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SOCB42 sep 27.docx

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Dan Silver

SOCB42 September 27 Review Propensity to trademarketsDOLproductive labournational wealthCommercial society propensity to better condition->capital accumulation->%productive workers pg. 432/3: productive labour.. "the prodigal (waster) perverts capital by not confining his expense within his income…" Smith compares the noble as church robs i.e. ppl that steals from the most important thing in society? Why does money exist? Limits of non-monetary exchanges/ BARTER -Money is any commodity that everybody will accept as valuable. Money is an abstract quality; however, some things work better than others as money. -Money must be able to a) lasts and b) its divisible: divided into smaller units. -Use value vs. exchange value. Pg. 41. Use value: value you get out of using something. Major aspect of commercial society: it creates the possibility of the market price will differ from its real value. That difference (market v and real) creates the gravitational forces of market?? How the market regulates the distribution? How does our lives get coordinated Natural price: is how ever much it costs to bring products to the market. Paying wages to worker, rent, and profit. Real price: the labour time to complete product Market price: how ever much you sell something for. Differs from natural price. ppl adjust their behavior. Effective demand: are the ppl's wants effective meaning: are they able to purchase it. How? Through the law of supply and the law of demand; law of demand: there is an inverse relationship between the price of the good and the amount that buyers are willing to purchase. The relationship between prices and behavior. Law of supply there is a direct relationship between the price of a good and the amount of it that will be offered for sale. Supplier will be more inclined to sell more of it if higher price. behaviour here is not coordinated by plan but by how prices are… that's why it is a sociological phenomenon. The liberty of motion: restricts the effective operation of the market Freedom to change jobs: Market also works if there is good information What creates the above conditions? 1) When people conceal profits; GIVES BAD INFORMATION 2) Trade secrets 3) Scarcity; this keeps prices high 4) Monopolies 5) Certifications; licensees Perverse consequence when the natural price and market price are too out of whack> if the market isn't allowed to adjust you end up rewarding ppl with high profits for which they shouldn't; unnatural reward. their talents should be used elsewhere. How is it that the market model helps us understand inequality and conflict? Wage inequality> why some jobs earn a higher price than others Original State: pg. 91; living in a world without rent, profit, and wages. No such thing as private property, no stock pile of stuff thus cant start selling surplus. Everything you produce is yours. You don’t have to take wages form a boss. Still be unequal, much harder to apply division of labour to agriculture they will be poorer. Even if we start in this state because the natural human condition leans toward inequality as we try to better ourselves. in a world where there is private property, you have to pay rent. Original source of rent is private propert
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