Posted on 02/11/2009 6:39:58 AM PST by marshmallow
The free market is dead. It was killed by the Bolshevik Revolution, fascist dirigisme, Keynesianism, the Great Depression, the second world war economic controls, the Labour party victory of 1945, Keynesianism again, the Arab oil embargo, Anthony Giddens’s “third way” and the current financial crisis. The free market has died at least 10 times in the past century. And whenever the market expires people want to know what Adam Smith would say. It is a moment of, “Hello, God, how’s my atheism going?”
Adam Smith would be laughing too hard to say anything. Smith spotted the precise cause of our economic calamity not just before it happened but 232 years before – probably a record for going short.
“A dwelling-house, as such, contributes nothing to the revenue of its inhabitant,” Smith said in The Wealth of Nations. “If it is lett [sic] to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue.” Therefore Smith concluded that, although a house can make money for its owner if it is rented, “the revenue of the whole body of the people can never be in the smallest degree increased by it”.
Smith was familiar with rampant speculation, or “overtrading” as he politely called it.
The Mississippi Scheme and the South Sea Bubble had both collapsed in 1720, three years before his birth. In 1772, while Smith was writing The Wealth of Nations, a bank run occurred in Scotland. Only three of Edinburgh’s 30 private banks survived. The reaction to the ensuing credit freeze from the Scottish overtraders sounds familiar, “The banks, they seem to have thought,” Smith said, “were in honour bound to supply the deficiency, and to provide them with all the capital which they wanted to trade.......”
(Excerpt) Read more at ft.com ...
Are you laughing?
I picture every despot from lenin to pelosi like daffy duck grabbing the gold “mine, all mine!”, while proclaiming the end of the free market
--Adam Smith also penned a great quote about the fact that whenever any group of shopkeepers get together, the first topic of conversation is how to reduce or eliminate competition.
-- Most , not quite all, leaders in large businesses will join with whatever level of government that they can to achieve that goal--
What can he say? Tragicomedy invites laughter, even if it is a chuckle for the gallows.
Thanks! Bookmarked.
Thanks for the post. As someone here said....the cure for a depression is a depression.
The 20th century’s Adam Smith.
Great article! Thanks for the link.
bttt
I imagine that Adam Smith will eventually win, but getting from here to there will be far more painful with the Obama/Pelosi detour than a direct route would have been.
Μολὼν λάβε
Not quite.
Black markets for labor and goods will rise.
This all goes back to the point of
people continue to act in their own self interest no matter what external constraints are supplied.
Regardless of what you believe—that individuals should purely act in their self-interest or that individuals should act so as to benefit "the common good," or any combination thereof—the fact of the matter is: descriptively, individuals, by and large, do act in their own self-interest.
And there is nothing that Zero, Stalin, Hitler, Mao, Mugabe, Carter, FDR, George III of Britain, or any of the other Socialists, dictators, monarchs, RINOs, and Democrats of the twentieth century, or any centuries past, or of any centuries in the future, or of the present, can do about changing human nature.
Only man's Creator can alter human nature.
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At the end of the day, no matter how hard the Socialists, Communists dictators, monarchs, RINOs, and Democrats try to achieve their Sisiphyusian machinations...the last laugh is always reserved for man's Creator and for the free markets. Please see post 17. |
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Don’t know of a PJ ping list but I could be wrong........
Thank you for this excellent article.shalom b'SHEM Yah'shua HaMashiach AdonaiEcc 1:9 That which has been is that which will be,
And that which has been done is that which will be done.
So there is nothing new under the sun.
And we could nationalize our economies. But Smith said: “The state cannot be very great of which the sovereign has leisure to carry on the trade of a wine merchant or apothecary”. Or chairman of General Motors.
Sigh...
Excellent article:
“Little else is requisite to carry a state to the highest degree of opulence,” Smith told a learned society in Edinburgh (with what degree of sarcasm we can imagine), “but peace, easy taxes and a tolerable administration of justice.”
Adam Smith failed to understand that to a socialist 2+2 equals any number you want. They are immune from the laws of physics, mathematics or economics.Unfortunately for the rest of us, we are not immune from them.
bfl
In the early days of his presidency wasn’t GWB “hot” to privatize Social Security with Goldman Sachs?
I figured you would like it.
I love the way Milton Friedman communicates. He seemed like such a great guy.
Nowadays, they give the Nobel in Economics to Neo-Keynsians like Stiglitz for unproven ‘ideas’.
The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.
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