “ o ff ic ia l” a s H obso n h ad b een in tu itiv e, ex tr e m e, a n d, s o to s p eak , u nau th oriz ed . Y et it is f ittin g th at w e c o nclu de th is jo urn ey th ro ugh th e s h ad ow y r e g io ns o f th e u nderw orld b y r e tu rn in g a g ain to Vic to ria n d ay lig ht. T he e co nom is ts w ho w ork ed in th at d ay lig ht m ig ht n ot hav e s e en th e d is tu rb in g s ig hts r e v eale d to m ore a d ven tu ro us s o uls , b ut th ey did o ne th in g th at th e h ere tic s d id n ot: th ey ta u ght th eir w orld — an d e v en o ur world — its “ eco nom ic s.” Mere ly t o l o ok a t A lf re d M ars h all’s p ortr a it i s a lr e ad y t o s e e t h e s te re o ty pe of th e te ach er: w hite m usta ch e, w hite w is p y hair , kin d brig ht ey es— an em in en tly p ro fe sso ria l c o unte n an ce. A t th e tim e o f h is d eath in 1 924, w hen th e g re ate st e co nom is ts in E ngla n d p aid h om ag e to h is m em ory , o ne o f th em , Pro fe sso r C . R . F ay, p ro duced t h is i n delib le p ortr a it o f t h e V ic to ria n p ro fe sso r ch ez l u i: Pig ou to ld m e I o ught to g o a n d se e h im a b out a su bje ct fo r a F ello w sh ip Dis se rta tio n. S o one afte rn oon to w ard s tw ilig ht I w en t to B allio l C ro ft. “C om e i n , c o m e i n ,” h e s a id , r u nnin g i n f ro m a l ittle p assa g e; a n d I w en t w ith him u psta ir s . “ H av e y ou a n y id ea w hat to d o?” h e a sk ed m e. I sa id “ n o.” “W ell, th en , lis te n ,” h e s a id , p ro ducin g a s m all b la ck b ook. H e p ro ceed ed to re ad o ut a lis t o f s u bje cts h av in g p re v io usly o rd ere d m e to h old u p m y h an d when h e c am e to o ne I lik ed . I n m y n erv ousn ess I tr ie d to c lo se w ith th e f ir s t su bje ct, b ut M ars h all to ok n o n otic e a n d r e ad o n. A bout h alf w ay th ro ugh th e se co nd pag e h e arriv ed at “T he R ecen t G erm an F in an cia l C ris is .” H av in g been to G re if s w ald fo r a s u m mer I s ig nale d a cq uie sc en ce. “ It w ould n’t s u it you a t a ll,” h e s a id . I k ep t q uie t fo r a n oth er fiv e m in ute s, a n d, c atc h in g th e word “ A rg en tin e” m ad e a n oth er n ois e w hic h sto pped h im . M y o nly re aso n was th at tw o o f m y u ncle s h ad b een in b usin ess th ere . “ H av e y ou b een th ere yours e lf ? ” h e a sk ed . “ N o,” I r e p lie d , a n d h e w en t o n. A f e w m om en ts l a te r h e sto pped a n d sa id , “ H av e y ou fo und a su bje ct y ou lik e?” “ I d on’t k now ,” I beg an . “ N o o ne e v er d oes,” h e s a id , “ b ut t h at’s m y m eth od. N ow , w hat w ould you lik e to d o?” I g asp ed o ut “ a c o m paris o n o f G erm an a n d E nglis h la b our.” Upon w hic h ( fo r it w as n ow q uite d ark ), h e p ro duced a little la n te rn w ith a n ele ctr ic b utto n a n d b eg an p ro w lin g a ro und th e s h elv es, h an din g o ut b ooks in Englis h a n d G erm an — von N ostitz , K uhlm an , a b out 3 0 i n a ll. “ N ow ,” h e s a id , “I’ll l e av e y ou t o s m ell; w hen y ou’v e f in is h ed , b lo w d ow n t h e t u be a n d S ara h will b rin g y ou s o m e t e a.” It w as a ll v ery r e m ote f ro m t h e A fric an s tr if e t h at h ad d is tu rb ed H obso n o r th e bois te ro us Am eric an sp ecu la tio n th at had fo rm ed th e cra d le of en vir o nm en t fo r H en ry G eo rg e’s id eas. M ars h all, lik e his co nte m pora ry Edgew orth , w as pre em in en tly th e pro duct of a univ ers ity . A lth ough he voyag ed to A m eric a a n d e v en a cro ss A m eric a to S an F ra n cis c o , h is lif e , h is poin t o f v ie w — an d in ev ita b ly h is e co nom ic s— sm ack ed o f th e q uie tu de a n d re fin em en t o f t h e C am brid ge s e ttin g. But ex actly w hat d id h e te ach ? T he w ord to su m u p M ars h all’s b asic co ncern is th e te rm w e h av e a lr e ad y id en tif ie d a s th e n ew V ic to ria n v is io n o f th e eco nom y— th e te rm “eq uilib riu m .” In co ntr a st w ith B astia t, w ho w as dra w n t o t h e i r ra tio nalitie s o f e co nom ic s o phis tr y , o r w ith H en ry G eo rg e, w ho sa w th e in ju stic es o f lif e c lo ak ed w ith e co nom ic sa n ctio n, o r w ith H obso n, who lo oked f o r h id den d estr u ctiv e te n den cie s in th e im pers o nal p ro cesse s o f cap ita lis t e co nom ic s, M ars h all w as p rim arily in te re ste d in th e s e lf -a d ju stin g, se lf -c o rre ctin g n atu re o f t h e e co nom ic w orld . A s h is m ost b rillia n t p upil, J. M . Key nes, w ould la te r w rite , h e c re ate d “ a w hole C opern ic an s y ste m , in w hic h all th e e le m en ts o f th e e co nom ic u niv ers e a re k ep t in th eir p la ces b y m utu al co unte rp ois e a n d i n te ra ctio n.” Much o f th is , o f c o urs e , h ad b een ta u ght b efo re . A dam S m ith , R ic ard o, Mill, h ad a ll e x pounded th e m ark et s y ste m a s a f e ed back m ech an is m o f g re at co m ple x ity an d eff ic ie n cy. Y et betw een th e overa ll vis io n an d th e fin e work in g-o ut of deta ils , th ere w as m uch unex plo re d te rrito ry an d fo ggy ex positio n: th e th eo ry o f m ark et e q uilib riu m w hic h M ars h all in herite d w as a good d eal m ore im posin g a t a d is ta n ce th an u p c lo se . T here w ere s tic k y b its ev en a b out s u ch b asic m atte rs a s w heth er p ric es w ere r e ally a r e fle ctio n o f t h e co st o f p ro ductio n o f a g ood, o r o f th e f in al d eg re e o f s a tis fa ctio n y ie ld ed b y th at g ood— were d ia m onds h ig h-p ric ed , in o th er w ord s, b ecau se th ey w ere hard t o f in d o r b ecau se p eo ple e n jo yed w earin g t h em ? P erh ap s s u ch q uestio ns would n ot m ak e a n y b ut a n e co nom is t’s h eart b eat fa ste r, a n d y et a s lo ng a s th ey r e m ain ed o bsc u re it w as h ard to th in k c le arly a b out m an y p ro ble m s th at eco nom ic s s o ught t o a tta ck . It w as to th ese fu zzy q uestio ns o f e co nom ic th eo ry th at M ars h all a p plie d him se lf . In his fa m ous Prin cip le s of E co nom ic s he co m bin ed a m in d of math em atic al pre cis io n w ith a sty le th at w as le is u re ly , dis c u rs iv e, sh ot th ro ugh w ith h om ely e x am ple , a n d w onderfu lly lu cid . E ven a b usin essm an co uld u nders ta n d th is s o rt o f e co nom ic s, fo r a ll th e h ard lo gic al p ro ofs w ere th oughtf u lly re le g ate d to th e fo otn ote s (w ith th e re su lt th at Key nes ir re v ere n tly s a id th at a n y e co nom is t w ould d o b ette r to r e ad th e f o otn ote s a n d fo rg et th e te x t th an v ic e v ers a ). A t an y ra te , th e b ook w as a tr e m en dous su ccess; o rig in ally p ublis h ed in 1 890, it is s till p re sc rib ed f a re f o r th e s tu den t who a sp ir e s t o b e a n e co nom is t. And w hat w as th e g re at c o ntr ib utio n o f M ars h all to th e c o ncep tu al ta n gle s of e co nom ic s? T he m ain c o ntr ib utio n— th e o ne to w hic h M ars h all h im se lf re tu rn ed tim e a n d a g ain — was th e in sis te n ce o n th e im porta n ce o f tim e a s th e quin te sse n tia l e le m en t i n t h e w ork in g-o ut o f t h e e q uilib riu m p ro cess. For eq uilib riu m , as M ars h all poin te d out, ch an ged its basic m ean in g acco rd in g to w heth er th e a d ju stm en t p ro cess o f th e e co nom y to ok p la ce in a sh ort- ru n o r a lo ng-ru n p erio d. In th e sh ort ru n, b uyers a n d se lle rs m et to hig gle on th e m ark etp la ce, but basic ally th e barg ain in g pro cess re v olv ed ab out a fix ed q uan tity o f g oods— th e d ia m onds th at th e d ia m ond m erc h an ts bro ught a lo ng w ith th em in th eir s u itc ase s. O ver th e lo nger r u n, h ow ev er, th e quan tity of dia m onds w as not fix ed . N ew m in es co uld be open ed if th e dem an d warra n te d it; old m in es co uld be ab an doned if su pply was su pera b undan t. H en ce in th e very sh ort ru n it w as th e psy ch ic utility of dia m onds— th at is , th e dem an d fo r th em — whic h ex erc is e d th e m ore im med ia te in flu en ce o n th eir m ark et p ric e; b ut o ver th e lo n g ru n, as th e re cu rrin g f lo w o f s u pply w as a d ju ste d t o c o nsu m ers ’ w an ts , c o st o f p ro ductio n ag ain a sse rte d i ts u pper h an d. N eith er c o st n or u tility , o f c o urs e , c o uld e v er b e quite div orc ed fro m th e dete rm in atio n of pric e; dem an d an d su pply , in Mars h all’s o w n w ord s, w ere lik e “ th e b la d es o f a p air o f s c is so rs ,” a n d it w as as fru itle ss to a sk w heth er s u pply o r d em an d a lo ne re g ula te d p ric e a s to a sk wheth er th e u pper o r lo w er b la d e o f th e s c is so rs d id a ll th e c u ttin g. B ut w hile both b la d es c u t, o ne o f th em , s o to s p eak , w as th e a ctiv e a n d o ne th e p assiv e ed ge— th e u tility -d em an d e d ge a ctiv e w hen th e c u t to ok p la ce in th e q uic k tim e s p an o f th e g iv en m ark et; th e c o st- s u pply e d ge a ctiv e w hen th e c u ttin g ex te n ded o ver th e lo nger p erio d in w hic h sc ale s o f o utp ut a n d p atte rn s o f pro ductio n w ere s u bje ct t o c h an ge. It w as, lik e ev ery th in g M ars h all to uch ed w ith his an aly tic m in d, an illu m in atin g in sig ht. A nd y et m ore th an th eo re tic al b rillia n ce ra d ia te d fro m th e Prin cip le s . If M ars h all w as th e fin est in te llig en ce o f th e “ o ff ic ia l” w orld of e co nom ic s, h e w as a ls o its m ost c o m passio nate in te llig en ce. A g en uin e co ncern fo r th e la b orin g p oor, fo r th e “ crin gin g w re tc h es” h e n ote d o n h is tr ip s to th e L ondon s lu m s, f o r e co nom ic s a s a to ol f o r s o cia l b ette rm en t— all th is w as in ex tr ic ab ly w oven in to h is b ook. S o, to o, it s h ould b e n ote d , w as a n ap pra is a l o f th e fu tu re th at c au tio ned a g ain st su ccu m bin g to th e “ b eau tif u l pic tu re s o f lif e , as it m ig ht b e u nder in stitu tio ns w hic h [th e im ag in atio n] co nstr u cts easily ,” co uple d w ith h opes th at th e attitu des of th e ric h w ere cap ab le o f tu rn in g to w ard “ ch iv alr y ,” to “ h elp th e ta x -g ath ere r … r e m ove th e wors t e v ils o f p overty f ro m t h e l a n d.” We sm ile at th ese V ic to ria n se n tim en ts , b ut th ey d o n ot co nstitu te th e asp ect o f M ars h all’s v is io n th at m ad e its g re ate st im prin t o n e co nom ic s its e lf . For t h at w e t u rn t o t h e f ro nt o f t h e P rin cip le s, w here t w o d ecla ra tio ns m eet t h e ey e. T he fir s t is a ty pic ally ch arm in g M ars h allia n passa g e desc rib in g an in div id ual w eig hin g th e p le asu re s to b e r e ceiv ed f ro m a p urc h ase a g ain st th e lo ss o f p le asu re t h at t h e e x pen ditu re w ill e n ta il: A r ic h m an , i n d oubt w heth er t o s p en d a s h illin g o n a s in gle c ig ar, i s w eig hin g ag ain st one an oth er sm alle r ple asu re s th an a poor m an , w ho is doubtin g wheth er to sp en d a sh illin g o n a su pply o f to bacco th at w ill la st h im fo r a month . T he c le rk w ith £ 100 a y ear w ill w alk to w ork in a m uch h eav ie r r a in th an t h e c le rk w ith £ 300 a y ear. The se co nd sta te m en t co m es a fe w pag es la te r, w here M ars h all is dis c u ssin g t h e p urp ose o f e co nom ic s. I t i s , h e s a y s, a stu dy o f th e eco nom ic m ean s an d asp ects o f m an ’s p olitic al, so cia l an d priv ate lif e ; b ut m ore e sp ecia lly o f h is s o cia l lif e … . It s h uns m an y p olitic al is su es, w hic h th e p ra ctic al m an c an not ig nore … a n d it is th ere fo re … b ette r desc rib ed by th e bro ad te rm “E co nom ic s” th an by th e narro w er te rm “P olitic al E co nom y.” Tw o th in gs a re n ote w orth y in th ese se em in gly in nocu ous p assa g es. T he fir s t, b rillia n tly re aliz ed in th e c le rk d ecid in g w heth er o r n ot to sp en d th e money to ta k e a c ab , is n oth in g le ss th an a n ew f ig ure w ho w ill e p ito m iz e th e Mars h allia n v is io n o f t h e e co nom y a s a p tly a s, i f m uch l e ss d ra m atic ally t h an , th e g re at m onarc h o f th e H obbesia n e ra . T he n ew fig ure is T he In div id ual, whose c alc u la tio ns n ot o nly s y m boliz e t h e w ork in gs o f t h e m ark et s y ste m , b ut are in f a ct th e r o ck o n w hic h th e e co nom y its e lf u ltim ate ly r e sts . G one is th e vis io n of e co nom ic s a s th e s tu dy o f th e s o cia l d ynam ic s o f M onarc h y o r o f a Sm ith ia n S ocie ty , n ot to m en tio n M arx ia n c la ss w arfa re . I n its p la ce w e h av e eco nom ic s a s e x plic atio n o f th e c o lle ctiv e lif e o f th e in div id ual, w hic h is to sa y, o f e v ery one f o r h im – o r h ers e lf . In tim ate ly t ie d t o t h is i s a n oth er c h an ge, i m plic it i n t h e s e co nd q uota tio n. I t is th e d is a p peara n ce o f a th em e th at w as u nab ash ed ly a c en tr a l p art o f e arlie r vis io ns— nam ely , th e politic al co nte n t of eco nom ic s. M ars h all se es th e purp ose o f e co nom ic s a s e x pla in in g s u ch q uestio ns a s h ow e q uilib riu m p ric es are a rriv ed a t, n ot th e u nderly in g q uestio n o f h ow th e r e la tio ns o f p ow er a n d obed ie n ce th at g iv e s tr u ctu re to a ll s tr a tif ie d s o cie tie s a ris e in a s o cia l o rd er perc eiv ed a s j u st a c o lle ctio n o f i n div id uals e ach s e ek in g h is o r h er “ u tility .” Why th is c u rio us tu rn in g a w ay f ro m politic a l e co nom y? T w o p ossib ilitie s sp rin g t o m in d. T he f ir s t i s t h at t h e e v en ts o f 1 848, a n d p erh ap s t h e i n cre asin g flo w o f s o cia lis tic i d eas, m ad e a n e x plic it r e co gnitio n, m uch l e ss e x am in atio n, of p ow er a n d o bed ie n ce m uch m ore c o nte n tio us th an it w ould h av e b een in Sm ith ’s o r M ill’s tim es, w hen s u ch s o cia l r e la tio ns w ere ta k en f o r g ra n te d . A se co nd, q uite c o ntr a ry , p ossib ility i s t h at t h e g ra d ual a ccep ta n ce o f d em ocra tic id eas d urin g th e n in ete en th c en tu ry g av e th e M ars h allia n v is io n a p la u sib ility it w ould n ot h av e e n jo yed i n e arlie r t im es. That is a q uestio n w e can ra is e , b ut n ot re so lv e. A ll w e can sa y w ith certa in ty is th at E co nom ic s n ow ta k es th e p la ce o f P olitic al E co nom y; a n d a new c h ap te r o f e co nom ic s b eg in s. A ll t h is w ill b eco m e i n cre asin gly i m porta n t as o ur stu dy m oves to w ard th e p re se n t. B ut th ere is o ne la st m atte r th at dese rv es a w ord . I t c o ncern s th e v ery e le m en t o f M ars h all’s a n aly sis th at w as his m ost im porta n t g if t to e co nom ic a n aly sis — th e e le m en t o f tim e. F or tim e, to M ars h all, w as a b str a ct tim e; it w as th e tim e in w hic h m ath em atic al c u rv es ex fo lia te a n d t h eo re tic al e x perim en ts m ay b e r u n a n d r e ru n, b ut i t w as n ot t h e tim e i n w hic h a n yth in g e v er r e ally happen s . T hat i s , i t w as n ot t h e i r re v ers ib le flo w o f h is to ric tim e— an d, a b ove a ll, n ot th e h is to ric tim e in w hic h M ars h all him se lf liv ed . T hin k fo r a m om en t of w hat he liv ed to se e: a vio le n t an tic ap ita lis t re v olu tio n in R ussia , a w orld -e n co m passin g w ar, th e fir s t ru m blin gs o f a n tic o lo nia lis m . T hin k o f w hat la y ju st a h ead : th e d eclin e o f cap ita lis m in m uch of E uro pe, a w orld w id e ch an ge in th e co ncep tio n of govern m en t, a w orld -s h ak in g d ep re ssio n in th e U nite d S ta te s. Y et, o f th e re le v an ce o f e co nom ic s to a ll th ese o verw helm in g c h an ges, n eith er A lf re d Mars h all n or s till le ss h is o ff ic ia l c o lle ag ues h ad m uch , if a n y, u nders ta n din g. Natu ra n on fa cit s a ltu m —natu re m ak es n o s u dden le ap s— was th e m otto o f th e Prin cip le s in its la st e d itio n in 1 920, a s it h ad b een in its fir s t, in 1 890. The fa ct th at h is to ry m ig ht m ak e s u dden le ap s, th at th e w orld o f e co nom ic s mig ht b e in se p ara b ly tie d to th e w orld o f h is to ry , th at th e lo ng a n d s h ort r u n of th e te x tb ook im plie d a to ta lly d if f e re n t c o ncep tio n o f “ tim e” fro m th at o f th e re le n tle ss tic k in g o f th e s o cia l c lo ck — all th is w as fa r re m oved fro m th e notio ns of eq uilib riu m w hic h M ars h all m ad e th e cen te r of his eco nom ic in quir y . F or n oth in g th at h e s a id c o uld h e b e r e p ro ach ed , f o r h e w as a m an o f gen tle f a ith a n d d eep ly f e lt c o nvic tio ns. T he tr o uble w as th at n oth in g h e s a id wen t f a r e n ough. And e v en th is m ig ht b e c o ndoned in h in dsig ht w ere it n ot fo r o ne th in g. All th e w hile th at M ars h all a n d h is c o lle ag ues w ere re fin in g th eir d elic ate mech an is m o f e q uilib riu m , a f e w u north odox d is se n te rs w ere in sis tin g th at it was n ot e q uilib riu m b ut c h an ge— vio le n t c h an ge— th at c h ara cte riz ed th e r e al world an d pro perly fo rm ed th e su bje ct fo r eco nom ic in quir y . W ar an d re v olu tio n a n d d ep re ssio n a n d so cia l te n sio n w ere to th eir m in ds th e b asic pro ble m s fo r e co nom ic s c ru tin y— not e q uilib riu m a n d th e n ic e p ro cesse s o f ad ju stm en t of a sta b le te x tb ook so cie ty . B ut w hen th e here tic s an d th e am ate u rs poin te d th is out to Vic to ria n acad em ic off ic ia ld om , th eir in te rru ptio ns w ere r e se n te d , th eir w arn in gs s h ru gged a sid e, th eir p re sc rip tio ns sc o rn ed . The co m pla cen cy of th e off ic ia l world was not m ere ly a ru efu l co m men ta ry o n th e tim es; it w as a n in te lle ctu al tr a g ed y o f th e f ir s t o rd er. F or had th e a cad em ic ia n s p aid a tte n tio n to th e u nderw orld , h ad A lf re d M ars h all posse sse d t h e d is tu rb in g v is io n o f a H obso n o r E dgew orth , t h e s e n se o f s o cia l wro ng o f a H en ry G eo rg e, th e g re at cata str o phe o f th e tw en tie th cen tu ry mig ht not hav e burs t upon a w orld utte rly unpre p are d fo r ra d ic al so cia l ch an ge. It te ach es us, in re tr o sp ect, th at id eas, how ev er here tic al, can not sa fe ly b e ig nore d — le ast o f a ll b y th ose w hose in te re sts a re , in th e b est s e n se of t h at m is u se d w ord , c o nse rv ativ e.
Please provide me with Plagiarism Report.Class reading and Chapters are attached belowIn Class, materials must be used only. No Outside source.QUESTION Write a 5-7 page paper (double spaced, 12 point
1 2 © 2 020 H ad as T hie r P ublis h ed i n 2 020 b y H ay m ark et B ooks P.O . B ox 1 80165 C hic ag o, I L 6 0618 773-5 83-7 884 w ww.h ay m ark etb ooks.o rg in fo @ hay m ark etb ooks.o rg I S B N : 9 78-1 -6 4259-2 18-4 D is tr ib ute d t o t h e t r a d e i n t h e U S t h ro ug h C onso rtiu m B ook S ale s a n d D is tr ib utio n (w ww.c b sd .c o m ) a n d i n te rn atio nally t h ro ugh I n gra m P ublis h er S erv ic es I n te rn atio nal (w ww.i n gra m co nte n t.c o m ). T his b ook w as p ublis h ed w ith t h e g en ero us s u pport o f L an nan F oundatio n a n d W alla ce A ctio n F und. S pecia l d is c o unts a re a v aila b le f o r b ulk p urc h ase s b y o rg an iz atio ns a n d i n stitu tio ns. P le ase c all 7 73-5 83-7 884 o r e m ail o rd ers @ hay m ark etb ooks.o rg f o r m ore i n fo rm atio n. C over a rtw ork , d esig n, a n d i n te rio r i llu str a tio ns b y T an ia G uerra . L ib ra ry o f C ongre ss C ata lo gin g-in -P ublic atio n d ata i s a v aila b le .3 To Uri and Tzvia Thier , who instilled in me a knee-jerk r eaction to injustice, and who gave me enough confidence to do something about it. And to Naim, with love, and with the hope that someday you can use this book to explain to your children what life was like before we relegated capitalism to the dustbin of history .4 CO NTEN TS Introduction CHAPTER ONE The Birth of Capital CHAPTER TWO The Labor Theory of V alue CHAPTER THREE Money CHAPTER FOUR Where Do Profits Come From? CHAPTER FIVE The Accumulation of Capital CHAPTER SIX Capitalist Crisis CHAPTER SEVEN Credit and Financialization CONCLUSION Capitalism’s Gravediggers AFTERWORD The Coronavirus Crisis Acknowledgments GLOSSAR Y5 FURTHER READING NOTES INDEX6 CHAPT ER FO UR WHER E DO P R O FIT S C O M E F R O M ? The product [of labor] is the property of the capitalist and not that of the worker , its immediate producer. Suppose that a capitali st pays for a day’ s worth of labor -power; then the right to use that power for a day belongs to him , just as much as the right to use any other comm odity, such as a horse that he has hired for the day… The produ ct of this proce ss belongs to him just as much as the wine which is the product of the process of fermentatio n going on in his cellar . —Capita l, V olu m e 1 1 RE AL W ORL D E X CH ANGE Up to now we’ve discussed commodities and values in a simplified world where furniture makers meet bread makers in a market. Happily, the furniture maker takes her chair to the market and exchanges it for money , which she uses to buy bread or other necessities. Of course, this is not how things work in our society . Today , the people who produce commodities, by and large, do not own what they’ve made and therefore they have no power to sell or directly exchange these commodities for othe r essentials. In fact, most furniture makers are not really “furniture makers,” in the sense that they don’t make a chair from start to finish, but are lumber handlers, machine operators, assemblers, and finishers who work collectively at a factory . And at the end of the day, they don’t ta ke home the chairs they’ve made; they return home with a paycheck. The finished products are not owned by these various laborers, but by the furniture company, which put them to work manufacturing chairs. This company then exchanges the chairs on the market for money , which—as we noted—acts as an intermediary representative of value. And while there may72 still be some local marketplaces, or online venues facilitated by companies like Etsy in which small numbe rs of artisans craft their own chairs to sell, you’d be hard-pressed to find an individual constructing phones, refrigerators, cars, or the myriad of things that we depend on and which fill our everyday lives. How did this come about? Answering this question leads us to the crux of the system: exploitation, and the special role played by labor under capitalism. In this chapter , we’ ll unpack what Marx meant by CAPIT AL , labor, and class society , and out of these concepts we will build a framework for understandin g the particular form that exploitation takes in a capitalist society . To start, let’s lo ok at what makes capitalist exchange unique. In a sense, the “sim ple commodity exchange” we described above never existed in quite so simple a form. But in pre-capitalist formations, exchanges between communities or individuals were “simple” in the sense that the point of these exchanges was to trade commensurate items. Communities could trade any surpluses they had accumulated in order to obtain different goods of equal value. A tribe could, for instanc e, trade their surplus of kola nuts for another tribe’ s iron rods for tool making . 2 This type of direct barter could take place among individuals as well. Commodity for commodity , or “C–C,” represents this basic bartered exchange—say , exchanging a chair for an equivalent value of bread. The more likely scenario would involve money as an intermediary , but the process remains the same. A commodity of one value is traded in for cash, which can then be exchanged for a commodity of a similar value. We can represent these exchanges with the formula: C-M-C: Commodity, C, is exchanged for Money , M, which in turn buys a dif ferent Commodity, C. Marx uses this formula to expr ess simple commodity exchange, which implies that goods exchange for their equivalents. If a chair maker sells her chair for $30, she should be able to get an amount of meat for her $30 that is roughly equivale nt in value (or the labor -time that went into producing it). In this setup, no one is extracting more value than what they put in—it is only the form of the value that is changing: from commodity , to money , to ano ther commodity . Everything equals out. Therefore “chair = $30 = 7 lbs. of beef”73 is the same as saying “$30 = $30 = $30” or “x hours of labor = x hours of labor = x hours of labor .” This is a theoretical example that simplifies the process of exchange in order to better elucidate the processes of capital. 