.ipynb_checkpoints/econ-105-lecture-notes-checkpoint.ipynb

{
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    "# <font color=\"880000\"> Smith, Marx, Keynes </font>\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
  {
   "cell_type": "markdown",
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    "&nbsp;\n",
    "\n",
    "## <font color=\"880000\">  0. Introduction </font>\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
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   "cell_type": "markdown",
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    "&nbsp;\n",
    "\n",
    "## <font color=\"880000\">  1. Adam Smith </font>\n",
    "\n",
    "Sociologists assert that Adam Smith is one of a number of important thinkers between Niccolo Machiavelli around 1500 and Max Weber around 1900 who discovered \"society\". Historians vehemently deny that this is the case—say that things are more complicated, and that to claim that before 1500-1900 people did not understand that \"society\" was a thing is to make a false and misleading and oversimplified claim. The historians are right. But. There is a sense in which the sociologists are right too. So take the sentence \"Adam Smith is one of a number of important thinkers between Niccolo Machiavelli around 1500 and Max Weber around 1900 who discovered 'society', and ask: what could that mean that is true?\n",
    "\n",
    "A good place to start is with the highest eagle-eye view possible of the human economy over the past 70000 years: numbers of human beings, and the average level of prosperity at which they lived:\n",
    "\n",
    "<a class=\"asset-img-link\"  href=\"https://delong.typepad.com/.a/6a00e551f0800388340240a498c6ba200c-popup\" onclick=\"window.open( this.href, '_blank',   \n",
    "  'width=640,height=480,scrollbars=no,resizable=no,toolbar=no,directories=no,location=no,menubar=no,status=no,left=0,top=0' ); return false\">\n",
    "    <img class=\"asset  asset-image at-xid-6a00e551f0800388340240a498c6ba200c img-responsive\" style=\"width: 500px; display: block; margin-left: auto; margin-\n",
    "      right: auto;\" alt=\"Longest-Run_Growth__2019_\" title=\"Longest-Run_Growth__2019_\" src=\"https://delong.typepad.com/.a/6a00e551f0800388340240a498c6ba200c-1024wi\" \n",
    "      />\n",
    "</a>\n",
    ">> ###### _Source_: <https://www.icloud.com/numbers/0jaPx8AjooD2TDbNM4Og3Z2ow>\n",
    "\n",
    "From the year -3000 to the year 1500 we guess that average human living standards were roughly constant at perhaps what modern-day developoment economists would call 2.5 dollars a day—not quite extreme poverty, but close. We guess that average worker productivity levels roughly constant at about 1800 dollars a year. And we guess that over those 4500 years the human population grew from roughly 15 to 500 million. Why did popuation grow? Because human ingenuity generated better ideas about how to manipulate nature and organize production: we can make heroic assumptions and try to value the stock of useful human ideas about economic production, and if we do we can build an index $ H $ that rises nearly sixfold from the year -3000 to the year 1500. Why didn't average living standards and productiviy levels increase? Because increasing populations generated greater resource scarcity: smaller average farm sizes and less pasture per herder eroded all the potential gains from better ideas. So over the 4.5 millennia from -3000 to 1500 human population grew at an average rate of 0.08% per year, or 2% in a typical generation.\n",
    "\n",
    "70000 years ago—when the descendants of those who had been _anatomically_ modern humans became _behaviorally_ modern humans—there were fewer than 100,000 of _us_ on the globe, perhaps many fewer than 100,000, perhaps shortly before (meaning a few thousands of years before) there had been only 1000 breeding pairs that have given nearly all of us nearly all of our genes. As a result, there is today more genetic diversity in a typical fifty-animal baboon troop than in the entire human race: we are all more closely one another's cousins than is the average baboon with his or her troopmates. Becoming behaviorally modern, however, gave _us_ a large edge. Over the subsequent 20000 years we spread out within our common motherland of Africa. And starting perhaps 50000 years ago we launched ourselves across the Red Sea from the Horn of Africa to Yemen, and began to spread out over the entire world. By 10000 years ago we could be found nearly everywhere there was land that wasn't Antarctica.\n",
    "\n",
    "By that moment—10000 years ago—there were perhaps 2.5 million of _us_ on the globe. We were all then, still, as we had been since our dawn, gatherer-hunters. We had proven successful in a Darwinian sense: we had expanded into many more—indeed, into nearly all—land environments, and in so doing we had multiplied our populations at least 25-fold. But that is a very slow rate of average population growth: only 0.005% per year or 0.125% per generation during the long 60000 years of the behaviorally-modern gatherer-hunter epoch. \n",
    "\n",
    "How ferocious was mortality to keep population growth so low? A pre-industrial nutritionally-unstressed human population with access to the technologies of settlement—building walls, roofs, and chimneys and weaving and sewing clothes—will roughly double in population every two generations. That is what the British settlers in America did in the generations after they hit the coast from Georgia to Maine. But human gatherer-hunter populations grew at an average rate of increase a rate of increase of 0.25% every two generations: two generations saw not twice as many people as its parent generation, but rather only a quarter of a percent more—one extra person for each 400. The rest had been carried off by the high mortality of the gatherer-hunter age.\n",
    "\n",
    "Gatherer-hunter nutritional standards were adequate and diets were varied in large part because population densities were low and foraging territories relatively large. Population densities were low because mortality was ferocious. You got to watch your friends die, your spouse die, your comrades die, worst of all a large fraction of your children die, and then you died at a relatively young age.  \n",
    "\n",
    "By 10000 years ago we knew a lot more—about how to make tools, manipulate and cooperate with nature—and organize our societies to make our livelihoods, survive, and reproduce—than we had known 70000 years ago. Each band, after all, had to know about its own climate, geography, and ecology. We were able to build up our knowledge because our precious possession of _language_ made us an anthology intelligence: what one of us knew or learned, pretty soon all who came within earshot or within earshot of someone who had once been within earshot knew. Our propensity to gossip about everything and anything is very strong, and odds are it provided a very powerful evolutionary edge. If we make truly heroic assumptions in order to construct a quantitative index of the effectiveness of our knowledge, we might guess that humans 10000 years ago collectively knew five times as much about nature, technology, and organization than their predecessors 70000 years ago had collectively known.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "#### <font color=\"000088\"> 2.1.2. Living Standards </font>\n",
