Adam Smith was WRONG

[Havet]

B7Z_UnshDlY

Interesting clip from the great movie: A Beautiful Mind. Any right-wingers want to comment on the notion that serving the individual need will improve the society overall?

This clip also seems to not defend the notion that just focusing on the collective need will improve society overall.

"The best result will come when everyone in the group is doing what is best for himself AND the group"

A simple analogy. Do you find it pertinent?

[Mr.Awesome]

I would have gone for the blonde :s

He makes a great point though :p

And I loved the movie.

[Bud Struggle]

It's blocked in my country. :)

[Ocean Seal]

This video contains content from NBC Universal who has blocked it in your country on copyright grounds.

This statement rather accurately shows the fallacy that individual need improves society as a whole. Rather than allowing me to watch this, the company blocks it hindering me from seeing the content, and expecting me to do something that will give them money. I don't suppose that they know how this will benefit them, since I don't know what the clip is, and I'm probably not going to buy or rent the movie as a.) I wouldn't rent a movie for a scene and b.) if I am truly looking out for number 1 I wouldn't care too much for their profits and would download it.

[Os Cangaceiros]

The fact that this video is blocked proves that Adam Smith was WRONG.

[RGacky3]

I never got why people tried to make a distinction or conflict between individual need and collective need.

Collective need is just when a bunch of individuals have a similar need, nothing more nothing less, then that is THEIR collective need.

People are treating "needs" as universal absolutes, no they change, I have needs that coencide with certain peoples needs and I have other needs that coencide with other peoples needs.

For example the need to take a dump sometimes at a bar is an individual need, but its also a collective one, at the moment I NEED to take a dump, but anyone might have to take a dump while at a bar, so you need a toilet at a bar.

This over simplistic thing of "INDIVIDUAL RIGHTS OR COLLECTIVE RIGHTS!!!??" is an nonsense premis.

[Dimentio]

I never got why people tried to make a distinction or conflict between individual need and collective need.

Collective need is just when a bunch of individuals have a similar need, nothing more nothing less, then that is THEIR collective need.

People are treating "needs" as universal absolutes, no they change, I have needs that coencide with certain peoples needs and I have other needs that coencide with other peoples needs.

For example the need to take a dump sometimes at a bar is an individual need, but its also a collective one, at the moment I NEED to take a dump, but anyone might have to take a dump while at a bar, so you need a toilet at a bar.

This over simplistic thing of "INDIVIDUAL RIGHTS OR COLLECTIVE RIGHTS!!!??" is an nonsense premis.

One problem with Economics is the equalisation between all needs.

Like, the need for a wealthy Sultan to have a golden toilet is equal to the need for a poor farmer in southern India to have a well with fresh water.

The need for a multi-billionaire Television show host to have 650 Cadillacs is equal to the need for a child to have basic education.

What is determining those needs are the capability to pay. And if you want to have a golden toilet like that Sultan, all you need to do is to work harder...

[Skooma Addict]

One problem with Economics is the equalisation between all needs.

Like, the need for a wealthy Sultan to have a golden toilet is equal to the need for a poor farmer in southern India to have a well with fresh water.

The need for a multi-billionaire Television show host to have 650 Cadillacs is equal to the need for a child to have basic education.

What is determining those needs are the capability to pay. And if you want to have a golden toilet like that Sultan, all you need to do is to work harder...

This is a misrepresentation.

[Dimentio]

Not from an Economics perspective no.

Classical/Neo-classical/Austrian Economics are not making any differentialisation between needs and wants.

And the rationalisation that there needs to be a price based on the subjective valuation by individuals (which per definition creates a situation where either those who are wealthy or those who are more socially savvy and predatory are gaining dominance) because all humans have infinite needs/wants is based on the idea that Private Property is something nature-given, because it wouldn't make sense if an individual couldn't enforce his or her dominance over more resources than he or she could utilise at one moment.

[Skooma Addict]

Not from an Economics perspective no.

Classical/Neo-classical/Austrian Economics are not making any differentialisation between needs and wants.

And the rationalisation that there needs to be a price based on the subjective valuation by individuals (which per definition creates a situation where either those who are wealthy or those who are more socially savvy and predatory are gaining dominance) because all humans have infinite needs/wants is based on the idea that Private Property is something nature-given, because it wouldn't make sense if an individual couldn't enforce his or her dominance over more resources than he or she could utilise at one moment. Standard Economic theory does not claim that one persons wants are "equal" to someone elses.

So this...

"Like, the need for a wealthy Sultan to have a golden toilet is equal to the need for a poor farmer in southern India to have a well with fresh water."

...is a misrepresentation.

I am not sure if I fully understand your second point. Are you describing economists belief regarding the price system and private property or critiquing it?

Edit: And Havet you know better than to use the term "right-winger" :)

[Dimentio]

In reality, they view all needs as equivalent, no matter if those needs are rather wants than needs.

I know that is a simplification, but that is at the heart of their analysis - an inability to see the divergence between basic life-supporting needs and other goods.