3 The point to note is that the goal of such an exchange is qua litative (gaining new use-values ) rather than quantitative (making money). The purpose is to procure a dif ferent item, which you did not possess before. The development of professional traders transformed the goal of exchange from the procurement of like items for use to the accumulation of money. The equation thus changed from C-M-C to M-C-M; or more accurately M-C-M’. The doohi ckey above the M (“M prime,” technically speaking) represents more money , or an increase of value above and beyond the money initially invested. In pre-capitalist societies, the basis for this added wealth was, more often than not, pilfering loot. Merchan ts from more economically developed centers were able to take advantage of societies that did not rely on large-scale internal trade. They could thus purch ase goods on the cheap, and then sell them at a higher price in places where these goods were scarce and their values unknown. Not surprisingly , while the merchant class grew and developed, stories from around the world during this time emphasize the thievery , dishonesty , and piracy found at the source of the wealthy man’s riches. Yet for all this piracy , the circulation of money , wrote Mandel, “is sterile from a global point of view; it does not increase the total wealth of huma n society . It consists in fact of a transfer of weal th, pure and simple; what one gains the other loses, in absolute value. Social value remains unchanged.” 4 TH E H ID DEN A BO DE O F P R O DUCTIO N Modern capitalism, on the other hand, is characterized by an immense expansion of wea lth. Its entire history is marked by growth. The US economy , when healthy , grows by about 4 percent per year. The Chinese economy , until recently , was growing by as much as 10 percent per year . And the world economy as a whole has expanded by roughly 3 perc ent annually74 since 1980, according to data from the World Bank. In fact, if any country’ s output stops expanding, it goes into recession. How do capitalists generate this ever-expanding surplus? Like the merchant class that preceded them, capitalists produce and exchange goods through an M-C-M’ circuit. They start with money (M), invest in the production of commodities (C), and then sell those commodities on the market to get back more money than they started with, (M’). Marx referred to this as “the general formula of capital.” Rather than money serving an intermediary role, it is the driver of the process. Capitalists don’t exchange goods for the sake of qualitative enrichment. Steve Jobs didn’t decide he had more iPhones and MacBooks than he reasonably needed and therefore might as well trade them for something he didn’t ha ve. (What didn’ t Steve Jobs have?) A capitalist invests for the sole purpose of accruing further wealth. To exchange like-for-like items and wind up with the same amount of money that they started with would be, to use Marx’ s words, “absurd and empty .” The purpose of exchange is the accumulation of extra value, or SURPLUS VALUE , which forms the basis of capitalist profit. As Marx ar gued: The simple circulation of commodities—selling in order to buy— is a means to a final goal which lies outside circulation, namely the appropriation of use-values, the satisfaction of needs. As against this, the circulation of money as capital is an end in itself, for the valoriz ation of value takes place only within this constantly renewed movement. The movement of capital is therefore limitless. 5 The satisfaction of even the most extravagant of needs can only go so far. But the boundl ess goal of acq uiring money through its circulation is an inexhaustible endeavor . But unlike mercantilism, modern capitalism doesn’t depend on a process of “buy ing cheap and selling dear.” Surplus value is produced when capitalists are buying goods for their true value and selling them for their true value . Capita lists may certainly defraud other players along the way —75 pay less for inputs or char ge more for the final product. But surplus is produced without that duplicity occurring, even when the system is at its most “honest” and “lawful.” Rather than being cunning in the market, the key to surplus value is a production process that creates more wealth than it begins with. Contrary to mainstream explanations (see sidebar: “How Capitalism Explains Capital”), capitalist surplus is not generated within the realm of exchange at all. It is created, argued Marx, within “the hidden abode of production on whose threshold there hangs the notice ‘No admittance except on business.’ Here we shall see, not only how capital produces, but how capital is itself produced. The secret of profit-making must at last be laid bare.” 6 Wherein lies the secret? Let’s look more closely at the circuit of capital. The merchant bought commodit ies that had already been produced and then sold them for a higher price. However , the capitalist invests not in finished products, but rather purchases two different types of commodities: 1) means of production (MP), and 2) labor -power (L). As we discussed in chapter one, the mea ns of production are the tools and materials that are necessary to make goods (e.g. factories, office buildings, land, machinery , software, IT infrastructure, etc.). The capitalist employs both “inputs” in a production process (P) that creates a new set of commodities, worth more than the combined value of the original inputs. The circuit of capital can thus be expanded to a more precise formula: M-C (MP+L) … P … C’-M’. 7 The “secret” hidden within the production process lies in a special commodity of labor -power—the ability to work. Marx explained that the ability to work has become a commodity under capitalism, which the capitalist buys in exchange for a wage (its exchange-value). At first look, this seems self-evident. We wak e up, go to work, come home with a wage (or at least the promise of one to be paid at the end of the pay period). W e are selling our ability to work—our labor-power . And since selling our old Beanie Baby collection will only get us so far, by and large, for most of us, if we are “lucky” enough to be considered employable, our labor -power is the only commodity we really have to sell. But what makes this commodity special, and to whom? Marx wrote:76 In order to extract value out of the consumption of a commodit y, our friend the money-owner must be lucky enough to find within the sphere of circulation, on the market, a commodity whose use- value possesses the peculiar property of being a source of value , whose actual consumption, therefore is itself an objectification of labor, hence a creation of value. The possessor of money does find such a special commodity on the market: the capacity for labor, in other words labor -power. 8 [emphasis added] The exchange-value of labor -power is paid out in a wage. But the use- value of labor -power is labor itself— the source of value, as we discu ssed in chapter two. What’ s more, the exchange-value of labor -power , and the value that labor then produces for the bosses, are two very different things. The worker is paid one thing, but then will normally create much more value during her shift than she is paid: The value of labor -power , and the value which that labor -pow er valorizes in the labor-process, are two entirely different magnitudes; and this difference was what the capitalist had in mind when he was purchasing the labor -power…. What was really decisive for him was the specific use-value which this commodity possesses of being a sour ce not only of value, but of more value than it has itself. This is the spec ific service that the capitalist expects from labor-power , and in this transaction he acts in accordance with the eternal laws of commodity-exchange. 9 The key to this golden egg arrangement for the boss is an agreement in which your labor is put under his control for a set amount of time, and you are paid for this time, not for the fruits of your labor. Just as a baker parts with the use-value of bread once she sells it, so too does the worker part with the use-value of her labor -power once she has sold it. As soon as she punches the clock, the condition s of her labor and the products of her labor are no longer hers, but the boss’ s. Marx thus continued: In fact, the seller of labor -power , like the seller of any other commodity , realizes its exchan ge-value, and alienates its use- value. He cannot take the one without giving the other . The use- value of labor -power , in other words labor , belongs just as little to its seller , as the use-value of oil after it has been sold belongs to the dealer who has sold it. The owner of the money has paid the value of a day’ s labor -power; he therefore has the use of it for a77 day, a day’ s lab or belongs to him. On the one hand the daily sustenance of labor -power costs only half a day’ s labor , while on the othe r hand the very same labor -power can remain effectiv e, can work, during a whole day, and consequently the value which its use during one day creates is double what he pays for that use; this circumstanc e is a piece of good luck for the buyer , but by no means an injustice towards the seller . 10 [emphasis added] In other words, the boss can get away with paying you for just half (or some other fraction) of the day for the “daily sustenance of labor -power” while reaping the full day of your labor. On top of it, he can proclaim it a fair day’ s wage, and the secret to this claim is in the determination of exchange-value of labor -power . Marx explained: “The value of labor -power is determined by the valu e of the means of subsistence habitually required by the average worker .” 11 That is to say , its value, like that of any other commodity , is bas ed on the amount of labor that has gone into producing it. In the case of labor – power , this amo unts to the labo r-time required to keep the worker alive, to daily reproduce her capacity and readiness to go to work every day, and to keep her children alive, so that they may one day replace her in the workforce. The value of food, rent, clothing, training, and education, along with other necessities deemed essential by society therefore make up the value of labor -power . If, for example, social norms attach an ave rage of $120 to the cost of minimal daily needs, that would loosely translate into the value of labor -power. 12 The bosses also get a big discount when they purchase labor-power . A good deal of unpaid work also contributes heavily toward its reproduction: for instance, childbirth, childcare, food preparation, laundry, and household cleaning, to name a few . As Marxist feminist Tithi Bhattachary a explained, “The working class doesn’ t onl y work in its workplace. A woman worker also sleeps in her home, her children play in the public park and go to the local school, and sometimes she asks her retired mother to help out with the cooking. In other words, the major functions of reproducing the working class take place outside the wor kplace.” 