    "\n",
    "Even though we knew more, we did not live better. We guess that modern development economists would rate our average standard of living back in the gatherer-hunter era as the equivalent of about 3.5 dollars a day—an average economic productivity for the half of the population adult and working of something like 7 dollars a day, or 2500 dollars a year. That is not extreme poverty by today's standards: the United Nations counts extreme poverty as a living standard of less than 2 a day, and if you drop below that it becomes difficult to think about much other than how important it is to get more food and how tired even minor exertions make you.\n",
    "\n",
    "Poor did not mean malnourished. Biomedically, our hunter-gatherer ancestors appear to have been about as healthy as we in the modern world are through early middle age—if they survived to early middle age, that is. Life expectancy at birth was twenty-five on a generous estimate. The average adult height of mesolithic—i.e., the period that ended 10,000 years ago—hunter-gatherers appears to have been about 5’8” for men and 5’5” for women, perhaps a hair less than average adult height in the rich postindustrial economies today. Our gatherer-hunter ancestors were, plausibly, better-nourished than we are today: even in the richest countries today diets are tilted toward high-caloric density carbohydrates—rice, wheat, corn, and potatoes—relative to nutritional requirements.\n",
    "\n",
    "Thus as a gatherer-hunter you lived a well-nourished, physically-strenuous life that kept you fit. Life was also at least moderately interesting, in terms of the day-to-day cognitive puzzles that you had to solve. Gatherer-hunters avoided the mind-numbing boredom of doing the same thing over and over again to the next row of the same crop what Karl Marx called the “idiocy of rural life”, or the next item to come down the assembly line, or the next set of symbols to be copied into the next spreasheet row.\n",
    "\n",
    "But even though life was not that of boring routinized repetitive labor, it was not what we would call comfortable: you spent a not-small part of your life hungry, cold (or too hot), or wet.\n",
    "\n",
    "Why is it that people knew more yet lived no better 10000 years ago than 70000?\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "#### <font color=\"000088\"> 2.1.3. A Malthusian Age </font>\n",
    "\n",
    "To understand why the gatherer-hunter age from 70000 to 10000 years ago was one in which standards of living and productivity stagnated and in which population grew slowly, you need to keep three things in the front of your mind:\n",
    "\n",
    "1. that the drive to make love is one of the very strongest of all human drives,\n",
    "2. that the rate of technological and organizatonal progress from 70000 to 10000 yearw ago was, by our standards, glacial\n",
    "3. that even small gatherer-hunter population densities put pressure on resources—and worker productivity falls when resources become less abundant.\n",
    "\n",
    "Before the coming of abundant and relatively reliable means of artificial birth control at the end of the nineteenth century, making love is followed almost invariably if not immediately by children—over a lifetime, lots of children. And once humans have children that they survive and flourish becomes the most important thing for almost every parent for two reasons:\n",
    "\n",
    "The first reason is that you love them almost as much as and in some cases more than yourself. Recall Hektor’s prayer for his son Astyanax (a prayer that Hera and Athene worked very hard to make certain that Zeus did not grant):\n",
    "\n",
    ">Zeus, grant that this my child may be, like me, first among the Trojans. Let him be not less excellent in strength. Let him rule Ilius with his might. And may the people say of him as he comes home from battle: “He is far better than his father!”...\n",
    "\n",
    "The second reason is that if you survive into your old age you will need someone to take care of you, and the only people likely to be willing to take care of you are your descendants. With infant and child mortality rates of 50% and life expectancies of less than thirty years, lots of pregnancies is the only way to be reasonably sure that you will have a still-living child when you go blind and toothless.\n",
    "\n",
    "Thus human populations—back before widespread female literacy enlarged the options open to women, back before the fall in infant mortality created the expectation that your children would survive to grow up, back before widespread artificial birth control allowed women to have the number of children they wanted and not more—tended to grow until something stopped them.\n",
    "\n",
    "A number of things can stop fertility. Perhaps celibacy and abstention from reproduction is thought of as pleasing to God. Perhaps a prospective father-in-law might tell a prospective son-in-law that marriage will be delayed until he establishes a higher status, and makes that stick. But most often and to the greatest extent that “something” is poverty: women become too skinny to reliably ovulate, and populations become to weak to harvest food in strenuous ways. As Thomas Robert Malthus was the first to see, a population subject to slow growth in technology and organization will tend to have its population grow and average productivity and living standards decline until restrained fertility and perhaps elevated mortality are just so on average that the population grows on average at the rate warranted by the growth of the stock of useful ideas. Improvements in technology and organization then lead to larger human populations, and not to higher standards of living and productivity levels, on average.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "### <font color=\"000088\"> 2.2. The Agrarian Age: 10000 to 500 Years Ago </font>\n",
    "\n",
    "#### <font color=\"008800\"> 2.2.1. The Neolithic Revolution and Its Consequences </font>\n",
    "\n",
    "Then, about 10000 years ago, comes an innovation miracle: the domestication of animals and the selective breeding of crops, and so the start of herding and of farming—the so-called Neolithic Revolution. Agriculture and herding quickly—in a couple of a thousand years—spread far. By the year -6000 farming and herding are nearly omnipresent in Eurasia and Africa, and the human population has nearly tripled, to perhaps 7 million.\n",