[resurgence]

The only good all out capitalist....Is what one??? :confused:

[Skooma Addict]

In reality, they view all needs as equivalent, no matter if those needs are rather wants than needs.

I know that is a simplification, but that is at the heart of their analysis - an inability to see the divergence between basic life-supporting needs and other goods.

Most economists support at least some social services, so they obviously don't see all wants as equivalent. But anyways, whether want/need X is more important than want/need Y is just an opinion. There is no right or wrong answer.

[Havet]

For those who cant see the video because of petty bourgeois intellectual property...

v5jrNoNNtrE

B7Z_UnshDlY

2d_dtTZQyUM

Touau7QRv8I

hopefully one of these will work for you

[RGacky3]

One problem with Economics is the equalisation between all needs.

Like, the need for a wealthy Sultan to have a golden toilet is equal to the need for a poor farmer in southern India to have a well with fresh water.

The need for a multi-billionaire Television show host to have 650 Cadillacs is equal to the need for a child to have basic education.

What is determining those needs are the capability to pay. And if you want to have a golden toilet like that Sultan, all you need to do is to work harder...

I was'nt implying that, I was just saying comparing collective and individual needs is rediculous.

The fact is market economists don't measure "need" they measure demand, which simply mean where the money is going.

The demand people in india have for clean water does'nt show up because those people don't have money, thus their demand is'nt measured.

My major beef though is with the concept of collective need being somewhat seperate and distinct from individual needs. My example of the toilet was just to point out that the line is'nt so clear and collectvie and individual needs blend back and forth all the time.

[Dimentio]

Most economists support at least some social services, so they obviously don't see all wants as equivalent. But anyways, whether want/need X is more important than want/need Y is just an opinion. There is no right or wrong answer.

While most economists do that to some extent, the very science of Economics views all human desires as equivalent, and the decision point in a price system is "who is willing to pay the most".

I am thinking of one scene in a Chevy Chase comedy, where Chevy & family ends up with a broken car in the middle of nowhere. He gets to a mechanic. The mechanic repairs the car, and then Chevy asks for the price.

"How much you have?" the Mechanic replies.

[ComradeMan]

While most economists do that to some extent, the very science of Economics views all human desires as equivalent, and the decision point in a price system is "who is willing to pay the most".

I am thinking of one scene in a Chevy Chase comedy, where Chevy & family ends up with a broken car in the middle of nowhere. He gets to a mechanic. The mechanic repairs the car, and then Chevy asks for the price.

"How much you have?" the Mechanic replies.

I think it's pretty hilarious calling economics a science...:laugh:

[Amphictyonis]

Game theory is usually used by silly capitalists to justify capitalism/self interest or as Smith put it "The Invisible Hand". I tiered of corresponding/debating with capitalists years ago so my gloves are hung up.

[Apoi_Viitor]

Game theory is usually used by silly capitalists to justify capitalism/self interest or as Smith put it "The Invisible Hand". I tiered of corresponding/debating with capitalists years ago so my gloves are hung up.

Adam Smith's writings - particularly his "Invisible Hand" metaphor are incomparable to how laissez-faire economists portray them.

This part below was originally posted by Kotze.


Adam Smith
He can know better the character and situation of the persons whom he trusts, and if he should happen to be deceived, he knows better the laws of the country from which he must seek redress. (...) By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.


Brad DeLong
Adam Smith's purpose here in Book IV, Chapter II is to argue against mercantilism, against the idea that you can make your country wealthier by imposing tariffs and other restrictions on imports. The problem with his argument is that mercantilism is correct (unless you are a very small country), at least in the absence of retailiation.

So Smith, ingeniously, argues that the biases toward home production that mercantilist goals would suggest should be incorporated into economic decision-making are already present in the market because of what modern economists would call political failures and psychological failures. Smith does not argue that the market maximizes wealth because there are no external benefits to home production and merchants are rational. Instead, Smith argues that the market maximizes national wealth because merchants' psychological propensities plus the inability of foreign governments to commit to the rule of law together match the external benefits to others in the national community of merchants' committing their capital at home.

[Skooma Addict]

While most economists do that to some extent, the very science of Economics views all human desires as equivalent, and the decision point in a price system is "who is willing to pay the most".

Economists can't believe that all needs are not equivalent "to some extent," and then also believe that all needs are equivalent. Regardless, the true fact of the matter is that what wants are the most important is just a matter of opinion.

The decision point in the price system is not who is willing to pay the most. It is where supply meets demand. If it were "who is willing to pay the most," Then every commodity would be insanely expensive since there is always going to be one person out there who is willing to pay an extremely high amount for something.

Sometimes companies can practice price discrimination as you pointed out. But most of the time this actually benefits the poor the most.

[Dimentio]

Economists can't believe that all needs are not equivalent "to some extent," and then also believe that all needs are equivalent. Regardless, the true fact of the matter is that what wants are the most important is just a matter of opinion.

The decision point in the price system is not who is willing to pay the most. It is where supply meets demand. If it were "who is willing to pay the most," Then every commodity would be insanely expensive since there is always going to be one person out there who is willing to pay an extremely high amount for something.