13 The free labor , performed largely by women within the home, is not accounted for within labor-power ’s exchange-value. The realm of social reproduction, as discussed in the sidebar “Outside the Abode of Product ion,” reproduces and regenerate s workers at very little cost to the system. Yet even if we limit ourselves more narrowly to the paid labo r th at goes into producing your subsistence, if all things were fair and just, you would give over to your boss only the amount of time that it takes to reproduce the78 value of your labor-power . Say it takes four hours to produce $120 worth of goods, the equivalent of your daily wage, you could go home after four hours. But if your boss allowed that, his inputs and outputs would be equal. It truly would just be M-C-M. What would be the point? Why not just keep the mon ey he started with? But all things are not fa ir and just. The capitalist pays you for the cost of your labor-power , not for the value of the goods you produce. Thus your paycheck is worth the exchange-value o f your labor- power . B ut the use-value o f your labor-power is the production of greater value . Let’ s sa y you work for Starbucks and they pay you $120 for an 8-hour shift. But you can probably make $120 worth of fancy coffee in an hour , or probably in a half hour at a busy store. Even once you subtract the cost of materials and use of the equip ment, Starbucks doesn’t pay you anywhere near the value you’ve created (hundreds of dollars a day). They buy your labor -power f rom you, not the actual fruits of your labor . And you make that value back for them in an hou r. The rest of your shift, you’re basically working for free! This extra labor they extract from us is called surplus labor. While necessary labor is that part of the day required to reproduce the cost of labor – power , the surp lus labor is the free labor that the capitalist benefits from during the rest of your workday . Thus, if after you finish making $120 worth of coffee, instead of throwing down your apron and going home, you finish out your eight-hour shift, one hour will be necessary labor, and seven hours are surp lus labo r! (This seven to one ratio is overly simplified because it doesn’t yet factor in the machinery and equipment we mentione d above. But we will get to those next!) Marx wrote: I call the portion of the working day during which this reproduction takes place necessary labor-time, and the labor expended during that time necessary labor; necessary for the worker , because independent of the particular social form of his labor; necessary for capital and the capitalist world, because the continued existence of the worker is the basis of that world. During the second period of the labor process, that in which his labo r is no longer necessary labor , the worker does indeed expend labor-power , he does work, but his labor is no longer necessary labor, and he creates no value for himself. He creates surplus value which, for the capitalist, has all the charms of something created out of nothing. 14 In this way , thr ough the “charm of something created out of nothing,” capitalism disguises a process of exploitation, of appropriating surplus labor79 from the working class, as a “fa ir day’ s wage for a fair day’ s w ork.” As we discussed in chapter one, appropriating surpluses was a visible and obvious norm of previou s class societies. But in examining capitalist society , we have to go beneath the surface appearance of a “fair day’s work,” to find the inner essence of exploitation. 15 HOW C APIT A LI SM EX PL A IN S C APIT A L Mainstream economists have a number of ways that they explain how capitalists turn a profit. As we discussed in chapter two, the predominant mainstream explanation is based on the neoclassical theory of mar ginalism. In this view , profits are generated in the market, not in production. When capital has a “high marginal product,” if the demand for goods generates a higher income per unit than the cost of producin g those goods, then profits are high. When labor has a “high marginal product,” wages rise and profits are low. This clearly pits bosses versus workers, but unlike the labor theory of value, this view sees workers as parasitic —a necessary evil and a dra in on profits when they become too expensive. In this model, their labor plays no role in the success or failure of a busin ess. And profits are determined by what’ s happ ening in the market. Another version of this argument is that the final goods don’t have any additional or surplus value whatsoever compared to the value of their inputs. Instead, the fact that items can be sold for a greater amount of money than it took to produce them is the result of shrewd buying and selling. The profit created is the result of keen investing—by a capitalist that can pay workers minimally and buy raw material s on the cheap, and then find a way to mark up the price on the final product. This is a conven ient explanation for capitalists because it means that profits are the result of the genius of bosses, a good justification for paying themselves ungodly sums of money . But where this argument fails is that it implies that every sale must have winners and losers. A car manufacture r would benefit by buying materials and parts from suppliers at cut-rate prices. But the suppliers must then lose out, having sold materials for below their worth. Say, for exampl e, that steel plates are worth $750 a ton. This is the average price paid throughout the market for steel plates by all steel producers and all buyers of steel plates. But our savvy automaker80 investor is able to cut a deal with their supplier to pay just $650 a ton. That steel is used in the production process and becomes part of the car. Additionally , our automaker , w hen figuring out the price of the car, prorates the cost of steel in each car at a price of $800 a ton. But by doing this, our investor hasn’ t created $150 of new value . All that has happened is that he has stolen $100 from the steel manufacturer and $50 from the car buyer . He has been able to buy somethin g worth $750 for $650. And he’s been able to sell something worth $750 for $800. In the process, he is $150 richer, but it has come by taking advantage of other parties. Plenty of good, old-fashioned fleecing such as this happens in the market economy . 16 And historically it was the basis for mercantilism, an early predece ssor of modern capitalism. But at the end of the day, this model would not add money or value. It has simply been redistributed, with the automake r benefiting at the expense of the steel manufacturer and the consumer . One section of society has defrauded another . If this defined how capitalism worked, our less savvy suppliers would have no profits and be forced out of business, unless somewhere in their production process they, too, were buying their inputs cheaply and marking up the price of thei r outputs. (But that would merely mean some other company involved in the production of steel was in the position of having no profits and would be forced to shut down.) So the idea of profits being generated by “buying as cheaply possible and selling as dear as possible,” fails to explain how the system itself can expand. It denies the reality of capitalism, which is constan tly growing in wealth and outputs. If it were just about keen buying and selling, there would be a constant process of roughly half of businesses succeeding while the other half were failing, and no new value being generated. This explanation also oddly precludes a scenario where the majority of capitalists are turning a profit. In reality , when the auto industry is humming, all of the companies that are involved in the production of cars and in parts supply profit simultaneously . In times of economic boom, investme nt, employment, and profits all ride high, bosses grow elated, “miracle economies” are declared, and economists proclaim that the days of economic busts are over . Yet another argument is that profits are a reward to investors for putting their capital “at risk.” The logic here is that capita lists are putting up the capital and tying it up into a production process for which81 they will not be paid back quickly (or perhaps at all). Profit therefore provides incentive to the capital ist for taking this risk rather than sitting on their money , thus the rate of return should be higher than if the capitalist safely tucked their capital away in a low-interest savings account. This explanation essentially equates capitalism with gambling. If a gambler wins at a hand of cards, is this too a profit that is the reward for his risk? Or is it merely the result of someone else losing money? Similarly, if profits are the reward for taking risk, doesn’ t it imply that there is—somewhere—a loser in the transaction? The Marxist understanding of capitalism reveals, however, that surplus value is produced when capitalists are buying goods for their true value and selling them for their true value. It illustrates that surplus value, and therefore profits, are rooted in the production process—in the difference between paid and unpaid labor—not in the cunning of market-based exchanges. DEFIN IN G CA PIT A L Marx called the capital invested in labor -power VARIABLE CAPITAL because it “both reproduces the equivalent of its own value, and also produces an excess, a surplus value, which may itself vary, may be more or less according to circumstances .” 17 Labor ’s use-value is “ a sour ce not only of value, but of mor e value than it has itself.” Tha t is, its value expands through its use. But how much extra value is produced can vary, as we’ll discuss below . Money advanced to purchase equipment and materials, however, passes its value on to the newly created goods without any quantitative change in its worth. Marx called this part of the capitalist’ s investment CONST ANT CAPITAL . Its value “merely reappears” in the commodities produced. 18 As we discussed in chapter two, the inputs of machinery , resources, and tools embody generations of DEAD LABOR manufactured by previous groups of workers. This value is transmitte d as is through the production process. Raw materials transfer their total value when they are consumed by production (Marx called this “productive consumption” of the means of production). Machinery and equipment, on the other hand, pass on fractions of their value during every use. Let’s say a piece of machinery was expected to last for a year before brea king down, and it cost the capitalist $365 when he purchased it. Every day, the machine would pass on a dollar ’s worth of value. In this82 way, ar gued Marx, it enters “piecemeal in proportion to its average daily depreciation.” 19 A machine can deteriorate physically , through wear and tear as it’ s used. Or it can eventually be consum ed by the elements while it sits on a shelf unused. “But in addition to the material wear and tear,” Marx pointed out, “a machine also under goes what we might call a moral depreciation . It loses exchange-value, either because machines of the same sort are being produced more cheaply than it was, or because better machines are entering into competition with it. In both cases, however young and full of life the machine may be, its value is no longer determined by the necessary labor- time actually objectified in it, but the labor -time necessary to reproduce either it or the better machine. It has therefore been devalued to a greater or lesser extent.” 20 [ em phasis added] For example , a tractor may lose its value over time through rust and wear of its body in a physical depreciation. Or it can lose value in a “moral depreciation” once newer lines of tractors equipped with wireless maps and monitors of machine data can do more work for the same price. An agricultural company that uses outdated machinery will incur losses because it will require greater time (and therefore higher costs) to do the same amount of work as its competitor . If we re turn to Starbucks, perhaps the executives there invest $360 a day in constant capital : a store’ s espresso machines, coffee grinders, refrigerators, dishwashers, cash registers, coffee beans, milk, cream, sugar, etc. The coffee beans and other raw materials pass on the whole of their value as they are consumed. The machinery passes on fraction s of its value during every use (which will eventually add up to the full value of the machine getting passed on during its lifetime). They invest another $120 worth of variable capital in employing the store’ s barista. This barista, for her meager paycheck, sets to work on the coffee grinders and espresso machines, producing the first $120 of lattes, cappuccinos, and caramel macchiatos in the first hour, enough to cover her paycheck. She produces another $840 of drinks in the next seven hours, for a total of $960 worth of drinks. After paying out wages and expenses, an extra $480 is left. By investing in constant (c) and variable (v) capital, the capitalists set in motion a produc tive process. At the end of the process these values will have replicated themselves, along with an additional surplus value (s). Marx expressed this with the formula: c + v -> c + v + s. In the case of our made- up Starbucks example, this would be $360 (c) + $120 (v) turns into $360 (c) + $120 (v) + $480 (s).83 The RATE OF SUR PLUS VALUE m easures the rate at which we are exploited (synonymous with RATE OF EXPLOIT ATION ). It is the ratio between that part of the day that creates the value of your wages (v), and that part of the day in which your labor is unpaid (s): in this case $480 (s)/ $120 (v) is 400 percent. 21 If a 400 percent rate of exploit ation seems far fetched to you , consider this real-life example quoted in a 2018 Oxfam report. Oxfam interviewed Lan, a V ietnamese garment worker who explained: When I got pregnant, they let me work in the warehouse. There were many boxe s full of shoes, and my job was to put the stamp on. Those shoes would fit my son perfectly , they are very nice. I’d like my son to have shoes like these, but he can’ t. I think he’d want them, and I feel sorry for him. The shoes are very pretty . You kno w that one pair of sho es that we make is valued more than our whole month’ s salary. 