    "\n",
    "Farming and herding are much more productive per unit of land than gathering and hunting. And the first few generations to adopt these technologies and social organizations experience a true bonanza. And yet when the dust settled—in the year -6000 or so—the more numerous agrarian-age humanity appeared poorer than humanity had been in the gatherer-hunter era: figure a standard of living that would be reckoned by today's development economists as roughly 2.5 rather than 3.5 dollars a day, and an average worker productivty level of not 2400 but 1800 dollars a year.\n",
    "\n",
    "Why did these better nature-manipulation and social-organization technologies produce a poorer humanity? Somewhat paradoxically, because farm life and herding life is easier and less strenuous. Mortality is thus lower. And so, at the same living standard, population grows faster. In order to keep population growth to the rate warranted by the pace of idea invention and innovation, living standards need to fall. And the population boom from -8000 to -6000 that nearly tripled human numbers put enough scarcity pressure on natural resources to accomplish this.\n",
    "\n",
    "A reasonable view of what we think of as “material well-being” classifies basic human needs and desires as sixfold: \n",
    "\n",
    "* to watch your grandchildren (or your great-nieces and nephews or your protégés) grow up, \n",
    "* to have enough food that you are not too hungry, \n",
    "* to have enough clothing that you are not too cold, \n",
    "* to have enough shelter that you are not too wet, \n",
    "* to have enough conceptual puzzles and diversions that you are not too bored, and \n",
    "* to have enough status that you can spitefully gloat (at least in private) as you incite the envy of others. \n",
    "\n",
    "By those yardsticks, the mass of humanity in the agrarian age was worse off than in the gather-hunter age. Relative status—is, alas!, conserved: you cannot generate it from some without taking it away from others, and so there we are stuck at an equal average level no matter what the society. The upper classes in the agrarian age may well have lived better, and increasingly better, than their gatherer-hunter age predecessors. (Indeed, it is not clear what one would mean by \"upper class\" in a gatherer-hunter society.) But -6000 to 1500 saw no greater life expectancy than -8000. Infant and adult mortality in agrarian societies is no lower than in hunter-gatherer ones. Mortality may well be higher for adults, because plagues and famines like dense human populations. Bacteria do not care (much) if their rapid growth kills their hosts as long as that happens only after they have found a new host to jump to. Denser populations terribly vulnerable to famine, either through blight or through weather—too hot or too cold, too wet or too dry—adverse to the growth of whatever the staple happens to be.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "#### <font color=\"008800\"> 2.2.2. Agrarian-Age Quality of Life </font>\n",
    "\n",
    "Dense, agarian populations become giant culture dishes for endemic debilitating diseases or periodic epidemic mortal plagues. And so population growth ceases. Generation-to-generation the population jumped up and down as the spread of agricultural techniques produced an edge in food and more children survive, as plagues and wars devastated provinces, and as bounceback takes place in the aftermath of plagues and famines that  left provinces depopulated, but the survivors with large and fertile farms—which induced rapid population growth, which pushed living standards back down to 2.5 dollars a day.\n",
    "\n",
    "An agricultural cereal-heavy diet does not contain enough iron to avoid anemia. It does not contain enough calcium to avoid tooth loss and bone weakness. Rome’s legions were paid in bread and a little salt—that’s what “salary” means. Add to this whatever meat they could find and whatever greens and seasonings they could gather, and you had the diet of the legionaries, collectively at least the most powerful group of men of their age. They wear highly-skilled practitioners of violence. They were mean. They were also short. And they were, by what we would regard as early middle age, largely toothless.\n",
    "\n",
    "Have we mentioned endemic hookworm, tapeworm, and other parasites yet? Or that agricultural and commercial labor likely involves heavy lifting-and-carrying labor that damages your spine? Or that the relatively high population densities create greater vulnerability to infectious diseases that debilitate even when they do not kill?\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "#### <font color=\"008800\"> 2.2.3. Another Malthusian Age </font>\n",
    "\n",
    "Up to 1500, and even later, agricultural and commercial societies people were short. Average adult male heights of 5’3” (and adult female heights averaging 5’0” or less) appear to have been the rule for humanity once we started to farm. This indicates extraordinary malnutrition by our standards. Were we today to feed our children a diet to produce such adult heights, Alameda County Child and Protective Services would take our children away. Like the gatherer-hunter age, the agrarian age was a Malthusian age: growth in population, but not sustained permanent growth in productivity levels (outside the upper classes) or living standards, as the benefits of technological and organizational progress were offset by the pressure of population on resources.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "#### <font color=\"008800\"> 2.2.4. Why Then the Transition to Agriculture? </font>\n",
    "\n",
    "Comparing the lifestyle of hunter-gatherers ten-thousand to that of illiterate peasant farmers five-hundred years ago raises an obvious question: why would people ever become farmers? Jared Diamond claims that we should—even in the United States, even today—envy our gatherer-hunter ancestors. I don’t buy this: I do not, or at least I think we should not, envy them. (He does not either: Full Professors of Physiology at UCLA and of Economics at U.C. Berkeley have chosen a life far, far removed from that of our ancestors.) But there is an important kernel here: almost all of our agricultural and commercial-era ancestors between -8000 and 1500 and even later did have good reason to envy our common pre-industrial ancestors. We understand why the transition from hunting and gathering to pre-industrial agriculture is good for those at the top of the pyramid. But why do those not at the top of the socioeconomic pyramid go along?\n",
    "\n",