Sometimes companies can practice price discrimination as you pointed out. But most of the time this actually benefits the poor the most.

What individual economists themselves think or do with their lives have little relation with the science of economics.

[Skooma Addict]

What individual economists themselves think or do with their lives have little relation with the science of economics.

Agreed. I misread your post.

However, I still deny that economics views all desires as equivalent. According to economics if a person spends their money on good X as opposed to good Y, then good X is considered a more prevalent want.

If you are just talking about comparisons between people, then for the most part economics does not attempt to make any claims on the matter. Saying that person A's want is "equivalent" to person B's want is not compatible with the STV.

[RGacky3]

However, I still deny that economics views all desires as equivalent. According to economics if a person spends their money on good X as opposed to good Y, then good X is considered a more prevalent want.

If you are just talking about comparisons between people, then for the most part economics does not attempt to make any claims on the matter. Saying that person A's want is "equivalent" to person B's want is not compatible with the STV.

Thats the problem, the STV only works really if all people have a similar amount of disposible income.

[Skooma Addict]

Thats the problem, the STV only works really if all people have a similar amount of disposible income.

When I say STV I am referring to the subjective theory of value.

[Rafiq]

This is all rubbish.

[RGacky3]

When I say STV I am referring to the subjective theory of value.

Yes I know.

[Dean]

Adam Smith wasn't one-dimensional. He also felt that completely unrestrained markets would lead to a terrible situation. And he felt that taxes were a "badge of honor."

And, Dimentio never said that all needs were "equal." Just that there is no differentiation between needs/wants - something Skooma doesn't seem to disagree with. So Dimentio's criticism stands.

[Skooma Addict]

And, Dimentio never said that all needs were "equal." Just that there is no differentiation between needs/wants - something Skooma doesn't seem to disagree with. So Dimentio's criticism stands.


I don't understand the criticism then. Given that what needs/wants are most important is subjective, a science should remain neutral on the matter.

[Havet]

Skooma, you haven't actually told what you thought about the video (I think, forgive me if i am mistaken). Do you agree with Nash's ideas, or do you hold that, at all times, the best outcome will come when individuals focus on their self-interest alone?

[Dean]

I don't understand the criticism then. Given that what needs/wants are most important is subjective, a science should remain neutral on the matter.

Its still not about which are most important. Some needs are fundamental to the perpetuation of the working class, which make them very important for capital to maintain an expansive, and therefore cheaper labor force.

Not only are these important to the functioning of human beings, but they also have very real economic consequences in regards to their rate of manifestation.

[Skooma Addict]

Skooma, you haven't actually told what you thought about the video (I think, forgive me if i am mistaken). Do you agree with Nash's ideas, or do you hold that, at all times, the best outcome will come when individuals focus on their self-interest alone?

The video didn't work, but I notice you later posted one that did. I agree with Smith that individuals perusing their self interest leads to a system of economic coordination which ends up benefiting the collective I am not sure if Smith said this would always be the case 100% of the time. I can imagine scenarios where this wouldn't hold.


Its still not about which are most important. Some needs are fundamental to the perpetuation of the working class, which make them very important for capital to maintain an expansive, and therefore cheaper labor force.

Not only are these important to the functioning of human beings, but they also have very real economic consequences in regards to their rate of manifestation.

I don't understand what either of these two sentences mean. My best guess is something like "Some goods are more essential for survival than others."

If that is what you mean, then yes I agree.

[RGacky3]

I don't understand the criticism then. Given that what needs/wants are most important is subjective, a science should remain neutral on the matter.

Yeah, but its subjective based on what? Its not each person has their own value which is thus transfered into market value, what it is is each person has their own value and that is only transfered relative to their wealth.

YOur right everyone has their own value, but the way that value is represented is how much money you have.

Thats why the subjective value of the needs of poor people is'nt represented in the market, what is is the subjective needs of people who have a voice in the market (i.e. those with lots of money).

If a poor man want beans and rice and a rich man want a golden toilet, those 2 needs are totally subjective, so one can say one is more important than the other, but due to the fact that a rich man has more money his need is deemed by the market to be much more important and the poor mans need for beans and rice to be insignificant.

Now if you ask almost any rational person they would say that the need of the poor man is much more important, and much more significant, but the market says the opposite.

[Dean]

I don't understand what either of these two sentences mean. My best guess is something like "Some goods are more essential for survival than others."

If that is what you mean, then yes I agree.

I'm sorry, but I've made myself as clear as possible. It's not rocket science that human beings need food, water, shelter and basic medical care to maintain their bodies to work. And, the human population rate, being tied to this, is also tied to labor supply, and wage rates (as this function of supply and demand). Some of the most extreme capitalist firms, when capital was less mobile, experienced existential crises when the health - and ultimately lives - of the local working class were jeopardized by poor working conditions, compensation and/or low food quality.

Like any issue of consumption, the economic relevance is certainly there.

Its also clear that these same foods are more pertinent to human survival in general than things like cell phones and the like (but we already agree on this point).