22 Finally, while the rate of surplus value importantly tells us the rate at which we are being exploited, what the capitalist ultimately cares about is his rate of profit. The RATE OF PROFIT is defined as the ratio of surplus value to variable and constan t capital: that is the total amount of capital that was invested. It tells him how much profit he is generating relative to the capital he advan ced. In our example $480 (s)/ $ 480 (c+v) is 100%. 23 W e’ll return to this important concept in later chapters. For the time being, we can see that capital is money that is invested in labor-power (variable capital) and materials and equipment (constant capital) in order to prod uce a commodity whose sale generates a greater quantity of money. It is a self-expansion of value. Marx distinguished again between the appearance of capital, which alternates, through the course of its life between capital as money and capital as commodities, and the essence of capital, which under goes a process of self-expansion. He wrote: If we pin down the specific forms of appearance assumed in turn by self-valorizing value in the course of its life, we reach the84 following elucidation: capital is money , capital is commodities. In truth, however , value is here the subject of a process in which, while constantly assuming the form in turn of money and commodities, it changes its own magnitude, throws off surplus value from itself … and thus valorizes itself independently . For the movement in the course of which it adds surplus value is its own mo vement, its valorization is therefore self -valorization. By virtue of being value, it has acquired the occult ability to add value to itself. It brings forth living offspring, or at least lays golden eggs. 24 [emphasis added] But these golden eggs can only be laid because of capitalism’ s particular social relation of production, forged through the historical processes we discussed in chapter one. Workers’ lack of control over the means of production makes us dependent on capital. We are coerced by the threat of poverty to sell the only commo dity we have: our labor -power . W ithin the “hidden abode of production” our labor then produces more value than our labor-power costs in wages, adding extra value to the final product that the capitalist does not pay for in his initial investment. Capital therefore reflects a relationship rather than a mathematical formula. Most economists think of capital as things: money, machinery , and labor . But these “things” do not become capital except through a social process in which they are activated to create more value. “Capital is not a thing, but a social relation between persons which is mediated through things.” 25 Marx summarized the point in V olume 3 of Capital : [The capitalist] can convert the value he advances into a higher value only by exchanging it with living labor, by exploiting living labor. But he can exploit labor only in so far as he advances at the same time the conditions for the realization of this labor , i.e. means and object of labor , mac hinery and raw materials, that is by transforming a certain sum of value that he has in his possession into the form of the conditions of production. Similarly , he is only a capitalist at all, and can only undertake the process of exploiting labor because he confronts, as proprietor of the conditions of labor , the worker as the mere owner of labo r- power . W e have already shown in Volume 1 [of Capital ] how it is precisely the possession of the means of production by the non- workers that turns the workers into wage-laborers and the non- workers into capitalists. 2685 OUTS ID E THE ABOD E O F P R O DUCTIO N Capitalism doesn’t just control the places where production of surplus value takes place. As is made all too clear by the conditions of our schools, homes, and communit ies, and the reach that police brutality and a decrepit health care system have into our lives, the system penetrates every layer of day-to-day existence. This is because sustaining the needs of capital accumulation also necessitates the creation, maintenance, and discipline of the working class as a whole. As a basic starting point, in order for capital relations to produce and reproduce themselves, the owne r of labor -power (i.e. the worker) must daily, in the words of Marx, “be able to repeat the same process in the same condition s as regards health and strength. His means of subsistence must therefore be sufficient to maintain him in his normal state as a working individual.” 27 The “means of subsistence” is historically and socially conditioned, and determines the value of labor – power . It must also include the maintenance of the workers’ children as well, as they will be the next generation of laborers. But what about the labor necessary to prepare the food, wash the clothing, provide the childcare? This, essentially , is extra labor that is mostly produced outside of the sites of capitalist production. 28 While Marx and Engels rightly located the reproduction of labor -power for the system within the nuclear family, they did not delve deeply into this topic. The concept of social reproduction has been theorized largely due to the importan t work of secon d-wave feminism (the women ’s rights movement that, beginning in the 1960s, fought for equality beyond suffrage and legal rights) and Marxist feminists (who incorporated and elaborated on Marx’ s ideas to explain the roots of women’ s oppression). In fact, as most women know all too well, the bulk of day-to-day responsibilities for the reprodu ction of labor at home fall on wives, daughters, mothers, and sisters. This unpaid labor does not directly create surplus value, yet it is critical to workers’ abilities to produce surplus, and therefore necessary to main taining the profitabili ty of the system. And so it is no coincidence that sexist ideologies that relegate women to second-class citizens emphasize women’ s nurturing capacity, which make us “naturally suited” to prioritizing husbands and children over our own lives.86 One of the leading theoreticians of social reproduction theory, Lise Vogel, situated the theory within Marx’s concept of “consumption”— within which he distinguish ed between a laborer ’s pr oductive consumption and individual consumption . “Productive consumption” Marx defined as the process by which workers “consume” the means of production while on the job, not by eating the machinery of cou rse, but by activ ating it. “Individual consumption” compromises the daily functions—eating, having clean clothes to wear , and so on—of reproducing our ability to live and go back to work the following day. Marx ar gued: The worker ’s productive consumption and his individual consumption are therefore totally distinct. In the former , he acts as the motive power of capital, and belongs to the capitalist. In the latter , he belongs to himself, and performs his necessary vital functions outside the production process. The result of the first kind of consumption is that the capitalist continues to live, of the second, that the worker himself continues to live. 29 Vogel added the element of domestic labor to understanding individual consumption. Marx wrote that with individual consumption, “the worker uses the money paid to him for his labor -power to buy the means of subsistence.” 30 But, Vogel argued, “he said little about the actual work involved in individ ual consumption. Here was a realm of economic activity essential to capitalist production yet missing from Marx’s exposition.” 31 In fact, without this labor, individual consumption could not take place. As capitalism has increasingly come to rely on women’ s ability to work outside the home, and to make up a low-wage sector of the workforce, the necessities provided by domestic labor have become strained. All the more so since those elements of social reproduction that do take place outside the home—public education, pensions and retirement for the elderly , pu blic transportation—have come under systematic attack over the last several decades. In part this tension has been mitigated by the increasing use of things like laundromats, microwaves, and frozen foods, which reduce the amount of time necessary for domestic labor. But in the main, the contradictory needs of capital to dep end on women’ s labor both inside and outside the home has been “solved” through the ruthless intensification of the double-87 burden faced by women. More paid and unpaid labor is expected of women, outside and inside the home. So the same woman who is being forced to spend extra hours at work as a teacher also faces increasing pressures as a mom when childcare costs rise out of reach. DIV ERG IN G RA TES O F E X PL O IT A TIO N We simplified the cost of labor -power above to an arbitrary $120 per day in order to distill the basic mechanism of this special commodity . In reality , the cost of the subsistence and reproduction of workers is both socially and historically determined. It refle cts the changing cost of producing food or acquiring skills; as well as differences—based, for instance, on the balance of class forces—in what is dee med a socially acceptable requirement for subsistence. For both of these reasons, the cost of labor differs, too, between countries or regions with disparate levels of productivity and histories of class struggle. This is why US-based companies chase cheaper wages to other countries like China or Mexico, or to the closer distance of the “right- to-work” states within the US. 32 The cost of labor also reflects the injustice of oppression. As of 2019, women in the United States were still paid 79 cents to a man’ s dollar . 33 (Or in the case of the country’ s most talented and famous soccer team, the United States women’ s national soccer team earns 38 cents to their male counter – parts, despite generating greater revenue. 34 ) Bla ck men are paid 70 cents and Black women 61 cents in comp arison to their white counterparts. 35 Latina women earn 53 cents to a white man’s dollar . 36 Increas ed educ ation does little to change this ratio for women or people of color . 37 Blacks, Latinxs, and wom en at all education levels earn less than white men. Women of color occupy the bottom of the totem pole. American capitalism relies upon women and people of color to populate permanent, low-wage sectors of the labor force. 38 The disparities in racial and gender wage gaps point to the fact that “socially determined” is not only dependent on public perception of what is acceptable, but is also based on historic and systemic institutions of oppression. People of color , for example, have less inherited familial wealth on average to draw from, and therefore disproportionately suffer from the accumulation of considerable amounts of debt in order to go to college or earn an advanced degree. Combined with the reality of severely underfunded, under-resourced, segregated public schools, this ensures that88 they never enter a level playing field. Then come long-documented discriminatory practices, which ensure that they are the last to get hired and the first to be fired, contributing to higher rates of unemploymen t and a more desperate workforce, forced to accept lower wages for equal work. Capitalism also depends on the superexploitation of immigr ants—and particularly those who are not protected by legal documentation. Disenfranchised and disempowered by the threat of deportation, undocumented workers are subject to draconian conditions and wages, and fired if they protest or attempt to unionize. As author Justin Akers Chacón has written, the criminalization of immigration has been “used widely by employers to structure lower-wage tiers within and across whole industries, setting the low-wage standard of ‘immigrant labor’ by the early 1990s. The declining wage benchmarks for undocumented labor had the further effect of holding all wages down within those same industries.” 