    "Most important, is that the first generation to farm—or to adopt any of the many subsequent agricultural productivity-multiplying innovations—does live the life of Riley, off the fat of the land. If you can figure out how to do it, it is good for you and your children and your chldren’s children to farm. But a well-fed and well-nourished population multiplies. So farming population densities explode far beyond hunter-gatherer densities.\n",
    "\n",
    "Some human populations did not pursue the agricultural road. Some settled into a halfway role as nomadic or transhumant herders following their flocks on land that was, for the time and given the available biotechnology, marginal for settled agriculture. Some remained hunter-gatherers for a while. But, eventually, somebody nearby had become farmers. And the population density of the farmers grew. Hunter-gatherers rarely exceed population densities of one per square mile. Farmers on land that is good for their particular version of agricultural technology can easily support many more than a thousand in the same space. The old “forty acres and a mule” for a family of six translates into a population density of roughly 100 per square mile. When those nearby who had become farmers decided that they wanted the hunter-gatherers’ or the herdsmen’s land, they took it: numbers of 100-to-1 or 1000-to-1 are not easy to argue with. \n",
    "\n",
    "The upshot is that—unless you were part of the rich, literate upper classes—per capita standards of living were not that much higher in 1500 as they had been back in 8000 BC. Population, however, was much greater: 500 million people in 1500, compared to 2.5 million or so back in -8000: a 50-fold multiplication in 9500 years.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "#### <font color=\"008800\"> 2.2.5. The Pace of Agrarian-Age Progress </font>\n",
    "\n",
    " Contrast that with the gatherer-hunter era average rate of population growth of 0.005% per year, or 0.125% per generation. Technological and organizational progress was thus more than ten times as fast in the agrarian age. Why?\n",
    "\n",
    "A Scottish moral philosopher...\n",
    "\n",
    "Dealing with the post-Medieval world...\n",
    "\n",
    "    Duby: The Three Orders...\n",
    "    \n",
    "    Braudel: The Structures of Everyday Life and The Wheels of Commerce...\n",
    "    \n",
    "    Gibbon: \n",
    "    \n",
    "    But all of a sudden society had begun changing—had become \"modern\"...\n",
    "    \n",
    "Thinking about \"modernity\" and society...\n",
    "\n",
    "A game-changing insight into how economies worked...\n",
    "\n",
    "Adam Smith is not just another moral philosopher working within the tradition of moral philosophy. Adam Smith wants to do much more. Adam Smith wants to change the game. And Adam Smith succeeds...\n",
    "\n",
    "Creating the science of economics...\n",
    "\n",
    "How about poverty and inequality?\n",
    "\n",
    "Smith cares deeply about poverty...\n",
    "\n",
    ">The real recompense of labour... the necessaries and conveniences of life which it can procure to the labourer, has, during the course of the present century, increased.... Grain has become somewhat cheaper... other things from which the industrious poor derive an agreeable and wholesome variety of food have become a great deal cheaper. Potatoes, for example, do not at present, through the greater part of the kingdom, cost half the price which they used to do thirty or forty years ago. The same thing may be said of turnips, carrots, cabbages; things which were formerly never raised but by the spade, but which are now commonly raised by the plough. All sort of garden stuff, too.... The great improvements in the coarser manufactures of both linen and woollen cloth furnish the labourers with cheaper and better clothing; and those in the manufactures of the coarser metals, with cheaper and better instruments of trade, as well as with many agreeable and convenient pieces of household furniture.... The common complaint that luxury extends itself even to the lowest ranks of the people, and that the labouring poor will not now be contented with the same food, clothing, and lodging which satisfied them in former times, may convince us that it is not the money price of labour only, but its real recompense, which has augmented.... Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers, and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged...\n",
    "\n",
    "Inequality? A stoic-cynic-snarky response:\n",
    "\n",
    "**Snarky**: That the wealth of the rich does not produce human flourishing...\n",
    "\n",
    "**Cynical**: Humans are made to be sheered, because they are sheep...\n",
    "\n",
    "**Stoic**: It is well that nature imposes on us in this way...\n",
    "\n",
    "If inequality is of great concern in his heart-of-hearts, he hides it well in his public literary face...\n",
    "\n",
    "Associate Professor of Social Studies Michael Donnelly's fault. He knew I was trying to write an undergradute thesis about the British Classical Economists and how they understood the economy of their time. He gave me a book by Keith Tribe, Land, Labour, and Economic Discourse. And Tribe had read and been hypnotized by Foucault--specifically The Order of Things and _The Archaeology of Knowledge. I began to read Keith Tribe. He said very strange things. He said that the Wealth of Nations that economists read was not the Wealth of Nations that Adam Smith wrote. The Wealth of Nations that economists read was made up of two books: Book I on markets and Book II on capital. The Wealth of Nations that Adam Smith wrote was made up of five books: Book I on the \"system of natural liberty,\" Book II on accumulation and the profits of stock, Book III on the economic history of Europe and why the empirical history of its economic development had diverged from its natural history, Book IV on the mercantile and physiocratic systems of political economy, and Book V on the proper management of the affairs of the public household by the statesman.\n",
    "\n",
    "The Wealth of Nations, Tribe said, could not be a book of economics because a book of economics had to be about the economy. And there was no such thing as the economy in 1776 for a book of economics to be about. What was there? There was the undifferentiated stuff of the mixed social-cultural-political-trading system that governed production and distribution: material life. There was the study of the management of public finances. This was conceived in a manner analogous to the domestic-economic management of household finances. Just as--to Robert Filmer and others--the King was the father of the people, so the King's household--which became the state--had to be properly and prudently managed.\n",
    "\n",
