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SOSC Lecture #5.docx

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York University
Social Science
SOSC 1000
Terry Conlin

SOSC Lecture #5 October 17 2013 3. Smith & Keynes • An Insatiable, Dynamic, Disembedded Two-Edged Sword • Adam Smith, Mercantilism & The Wealth of Nations • The society of perfect (economic)Liberty & The Disembedded, Self-Correcting Free Market Economy • The Keynesian Challenge to Orthodoxy • The Keynesian Welfare State • The Attack on Keynesianism (Right & Left) • Marilyn Waring Versus Economic Orthodoxy: UN System of National Accounts Economist are unhappy when they have to examine variables that are not easily measured by something like a price – Ernest Schusky Insatiable, Dynamic, Disembedded Two-Edged Sword • Humans are creatures of unlimited appetite. We want more, no such thing as enough. • Possessive individualism : no such thing as enough for humans. We want more. • Capitalism is all about change. • Marx: Under capitalism all that is solid melts into air. • Capitalism is all about creative destruction • Disembedded • When capitalism came along, economy became its own thing • Capitalism is a 2 edged sword, produces wealth, the goods like we’ve never seen before • It also produces misery. • Twenty first century capitalism, first page quote. • 2008, beginning of the Great Ression. Adam Smith, Mercantilism & The Wealth of Nations • Fall of rome, Socratics (Aristotle) • Aristotle is not a fan of economics • To him there is such a thing as enough. • People who can do long distance trade are fit to be made slaves • Limits on acquisition. • Debt: if a person is in it, something is wrong with him • Slavery is okay • Political life dominates economic life • Economy was embedded in society, limited, local, regulated. (Thomson, the poor law) • Mercantilism: target Adam Smith aims at. • Debate: Gov’t should be aligned with old forces of traditional society? Or with the new emerging interests (bourgeoisie) • 1940, GB: Mercantilism is the problem. Need to get rid of poor laws etc. Colonies need to stand on their feet • 1848: repealed the corn law -> new Quebec group. • 1849, they adopt new document. Manifesto. • A document that outlines all the movements towards free trade, how they are bad. • Marx: Capital will go where it gets the highest return on its investment • Molson, 2005 -> becomes Coors Light. An American brewery • Workers were not free to tell their employers they quit. Regulated with guilt. Tied with employers in ways • All about enriching the center, decreasing imports, increasing exports • A society of liberty, to maximize the wealth of nations. • Limiting the power of large trading companies and governments • Governments should pursue free trade and comparative advantage • Smith was aware of advantages and disadvantages of free trade • But no one focuses on the disadvantages that smith outlined • Smith: England has a comparative advantage for creating wool, France as an advantage in production of wine. They should trade their goods with each other. • French and English should engage in free trade. It will maximize wealth in both countries. Government should not interfere. • Businesses should be allowed to fail (2008, govt bails out private companies) • Government should only check monopoly, prices. • Result: Perfect Liberty. Allows a fair economy • IF • A) Incomes, - Must have equal distribution of wealth in society. (relatively equal) • B) Labour, - Labour must be free. Legally allowed to seek best return to what it brings to the market. Labour power. • C) Investment & - Economy will repair itself. It will always go to equilibrium, self regulating. It will have ups and downs and will become normal by itself. Private investment must be self regulated. • D) Competition - Must have significant amount of competition. Will not function perfectly is monopoly exists. Government must ensure there is free, fair competition. • THEN • Laissez-
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