39 Inequality has long been built into the core fabric of the American business model. Pitting Black workers against white workers against immigrant workers has been a particularly potent, tried-and-true tactic of employers to drive down all wag es. But the cursory sketch laid out here does not even begin to discuss the very many oppressions—of people with disabilities, of gay people, of transgender people, of Native peoples, of elders, and more—that play an integral role in upholding the profitability of US capitalism. In fact, any place where bosses can hold down the wages of one section of the workforce not only ensures a cheaper labor pool among the oppressed demographic, but also, in the words of abolitionist Frederick Douglass, divides both in order to conquer each, so that everyone’ s wages are pushed down. Lastly , the value of labor will also vary among industries and skills. One reason is the cost of education and training required for different jobs, and another is the expectation of how stable of a workforce bosses are looking to buy. Fast food workers, home health aides, farm workers, and other low- wage workers are consistently paid wages far short of the cost of living (and therefore their true value). The capitalists bank on getting away with it because they expect, in fact depend on, a high turnover rate and unemployment rate, which will ensure that those positions will fill easily . Bosses see low-wage workers as quickly replaceable commodities, bought and employed as easily as one would buy other cheap “inputs.” Meanwhile, higher paid workers don’t suf fer the crushing weight of poverty , but this does not mean that they are not exploited. In fact, they often face even greater rates of exploitation if the value of the goods that they produce are significantly higher. A Boeing engineer may earn over a hundred thousand dollars a year , but she contributes to products that sell for millions89 or billions of dollars. 40 More importantly , varying rates of exploitation make up an integrated web of labor . The extraction of value does not happen on a case-bycase basis, but is a collective process. Google’s high-paid programmers work in buildings cleaned by low-paid janitors. The one’ s work is, in fact, dependent on the other ’s, and therefore so is the extraction of its value. TH E W ORK IN G-CL ASS M AJO RIT Y Across these experiences, workers collectively make up a cla ss of people exploited to create surplus value for the bosses. 41 A very basic definition of classes as they exist in capitalist society begins with this premise. Workers have to sell our ability to work, and capitalists buy and command our labor – power . Y ou can’ t understand either the worker ’s or the boss’ s class position without understa nding that the whole of the system is one in which labor is set to work on means of production, in order to produce a profit for someone else. Class, in other words, is a relationship of exploitation. This understand ing of class as a social relationship is complete ly absent in mainstream analysis. If class is discussed at all in the main stream, it is considered in terms of wealth and social stratification. Income levels, education, lifestyles, and pattern s of consumption are used to divide people into a society that is mostly middle class, with some rich and poor people around the fring es. Indeed, in most accounts, the majority of us are middle class, and there is no working class at all. We are reminded of this fact at least every two to four years in election seasons, when politicians appeal to the “struggling middle class,” a category that apparently includes all “good Americans,” or as former president Bill Clinton said, people who “work hard and play by the rules.” 42 Bernie Sanders’ s presidential campaigns have been so notable precisely because he uttered the words “working class.” An explanation of classes based on levels of wealth also has a more progressive version, as populari zed by the Occupy Wall Street movement in 2011. The slogan “we are the 99%” caught on like wildfire as activists identified the top 1 percent of the country’ s economic elite, which owns about 40 percen t of the nation’ s wealth, as culpable for creating the financial meltdown of 2008 and the Great Recession that followed. While this analysis is a subs tantial leap forward from that which assumes that we are nearly all middle class, it still assumes that the quantity of wealth is the determinant of class positions. Class and wealt h surely have everything to do with each other, but they are not the same thing. A stable , well-paid job (to the extent that these still90 exist) such as a train conduct or in New York City may pay upward of $70,000 a year , and a small bodega owner in the Bronx may earn much less. But the former is a worker—who does not control her own hours and conditions of work, and the latte r is a small business owner, char ged with his own exploitatio n, as well as that of others (even if few in number). The numbers on someone’ s paychec k can’ t tell you everything. It can’ t tell you, for instance, that a manager at Starbucks, who makes less than a subway conductor , has the power to fire every worker in the store. We can see then that wealth is just one part of the picture, and one that is more symptomatic of class inequality than explanatory of its origin. In fact, power , control over working conditions, and financial decision-making are the bedrocks of exploitation. Economics Professor Michael Zweig explained it this way: “By looking only at income or lifestyle, we see the results of class, but not the origins of class. We see how we are different in our possessions, but not how we are related and conn ected, and made different, in the process of making what we possess.” 43 [em phasis added] The Marxist explanation instead emphasiz es that one’s position in society is not measured quantitatively , but is determined by a person’ s relati onship to labor , the fruits of labor , and the means of production. Anyone who controls the means of production, has political power, dictates the terms of other ’s working conditions, or owns capital that can be invested in production, is part of the CAPIT ALIST CLASS . A nd anyone who must sell their labor -power for a wage and has no access to the means of produc tion themselves is part of the WORKING CLASS . This does not just extend to workers engaged in production of physical goods. Teachers and nurses must sell their labor in order to prov ide services, and thus are part of the working class. 44 As Marx argued: “If we may take an example from outside the sphere of material production, a schoo l-master is a productive worker when, in add ition to belaboring the heads of his pupils, he works himself into the ground to enrich the owner of the school. That the latter has laid out his capital in a teaching factory, instead of a sausage factory , makes no dif ference to the relation.” 45 It is in this sense that Marx and Engels wrote that the “prol etarian is without property.” PROLET ARIANS is ano ther word for workers; and private property does not mean personal belongings, like your TV or laptop, but the means of production—the buildings, machinery , software, equipment, tools, and other materials owned by capitalists. Marx wasn’t saying that workers literally have nothing, although that is often and increasingly true. He meant that we are without any means to produce and reproduce our91 livelihoods, and therefore we are at the mercy of capitalist exploitation. A construction company has mechanical shovels, drills, and dozers, which allow them to exploit laborers and turn a profit. I have a shovel, which I can use to grow flowers or tomatoes. Historian Geof frey de Ste. Croix put it this way: [Class] is the collective social expression of the fact of exploitation, the way in which exploitation is embodied in a social structure… Class is essentially a relationship —just as capital , another of Marx’ s basic concepts, is specifically described by him… as “a relation,” “a social relation of production,” and so forth. And a class (a particular c lass) is a group of persons in a commun ity identified by their position in the whole system of social production, defined above all according to their relationship (primarily in terms of the degree of control ) to the conditions of production (that is to say , to the means and labor of production) and to other classes. 46 Using this defin ition, we see that wealth and poverty do not determine class, rather they are manifestations of it. The bosses are thus not defined by the degree of their extravagance. At the same time, society’ s poor do not represent an “underclass” who, due to lack of employment or wealth, stand outside of society . Poverty is an integral par t of the experience of the working class, and unemployment is just a stone’ s throw away for most workers. Almost half the US population would not be able to pay their bills if they missed one paycheck, and one in four people report foregoing health care treatment because they could not afford it. 47 A quart er of the population have jobs that are defined as low-wage. 48 Ad d to this bleak picture the mountains of student debt carrie d by tens of millions of people and a rising cost of living, and it becomes very clear just how intrinsic poverty is to the fabric of American society . Capitalism requir es that there be some level of unemployment at all times, or as Marx termed it, a RESER VE ARMY OF LABORERS . The bosses depend on this reserve army of laborers to ensure that there is always someone else willing to take your job, and can thus discipline the paid workforce into acquiescing to the terms set by employers. High levels of unemployment are certainly a cruel feature of every downturn in the economy , but even when “times are good,” unemployment is still a painful reality for millions. What mainstream economists consider “full employment” is in fact about 5 percent unemployment. The introduction of new machinery , a growing labor force due to demographic or migration92 changes, regular changes in the structure of the economy (what is and isn’t produced, and where), can all contribute to unemployment during the “best” of times. This understanding of society yields a much different picture than the popularized version of the Unit ed States as a “middle class country .” To be sure, there is a middle class. They do not just live in a glossy alternate universe on television screens. The MIDDLE CLASS is a lay er of society that stands between the working class and the ruling class. It includes small business owners, as well as middle managers, supervisors, and professional occupations that have a fair amount of autonomy within the system (such as doctors and lawyers). They are often the daily face of exploitation. You see your manager every day at work . He may reward your work with a raise, or reprimand you for being late, but you will rarely encounter the CEO who profits from this arrangement. Still, this middle class is much smaller than usually assumed, and many of those traditionally deemed “professionals” are being shoved into the working class (or “proletarianizing”) as computer programmers become routine code writers punching timecards, social workers with enormous caseloads spend their days filling out forms, and academic professorial jobs increasingly give way to adjunct positions. 49 W ithin many middle-class job classifications as well, the differences between the kind of conditions faced by professors at elite colleges versus those at public universities, or doctors with private practices contrasted to those working in emer gency rooms, lead to very different levels of cont rol at the workplace. “The bourgeoisie has stripped of its halo every occupation hitherto honored and looke d up to with reverent awe,” wrote Marx and Engels. “It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.” 50 Michael Zweig and labor journalist Kim Moody have both estimated that the working class makes up about 63 percent of the US labor force. The corporate elite makes up 2 percent, and in between, the middle class makes up 35 percent. 51 Further , if you include broader society beyond the accounted-for labor force (family members not working, elderly people, people permanently unemployed because of disabilities, etc.), the numbers reflecting the working class would be even higher . As Moody ar gued: “If working-class people in employ ment make up just under two-thirds of the workforce, those in the class amount to at least three-quarters of the population—the overwhelming majority. As teachers, nurses, and other professionals are pushed down into the working class, the majority grows even lar ger.” 52 Thi s highlights a broader point: classes are fluid and plenty of93 gray area exists between them. These numbers only offer a general guide to emphasize the broader trend toward increasing polarization. As Marx and Engels wrote in the Communist Manifesto ove r 150 years ago (at a time , incidentally , when the working class was a clear minority of the world’ s population): “Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other: bourgeoisie and proletariat.” 