    "In the words of James Steuart, who wrote his Principles of Political Oeconomy nine years before the Wealth of Nations, in 1767: \"Oeconomy, in general, is the art of providing for all the wants of a family, with prudence and frugality. What oeconomy is in a family, political oeconomy is in a state.\" It is managing affairs to make the people prosperous and the tax collections ample by governing \"in such a manner as naturally to create the reciprocal relations and dependencies between [inhabitants], so as to make their several interests lead them to supply one another with their reciprocal wants.\"\n",
    "\n",
    "There wasn't, Tribe argued, an economy that an economist could write a book of economics about until the 1820s or so.\n",
    "\n",
    "Strip Tribe's (and Foucault's) arguments of their rhetoric of apparent contradiction and you can understand that within the mystical shell there is a rational kernel. It is--or, at least, I read them as--an injunction to analyze a school of thought in more-or-less the following way:\n",
    "\n",
    "Read not just one or two important books, but a whole bunch of books that talk to our past each other and use the same or similar vocabulary in order to identify the school you will look at.\n",
    "Strip your mind of what they must be talking about, and look with fresh eyes on what they are talking about.\n",
    "Examine what rhetorical, conceptual, and intellectual moves are common within the examples you have of this \"discursive formation.\"\n",
    "Think hard about what rhetorical, conceptual, and intellectual moves you would think you would find in these books--but don't.\n",
    "Think hard about what rhetorical, conceptual, and intellectual moves you do not expect to find prominently in these books--but that you nevertheless do find.\n",
    "Present to the world, in as clear and straightforward a way as you can, what this particular form of discourse was--what it thought the world was like, what it saw as important, what its particular blindnesses were, what its particular sharp points of insight were.\n",
    "Do not, ever, grade a discursive formation of the past by how much it falls away from the ideas of the bien-pensant of today. The past is another country.\n",
    "And I became convinced that Tribe and Foucault were right. It was, indeed, only with Ricardo that the operation of what we now say is the economy--the production, exchange, and distribution of goods and services all mediated through market exchange--was seen as something that was important enough, or separate enough, or coherent enough to be something that it made sense to write books about, and, indeed, something that it made sense to be an expert in. David Ricardo was a political economist. Adam Smith was a moral philosopher. To try--as somebody like Joseph Schumpeter was--to grade Adam Smith as if he were engaged in the same intellectual project as Schumpeter was somewhat absurd.\n",
    "\n",
    "Tribe applied this methodology to Adam Smith, his predecessors, contemporaries, and successors. What they were doing, before Ricardo, was Political Oeconomy--writing manuals of tactics and policy as advice to statesmen, although manuals restricted to what Adam Smith would have called (did call) a subclass of police: how to keep public order and create public prosperity. Hence for Adam Smith Book V of Wealth of Nations is the payoff: it tells British statesmen what they ought to do in order to make the nation prosperous, their tax coffers full, and thus the state well-funded. Book IV is a necessary prequel to Book V: it tells the statesmen in the audience why the advice that they are being given by others in other books of Political Oeconomy--by Mercantilists and Physiocrats. Book III is another necessary prequel: it teaches statesmen about the economic history of Europe and how political oeconomy of various kinds has been practiced in the past.\n",
    "\n",
    "But Tribe's (and Foucault's) methodology collapses when we work back to Books II and I of the Wealth of Nations. For Adam Smith is not the prisoner of the discursive formation of Political Oeconomy. He is not the simple bearer of currents of thought and ideas that he recombines as other authors do in more-or-less standard and repeated ways. Adam Smith is a genius. He is the prophet and the master of a new discipline. He is the founder of economics.\n",
    "\n",
    "Adam Smith is the founder of economics because he has a great and extraordinary insight: that the competitive market system is a remarkably powerful social calculating and organizing mechanism, and that the sophisticated division of labor to which a competitive market system backed up by secure and honest enforcement of property rights give rise is the key to the wealth of nations. Some others before had had this insight in part: Richard Cantillon writing of how once you have specified demands the market does by itself all the heavy lifting that a central planner would need to do; Bernard de Mandeville that dextrous management by a statesman can use the power of private greed to produce the benefit of public utility. But it is Smith who sees what the power of the \"system of natural liberty\" that is the market could be--and who follows the argument through to the conclusion that it forever upsets and overturns the previous intellectual moves made in and conclusions reached by the discursive formation of Political Oeconomy.\n",
    "\n",
    "And once I had worked my way through to this conclusion, I could start to write my own thesis. I had broken the thralldom. Foucault's ideas of \"discourse\" and \"archaeology\" were not my masters, but my tools. And as I wrote it became very clear to me that between David Ricardo and even the later John Stuart Mill the discursive formation that was Classical Economics did not produce anybody like Adam Smith. There was nobody who made the intellectual leap--produced the epistemological break--that Smith had done that shattered Political Oeconomy and enabled the birth of Classical Economics. I could write my thesis about how the British Classical Economists never understood the Industrial Revolution that they were living through.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "**What Is Human Nature? Two Views from Adam Smith**: Two models of human nature in one book.\n",
    "\n",
    "In Books I and II of the Wealth of Nations, Adam Smith lays out how the economy works. People seek material comfort and are naturally sociable--have a predisposition to \"truck, barter, and exchange.\" From this derives market exchange, the division of labor, specialization, high productivity, accumulation and investment, higher productivity, comfort, and material wealth. This process driven by human nature, Smith says, starts in the countryside with the expansion of productivity in making the necessities of life, moves to the towns with the subsequent expansion of productivity in making the conveniences of life and then shows itself at last with the development of long-distance international trade in luxuries. That, at least, is the \"natural\" history of the economy.\n",
