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Adam Smith’s Glorious Vision Accumulation + Division of Labor = Cumulative Progress.

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Presentation on theme: "Adam Smith’s Glorious Vision Accumulation + Division of Labor = Cumulative Progress."— Presentation transcript:

1 Adam Smith’s Glorious Vision Accumulation + Division of Labor = Cumulative Progress

2 Adam Smith Accumulation: “capitals are increased by parsimony and diminished by prodigality and misconduct.” Division of labor: “… natural propensity among men to truck, barter, and exchange one thing for another.”

3 Adam Smith: The division of labor is limited by the extent of the market. Free Trade  Extended Market

4 Adam Smith: Virtuous Circle of Growth Accumulation | Division of Labor | Productivity | Reduced Cost | Extended Market | Profit

5 Adam Smith: Limit to Growth Accumulation | Competition Up | Profit Down Steady State: “that full complement of riches which the nature of [a nation’s] soil and climate, and its situation with respect to other countries, allow it to acquire.”

6 The Dismal World of David Ricardo and Thomas Robert Malthus Diminishing Returns to Land - Intensive Margin - Extensive Margin Land Rent = Productivity Premium over Marginal Land Constant Returns to Manufacturing Iron Law of Wages - Wage Fund - Malthusian Law of Population

7 The Dismal World of David Ricardo Accumulation | Increase Wage Fund | Increased Workforce | Increased Cultivation | Increased Food Cost (Labor Theory of Value) | Increased Rent Share | Reduced Profit Share | Reduced Accumulation

8 Ricardo’s Prescriptions Free Trade Import Food Repeal “Corn Law” Tariff Promote Colonies (J.S. Mill) Abolish Poor Laws Population Growth  Wage Below Subsistence Tax Rents and Luxuries Vs Malthus  Landlords Consume “Glut”

9 Modern Malthusians: The Limits to Growth Lily – Pond S P R A W L Finite Resources Environmental Catastrophe But why not Tech – Fix ???

10 Karl Marx: Inherent Contradictions of Capitalist Development Accumulate, accumulate… That is Moses and the prophets.

11 Karl Marx: Inherent Contradictions of Capitalist Development Capitalists … own means of production Workers … paid subsistence wage Exploitation  Surplus Value (Profit) Accumulation of profit  Crisis  Monopoly + Immiseration of labor  Revolution  Socialism The expropriators are expropriated

12 Karl Marx: Inherent Contradictions of Capitalist Development Flavors of Capitalist Crisis Falling Rate of Profit Profit Squeeze Disproportionality Uncertainty  Error  Overproduction Underconsumption Heightened accumulation  Increased Supply + Diminished Demand Crisis : Rush for Liquidity  Breakdown of Monetary Economy

13 Karl Marx: Inherent Contradictions of Capitalist Development Falling Rate of Profit Accumulation | Increased Demand for Labor | Depletion of “Reserve Army” | Rising Wage | Profit Squeeze

14 Karl Marx: Inherent Contradictions of Capitalist Development Profit Squeeze | Concentration | Monopoly Capitalism Profit Squeeze | Increased “Organic Composition” of Capital | Reduced Long- Run Rate of Profit

15 Vlad Lenin Imperialism: The Highest Stage of Capitalism Viewed from the center, periphery offers Untapped Markets + Cheap Food + Outlet for Investment (forestall stagnation)

16 Vlad Lenin Imperialism: The Highest Stage of Capitalism “Imperialism is capitalism in that stage of development in which the dominance of monopolies and finance capital has established itself; in which the division of the world among the international trusts has begun; in which the division of all territories among the great capitalist powers has been completed.”

17 Vlad Lenin Imperialism: The Highest Stage of Capitalism International Competition for Dependencies | Capitalist Wars


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