53 Lastly , one belo ngs to a class regardless of whether one belie ves in the notion or identifies with the interests of that class. Whether Democrats tell you that you are part of the middle class they are trying to save or Donald Trump promises tax breaks to the “for gotten middle class,” and whether you believe any of them, have little to do with whether you still have to wake up to go to work tomorrow morning, follow someone else’s instructions for what to do, and return home with little more than a meager paycheck and a backache. Class position is therefore determined by material reality rather than ideology . At the same time, the structure of the working class does then lend itself to the development of class-consciousness. In that sense, we can identify a secondary definition of the working class on the basis of its consciousness and activity . Along these lines, Marx distinguished between the working class as a “class in itself ”: defined by a common relationship to the means of pro duction; and a “class for itse lf ”: or ganiz ed in active pursuit of its own interests. As Ste. Croix explained: The individuals constituting a given class may or may not be wholly or partly conscious of their own identity and commo n interests as a class, and they may or may not feel antagonis m towards members of other classes as such. Class conflict (class struggle, Klassenkampf ) is essentially the fundamental relationship between classes, involving exploitation and resistance to it, but not necessarily either class consciousness or collective activity in common, political or otherwise, although these features are likely to supervene when a class has reached a certain stage of development and become what Marx once (using a Hegelian idiom) called “a class for itself .” 54 TH E W ORK IN G D AY The opposing class positions—and therefore interests—of workers and bosses pits these classes against each other. Bosses try to squeeze more94 profits out of workers; the working class is always trying in some way to relieve the intensity of exploitation and oppression. As Marx argued, the history of capitalism is, at its heart, the history of class struggle: “carried on an uninterrupted , now hidden, now open fight.” It isn’ t alw ays a clear conflict, like a strike or a protest, and it is never an evenly two-sided fight, but it is an ongoing struggle nonetheless. The battle between capitalist and worker over the terms of exploitation has historically been centered on the terms of the working day, to determine how much surpl us value bosses are able to extract from their employees. If we start with a baseline scenario in which a worker delivers four hours of necessary labor (to replace her own wages) and four hours of surplus labor (to go to the capitalist’ s profits), the rate of exploitation is 100 percent. Capitalists will attempt to impose faster, more intensive working conditions or lower the value of labor -power in order to extract more surplus labor and a greater profit. This is not driven by an individu al capitalist’ s cruelty , or a Mr . Burns-like maniacal cackle. 55 T o surv ive and thrive in a com petitive market, business owners can get an edge over the competition by raising the rate of exploitation and lowering the cost per unit of their goods. And so the structure of capitalism typically rewards the Mr. Burnses of the world, and puts out of business any bosses who attempt fairness, equity, and job safety . 56 There are two main roads to increase the rate of exploitation. One is raising the ABSOLUTE SURPLUS VALUE : how much total surplus value is created during the day. The other is increasing RELA TIVE SURPLUS VALUE : alte ring the ratio of value produc ed during the course of the day so that less of it goes toward the reproduction of labor -power (paid out in wages) and more of it goes over to the capitalist in the form of surplus value. To increase absolute surplus value, capitalists lengthen the working day without paying any additional wages. By doing this—forcing workers to toil for two, three, or four additi onal hours—the capitalist will accumulate additional surplus labor. If the working day is lengthened from eight hours to twelve hours with no additional pay , the rate of exploitation will change from 4 hours / 4 hours = 100 percent, to 8 hours / 4 hours = 200 percent. 57 In Marx’ s day , the battle over whether workers would be forced to work twelve-hour days or ten-hour days raged on over decades. Today , working ten or twelve hours is still very much a reality for many working-class people—from restaurant workers, to unregulated sweatshops in the garment industry , to Apple’ s infamous Foxconn factories. Salaried “middle class”95 jobs in IT and other office workers regularly work ten- and twel ve-hour days without extra compensation. Even seemingly “secure” jobs with union protections are vulnerable to unpaid increases in the working day. Lengthening the school day without compensating teachers is a common example. Of course it’s als o completely “normal” for teachers to spend countless hours of unpaid work as it is, grading homework and preparing lesson plans. Just as it is for homecare nurses to spend many unpaid hours filling out reports. On the whole, US workers labor for a month longer per year than our European counterparts. This has been one of the prevailing strategies of American capitalism to increase profitability since the 1970s. FIG URE 4 . A BSO LU TE S U RPL U S V A LU E Of course there are human limits to the level to which people can be driven to work. There are, unfortunately for the bosses, a finite number of hours in a day . And the human body can cope with only so much work before it collapses. Indeed, many of the nineteenth-century regulations on the length of the working day stemm ed from the fact that the damage done to the working class was so severe as to undermine a suf ficient labor pool from which businesses could hire. Marx noted that the British ruling class set limits on the working day and took measures to strengthen the working-class families in order to prevent future generations of laborers from literally being worked to death before they came of age. Bosses gave male workers a “family wage” just high enough to provide for their families.96 Most importantl y, labor , unlike machinery and other production inputs, is made up of thinking, toiling humans who can organize to fight back against their own ruination. Workers’ resistance, as Marx put it, is “that obstinate yet elastic natural barrier” to capital. 58 Th us bosses must rely on a second strategy of increasing relative surplus value: that is to change the ratio of who gets what from the fruits of the working day. In this case, the length of the working day doesn’ t chang e, but how much surplus value is produced does. “The prolongati on of the working day beyond the point at which the worker would have produced an exact equivalent of that surplus labor by capital—this is the process which constitutes the production of the absolute surplus-value,” wrote Marx. “For the production of relative surplus-value,” he continued, “the necessary labor is shortened by methods of producing the equivalent of the wage of labor in a shorter time.” 59 In other words, the ratio of nec essary labor to surplus labor changes in favor of the bosses, because the amount of labor -time that is necessary for a worker to reproduce her wage will be reduced. If the workers’ wages can be reproduced in three hour’s time , rather than four hour’s, the rate of surplus value will jump from 100 percen t (four hours of surplus labor / four hours of necessary labor) to 166 percent (five hours of surplus labor / three hours of necessary labor). FIG URE 5 . R ELA TIV E S U RPL U S V A LU E97 We can see roughly four ways to increase relative surplus value: First, increasing the intensification of labor—that is forcing workers to deliver more value in the same amount of time than they had previously . Marx described this process as a “con densation of labor ,” or a “closer filling up of the pores of the working day,” 60 more commonly referred to today as speedups and attrition of workers, so that fewer bodies do the work that more employees used to do. As Marx explained: “This compression of a greater mass of labor into a given period now counts for what it really is, namely an increase in the quantity of labor .” 61 In the United States, older workers in the auto industry can remember a time when workers would “work up the line” by moving faster than the belt, and would wind up with some downtime during their shift. Now the belts move at the fastest rate possible so there is no downtime possible. Motions are timed and regulated such that they are in motion fifty-seven seconds in every minute (compare this to forty-five seconds per minute on a traditional Fordist assembly line). The result, explained political science professor Tony Smith, “is an equivalent to hiring an extra 333 workers to work a forty-hour week.” 62 This process of intensifying labor was first turned into a science by Frederick Taylor in the late nineteenth century and dubbed “Taylorism” (see sidebar: “A ‘Scientific’ Obsession”). Since then, the twenty-first century version of the same is often referred to as “lean production”: speedups, de-skilling, use of temporary and contract workers, greater management flexibility on hours and tasks, etc. These processes have resulted in “the greatest work intensification in US history ,” according to Kim Moody , “far surpassing the now quaint norms of Taylorism.” 63 Her e we see that the value of labor -power (paid out in wages) remains the same, but the time that it takes to reproduce it is lessened. So if you are paid $120 per day, you r wage would stay the same, but instead of making $120 worth of value for your boss in four hours, you would make it in, say , three and a half. Alternatively , a second means of increasing relative surplus value is lowering the value of labor -pow er—let’ s say from $120 to $90 a day . In this case, workers employed at the same level of intensity could reproduce this value in three, rather than four hours. This happens if technology in other industries producing necessities like food and clothing create cheaper commodities for workers, and wages are reduced accordingly . For instance, a 75 percent drop in the cost of buying food and other requirements, could lead to wages being cut by 75 percent as well. These costs can also be lessened by reducing the worth and quality of the things that workers need. Thus household items bought from discount stores, cheap shoes, and fast-food98 dinners increasingly make up what is considered an “acceptable” standard of living. This is not necessarily a deliberate strategy on the part of the capitalist class, but a convenient by-product of competition. As Marx explained: “When an individual capitalist cheapens shirts, for instance, by increasing the productivity of labor , he by no means necessarily aims to reduce the value of labor -power and shorte n necessary labor-time in proportion to this. But he contribu tes toward increasing the general rate of surplus-value only insofar as he ultimately contributes to this result.” 