    "\n",
    "But in Book III things change. Humans are no longer naturally sociable beings with a propensity to trade seeking material comfort. Instead, they are creatures of \"rapine and violence,\" desperate for \"power and protection,\" vain and seeking luxury, unwilling to take pains to pay attention to smalls savings and small gains, loving to domineer, mortified at even the thought of having to persuade his inferiors.\n",
    "\n",
    "This is a different \"Adam Smith problem\" than is usually posed. And, I think, it is in many ways more interesting than the standard Adam Smith problem:\n",
    "\n",
    "Adam Smith, from Book III of the Wealth of Nations:\n",
    "\n",
    ">According to the natural course of things... capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and last of all to foreign commerce.... But though this natural order of things must have taken place... it has, in all the modern states of Europe, been, in many respects, entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures, or such as were fit for distant sale; and manufactures and foreign commerce together have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order....\n",
    "\n",
    ">When the German and Scythian nations overran the western provinces of the Roman empire, the confusions which followed so great a revolution lasted for several centuries. The rapine and violence which the barbarians exercised against the ancient inhabitants interrupted the commerce between the towns and the country. The towns were deserted, and the country was left uncultivated, and the western provinces of Europe, which had enjoyed a considerable degree of opulence under the Roman empire, sunk into the lowest state of poverty and barbarism.... [T]he chiefs and principal leaders of those nations acquired or usurped to themselves the greater part of the lands of those countries....\n",
    "\n",
    ">This original engrossing of uncultivated lands... might have been but a transitory evil.... [But] primogeniture hindered them from being divided by succession: the introduction of entails prevented their being broke into small parcels by alienation. When land... is considered as the means only of subsistence and enjoyment, the natural law of succession divides it... among all the children... equally dear to the father.... But when land was considered as the means, not of subsistence merely, but of power and protection, it was thought better that it should descend undivided to one.... The security of a landed estate... the protection which its owner could afford to those who dwelt on it, depended upon its greatness. To divide it was to ruin it.... The law of primogeniture, therefore, came... in the succession of landed estates, for the same reason that it has generally taken place in that of monarchies....\n",
    "\n",
    ">In the present state of Europe, the proprietor of a single acre of land is as perfectly secure of his possession as the proprietor of a hundred thousand. The right of primogeniture, however, still continues to be respected, and... is still likely to endure for many centuries.... Entails are the natural consequences of the law of primogeniture. They were introduced to... hinder any part of the original estate from being carried out of the proposed line either by gift, or devise, or alienation; either by the folly, or by... misfortune.... Great tracts of uncultivated land were, in this manner, not only engrossed by particular families, but the possibility of their being divided again was as much as possible precluded for ever.\n",
    "\n",
    ">It seldom happens... that a great proprietor is a great improver. In the disorderly times which gave birth to those barbarous institutions... [h]e had no leisure to attend to the cultivation and improvement of land. When the establishment of law and order afforded him this leisure, he often wanted the inclination, and almost always the requisite abilities.... To improve land with profit, like all other commercial projects, requires an exact attention to small savings and small gains, of which a man born to a great fortune, even though naturally frugal, is very seldom capable.... The elegance of his dress, of his equipage, of his house, and household furniture, are objects which from his infancy he has been accustomed to have some anxiety about.... There still remain in both parts of the United Kingdom some great estates which have continued without interruption in the hands of the same family since the times of feudal anarchy. Compare the present condition of those estates with the possessions of the small proprietors in their neighbourhood, and you will require no other argument to convince you how unfavourable such extensive property is to improvement....\n",
    "\n",
    ">If little improvement was to be expected from such great proprietors, still less was to be hoped for from those who occupied the land under them. In the ancient state of Europe, the occupiers of land were... all or almost all slaves.... Whatever they acquired was acquired to their master, and he could take it from them at pleasure.... This species of slavery still subsists in Russia, Poland, Hungary, Bohemia, Moravia, and other parts of Germany. It is only in the western and south-western provinces of Europe that it has gradually been abolished altogether. But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen.... A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only, and not by any interest of his own....\n",
    "\n",
    ">The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freemen. The planting of sugar and tobacco can afford the expence of slave-cultivation. The raising of corn, it seems, in the present times, cannot. In the English colonies, of which the principal produce is corn, the far greater part of the work is done by freemen.... In our sugar colonies, on the contrary, the whole work is done by slaves, and in our tobacco colonies a very great part of it.... Both can afford the expence of slave-cultivation, but sugar can afford it still better than tobacco. The number of negroes accordingly is much greater, in proportion to that of whites, in our sugar than in our tobacco colonies...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">[...]