64 A third means of increasing relative surplus value is the de-s killing of jobs, lowering the amount of education or training necessary , and therefore the value of the labor -power . Co nsider , for instance, the trend to have home health aides, who have minimal training requirements and are usually paid $7–10 per hour , administer medications, which used to be sole ly the job of highly trained and well-paid nurses. Or, there are jobs that have become so automated that an afternoon’ s worth of training is sufficient for their execution. These de-skilled jobs correspond to vastly lower wages, which have the same impact as reducing the pay of current employees. In fact, a division of labor in the workplace is key to creating ef ficiency in production, and is also critical to the process of de-skilling and cheapening labor . Charles Babbage, the Eng lish mathematician and zealous advocate for a strict division of labor , wrote On the Economy of Machinery and Manufactures in 1832. In it, Babbage argued that by dividing crafts into their simplest component parts, each can be devalued to its lowest possible point. Writing about the meatpacking industry , Babbage explained: It would be difficult to find another industry where division of labor has been so ingeniously and microscopically worked out. The animal has been surveyed and laid off like a map; and the men have been classified in over thirty specialties and twenty rates of pay , from 16 cents to 50 cents an hour . The 50-cent man is restric ted to using the knife on the most delicate parts of the hide (floorman) or to using the ax in splitting the backbon e (splitter); and wherever a less-sk illed man can be slipped in at 18 cents, 18½ cents , 20 cents, 21 cents, 22½ cents, 24 cents, 25 cen ts and so on, a plac e is made for him and an occupation mapped out. In working on the hide alone there are nine positions, at eig ht different rates of pay . A 20-cent man pulls off the tail, a 22 ½- cent man pounds off another part where good leather is not foun d,99 and the knife of the 40-cent man cuts a dif ferent texture and has a different “feel” from that of the 50-cent man. 65 A final means to increase relative value is to drive wages down below the value of labor -power . In the current age of austerity , the common scenario is that the cost of living (not just food and clothing, but also housing, transportation, and health care) increases, while compensat ion (usually through cuts to health care and other benefits) is still reduced, forcing wages below t he actu al value of labor -power . The higher the rate of unemployment, the easie r it is to push a desperate workforce to accept wages below the cost of living. More often than not, increasing household debt makes up the difference. While recessions are frequently the excuse to drive down living standards, wages don’t usually bounce back once bosses start making record profits again. Each of these routes to increasing surplus value—lengthening the working day, lowering the value of labor -power , lowering the wages paid, and increasing the intensificatio n of labor—yields gains to capit alists. And if they push on multiple fronts at the same time, they can dramatically increase the rate of exploitation. An addi tional point, which we will discuss in the next two chapters, is that in the short-term , bosses can also raise the rate of exploitation through increases in productivity , by introducing new laborsaving technologies. Using advanced machinery or tools, a single worker can churn out the same commodities in ten or twenty times the speed. Introducing new technologies thus allows capitalists to reduce the unit cost and undersell rivals—but still sell somewhat above value. But this competitive advantage is wiped out when others introduce the same technology . It will have only a temporary effect on profitability , unless , as we noted above, the increases in productivity are in industries that cheapen the goods needed for workers’ subsistence, and therefore lower the cost of labor -power in society as a whole. Marx ar gued: New machinery produces relative surplus value, when it is first introduced into an industry not only by directly depreciating the value of labor -power , and by indirectly cheapening the same through cheapening the commodities that enter into its reproduction, thus enabling the capitalist to replace the value of a day’ s labor -power by a smaller portion of the value of a day’ s product. During this transitional period, while the use of machinery remains a sort of monopoly , profits are exceptional, and the capitalist endeavors to exploit thoroughly “the sunny time100 of this his first love” by prolonging the working day as far as possible. The magnitude of the profit gives him an insatiab le hunger for yet more profit. 66 The sunny time of his first love will quickly give way to increasing competition when other capitalists adopt the same means, thus returning to the forefront, yet again, the need to extort more labor from the workers themselves. CO NCL USIO N Surplus-labor is not an invention of capitalism. As Marx argued: “Wherever a part of society possesses the monopoly of the means of production, the worker, free or unfree, must add to the labor -time necessary for his own maintenance an extra quantity of labor -time in order to produce the means of subsistence for the owner of the means of production, whether this proprietor be an Athenian [aristocrat], an Etruscan theocrat, a civis romanus , a Norman Baron, an American slave-owner , a Wallachian boyar , a modern landlord or a capitalist.” 67 Previous class societies, too, were predicated on exploitation—the appropriation of a part of the wealth of those who work by a ruling class. A serf, for example , would be required to work for a certain number of days on the lord’ s land. In this way, the extraction of surplus labor was quite explicit. Modern-day exploitation, however, is disguised by the appearance of a fair deal. It seems that workers are paid a fair day’ s wage for a fair day’ s work, as the saying goes. But we are not paid for our work, we are paid for our labor – power , and therein lies the rub. What distingui shes capitalism is the particular (and particularly deceptive!) form in which surplus labor is extracted: the gap between the labor-power ’s ex change-value, paid out in wages, and the value of the labor that is delivered back to the capitalist. This exploitation of labor by capital is the propellant of class society . It is not newly reinvented each time a worker applies for a job, but is a product of historically ingrained class positions, which continuously repeat and renew themselves. As Marx wrote: It is no longer a mere accident that capitalist and worker confront each other in the market as buy er and seller . It is the alternating rhythm of the process itself which throws the worker back onto the market again and again as a seller of his labor -power and continually transforms his own product into a means by which101 another man can purchase him. In reality , the worker belongs to capital before he has sold himse lf to the capitalist. His economic bondage is at once mediated through, and concealed by, the periodic renewal of the act by which he sells himself, his change of masters, and the oscillations in the market-price of his labor . 68 We’ve gotten a glimpse of what this economic bondage means for the working class. In the next chapt er we’ll see that capitalists, too, in their own opulent ways, are bound to the economic laws of the system—ones that they clearly benefit from tremendously , but which bind them to a certain modus operandi nonetheless. A “ S C IEN TIFIC ” O BS ESSIO N The compulsion to increase the intensity of labor ratcheted up to an obsession in the 1890s with the methods of “scientific management.” Frederick Taylor developed the ideas of industrial efficiency first as a manager at Midvale Steel Work s and later at Bethlehem Steel. Every task was studied, broken down into individual components, and timed in order to deter mine the minimal intervals required to accomplish each. The timing and methods of wor k could then be standardized—whether that be through speeding up the conveyor belt in an auto plant or using keystroke counters to mechanize of fice jobs. Scientific management is base d on a severe alienation of labor , which assumes that the greatest and most specific level of supervision will yield maximum productivit y. So long as workers have any control over the labor process, goes the argument, they will try to thwart their full productive potential. According to Taylor , managers should specify “not only what is to be done but how it is to be done and the exact time allowed for doing it.” 69 Taylor wrote at length about his own experience as a manag er at Bethlehem Steel. While studyin g the physics of loading pig iron, he discovered that a pig iron handler ought to handle between 47 and 48 tons per day , but in fact they averaged 12½. To resolve this situation, he set upon buying of f the most fit workers and training them to follow second-by-second instruction in order to produce optimal efficiency . These workers were then set as examples and their work-speed imposed as the standard on the shop floor .102 Taylor outlined the process by which this was accomplished in his book, The Principles of Scientific Management . Fir st they picked out a man who seemed physically capable and who they assumed could be sufficiently convinced to work harder by the promise of a raise: “a little Pennsylvania Dutchman who had been observed to trot back home for a mile or so after his work in the evening about as fresh as he was when he came trotting down to work in the morning.” 70 (Im agine the nerve, leaving work still feeling fresh!) Taylor recounted a very patronizing conversation with the man he called “Shmidt,” which ended in the following lecture: Well, if you are a high-priced man, you will do exactly as this man tells you tomorrow , from morning till night. When he tells you to pick up a pig and walk, you pick it up and you walk, and when he tells you to sit down and rest, you sit down. You do that right straight through the day. And what’ s more, no back talk. Now a high-priced man does just what he’s told to do, and no back talk. Do you understand that? When this man tells you to wa lk, you walk; when he tells you to sit down, you sit down, and you don’t talk back at him. Now you come on to work here tomorrow morning and I’ll know before night whether you are really a high-priced man or not. 71 For the reward of being judged a “high-priced man,” Shmidt and eventually others were paid $1.85 a day instead of $1.15, an increase of 60 percent in their wage. In exchange, the workers each loaded 47.5 tons of pig iron on average instead of 12.5, an increase in productivity of 280 percent. Not a bad deal for the bosses. Taylor justified his astonishing condescension toward the workers by explaining that they were too “mentally sluggish” to understand how to efficiently do the work themselves: Now one of the very first requir ements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his men tal make-up the ox than any other type. The man who is mentally alert and intell igent is for this very reason entirely unsuited to what would, for him, be the grinding monotony of work of this character . Therefore the workman103 who is best suited to handling pig iron is unable to understand the real science of doing this class of work. 72 But the real implication of Taylorism is not that workers are too “mentally sluggish” to efficiently work themselves to the bone. Quite the opposite, their own interest would lead them to work as little as possible in order to preserve their health and well-being. This very intelligent sense of self-preservation is in fact the reason that workers need to be supervised to the second. Indeed, more often than not, management observes their employees only to discover that the workers have found ways to shorten the labor -time it takes to perform various functions. They do this in order to have more downtime for themselves, but managers take that knowled ge in order to enforce speedups and to steal more surplus labor -time. Capitalism uses our ingenuity to further immiserate us. Socialism would use every advance to make more time for humans to rest, play, and thriv e. This is why Russian Revolutionary Leon Trotsky was onto something when he lauded human laziness as a quality necessary for human progress: As a general rule, man strives to avoid labor. Love for work is not at all an inborn characteristic: it is created by economic pressure and social education. One may even say that man is a fairly lazy animal. It is on this quality , in reality , that is founded to a considerable extent all human progress; because if man did not strive to expend his ener gy economically , did not seek to receive the largest possible quantity of products in return for a small quantity of ener gy, there would have been no technical development or social culture. It would appear, then, from this point of view that human laziness is a progressive force. Old Antonio Labriola, the Italian Marxist, even used to picture the man of the future as a “happy and lazy genius.” 73104