\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">In some parts of Lancashire, it is pretended, I have been told, that bread of oatmeal is a heartier food for labouring people than wheaten bread, and I have frequently heard the same doctrine held in Scotland. I am, however, somewhat doubtful of the truth of it. The common people in Scotland, who are fed with oatmeal, are in general neither so strong nor so handsome as the same rank of people in England, who are fed with wheaten bread. They neither work so well, nor look so well; and as there is not the same difference between the people of fashion in the two countries, experience would seem to shew, that the food of the common people in Scotland is not so suitable to the human constitution as that of their neighbours of the same rank in England. But it seems to be otherwise with potatoes. The chairmen, porters, and coal-heavers in London, and those unfortunate women who live by prostitution, the strongest men and the most beautiful women perhaps in the British dominions, are said to be, the greater part of them, from the lowest rank of people in Ireland, who are generally fed with this root. No food can afford a more decisive proof of its nourishing quality, or of its being peculiarly suitable to the health of the human constitution...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">[...]\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog.... When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilised society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons....\n",
    "\n",
    ">Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love....\n",
    "\n",
    ">It is this same trucking disposition which originally gives occasion to the division of labour. In a tribe of hunters or shepherds a particular person makes bows and arrows, for example, with more readiness and dexterity than any other. He frequently exchanges them for cattle or for venison with his companions; and he finds at last that he can in this manner get more cattle and venison than if he himself went to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business, and he becomes a sort of armourer. Another excels in making the frames and covers of their little huts or movable houses. He is accustomed to be of use in this way to his neighbours, who reward him in the same manner with cattle and with venison, till at last he finds it his interest to dedicate himself entirely to this employment, and to become a sort of house-carpenter.... [T]he certainty of being able to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he may have occasion for, encourages every man to apply himself to a particular occupation, and to cultivate and bring to perfection whatever talent or genius he may possess for that particular species of business.\n",
    "\n",
    ">The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men... is not upon many occasions so much the cause as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education... and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance. But without the disposition to truck, barter, and exchange, every man must have procured to himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do, and there could have been no such difference of employment as could alone give occasion to any great difference of talents.... By nature a philosopher is not in genius and disposition half so different from a street porter, as a mastiff is from a greyhound, or a greyhound from a spaniel, or this last from a shepherd's dog....\n",
    "\n",
    ">Among men... the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men's talents he has occasion for...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">[...]\n",
    "\n",
    ">Adam Smith: Smith: Wealth of Nations, Book I, Chapter 8: The liberal reward of labour, as it encourages the propagation, so it increases the industry of the common people.... A plentiful subsistence increases the bodily strength of the labourer, and the comfortable hope of bettering his condition, and of ending his days perhaps in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low; in England, for example, than in Scotland; in the neighbourhood of great towns, than in remote country places. Some workmen, indeed, when they can earn in four days what will maintain them through the week, will be idle the other three. This, however, is by no means the case with the greater part.\n",
    "\n",
    ">Workmen, on the contrary, when they are liberally paid by the piece, are very apt to over-work themselves, and to ruin their health and constitution in a few years. A carpenter in London, and in some other places, is not supposed to last in his utmost vigour above eight years. Something of the same kind happens in many other trades, in which the workmen are paid by the piece; as they generally are in manufactures, and even in country labour, wherever wages are higher than ordinary. Almost every class of artificers is subject to some peculiar infirmity occasioned by excessive application to their peculiar species of work. Ramuzzini, an eminent Italian physician, has written a particular book concerning such diseases....\n",
    "\n",
    ">If masters would always listen to the dictates of reason and humanity, they have frequently occasion rather to moderate, than to animate the application of many of their workmen. It will be found, I believe, in every sort of trade, that the man who works so moderately, as to be able to work constantly, not only preserves his health the longest,\n",
    "\n",
    ">In cheap years, it is pretended, workmen are generally more idle, and in dear ones more industrious than ordinary. A plentiful subsistence, therefore, it has been concluded, relaxes, and a scanty one quickens their industry. That a little more plenty than ordinary may render some workmen idle, cannot well be doubted; but that it should have this effect upon the greater part, or that men in general should work better when they are ill fed than when they are well fed, when they are disheartened than when they are in good spirits, when they are frequently sick than when they are generally in good health, seems not very probable. Years of dearth, it is to be observed, are generally among the common people years of sickness and mortality, which cannot fail to diminish the produce of their industry.\n",
    "\n",
    ">In years of plenty, servants frequently leave their masters, and trust their subsistence to what they can make by their own industry. But the same cheapness of provisions, by increasing the fund which is destined for the maintenance of servants, encourages masters, farmers especially, to employ a greater number. Farmers upon such occasions expect more profit from their corn by maintaining a few more labouring servants, than by selling it at a low price in the market. The demand for servants increases, while the number of those who offer to supply that demand diminishes. The price of labour, therefore, frequently rises in cheap years.\n",
    "\n",
    ">In years of scarcity, the difficulty and uncertainty of subsistence make all such people eager to return to service. But the high price of provisions, by diminishing the funds destined for the maintenance of servants, disposes masters rather to diminish than to increase the number of those they have. In dear years too, poor independent workmen frequently consume the little stocks with which they had used to supply themselves with the materials of their work, and are obliged to become journeymen for subsistence. More people want employment than can easily get it; many are willing to take it upon lower terms than ordinary, and the wages of both servants and journeymen frequently sink in dear years.\n",
    "\n",
    ">Masters of all sorts, therefore, frequently make better bargains with their servants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, commend the former as more favourable to industry. Landlords and farmers, besides, two of the largest classes of masters, have another reason for being pleased with dear years. The rents of the one and the profits of the other depend very much upon the price of provisions. Nothing can be more absurd, however, than to imagine that men in general should work less when they work for themselves, than when they work for other people. A poor independent workman will generally be more industrious than even a journeyman who works by the piece. The one enjoys the whole produce of his own industry; the other shares it with his master. The one, in his separate independent state, is less liable to the temptations of bad company, which in large manufactories so frequently ruin the morals of the other. The superiority of the independent workman over those servants who are hired by the month or by the year, and whose wages and maintenance are the same whether they do much or do little, is likely to be still greater. Cheap years tend to increase the proportion of independent workmen to journeymen and servants of all kinds, and dear years to diminish it...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">**Division of Labor**: Observe the accommodation of the most common artificer or day-labourer in a civilized and thriving country, and you will perceive that the number of people... employed in procuring him this accommodation, exceeds all computation. The woollen coat... is the produce of the joint labour of... [t]he shepherd, the sorter of the wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others....\n",
    "\n",
    ">How many merchants and carriers, besides, must have been employed in transporting the materials from some of those workmen to others who often live in a very distant part of the country! how much commerce and navigation in particular, how many ship-builders, sailors, sail-makers, rope-makers, must have been employed in order to bring together the different drugs made use of by the dyer, which often come from the remotest corners of the world! What a variety of labour too is necessary in order to produce the tools of the meanest of those workmen! To say nothing of such complicated machines as the ship of the sailor, the mill of the fuller, or even the loom of the weaver.... The miner, the builder of the furnace for smelting the ore, the feller of the timber, the burner of the charcoal to be made use of in the smelting-house, the brick-maker, the brick-layer, the workmen who attend the furnace, the mill-wright, the forger, the smith, must all of them join their different arts in order to produce them....\n",
    "\n",
    ">This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature... to truck, barter, and exchange one thing for another.\n",
    "\n",
    ">Whether this propensity be one of those original principles in human nature... it belongs not to our present subject to enquire. It is common to all men, and to be found in no other race of animals.... Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog....\n",
    "\n",
    ">When an animal wants to obtain something either of a man or of another animal, it has no other means of persuasion but to gain the favour of those whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours by a thousand attractions to engage the attention of its master who is at dinner, when it wants to be fed by him. Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will.\n",
    "\n",
    ">He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons.... [M]an has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love... it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">**Extent of the Market**: As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by... the extent of the market. When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce... for such parts of the produce of other men's labour as he has occasion for.\n",
    "\n",
    ">There are some sorts of industry... which can be carried on no where but in a great town.... In the lone houses and very small villages which are scattered about in so desert a country as the Highlands of Scotland, every farmer must be butcher, baker and brewer for his own family. In such situations we can scarce expect to find even a smith, a carpenter, or a mason, within less than twenty miles of another of the same trade. The scattered families that live at eight or ten miles distance from the nearest of them, must learn to perform themselves a great number of little pieces of work, for which, in more populous countries, they would call in the assistanc.... A country carpenter... is not only a carpenter, but a joiner, a cabinet maker, and even a carver in wood, as well as a wheelwright, a ploughwright, a cart and waggon maker.... It is impossible there should be such a trade as even that of a nailer in the remote and inland parts of the Highlands of Scotland....\n",
    "\n",
    ">As by means of water-carriage a more extensive market is opened to every sort of industry than what land-carriage alone can afford it, so it is upon the sea-coast, and along the banks of navigable rivers, that industry of every kind naturally begins to subdivide and improve itself...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">When we consider the condition of the great, in those delusive colours in which the imagination is apt to paint it. it seems to be almost the abstract idea of a perfect and happy state. It is the very state which, in all our waking dreams and idle reveries, we had sketched out to ourselves as the final object of all our desires. We feel, therefore, a peculiar sympathy with the satisfaction of those who are in it. We favour all their inclinations, and forward all their wishes. What pity, we think, that any thing should spoil and corrupt so agreeable a situation! We could even wish them immortal; and it seems hard to us, that death should at last put an end to such perfect enjoyment. It is cruel, we think, in Nature to compel them from their exalted stations to that humble, but hospitable home, which she has provided for all her children.\n",
    "\n",
    ">\"Great King, live for ever!\" is the compliment, which, after the manner of eastern adulation, we should readily make them, if experience did not teach us its absurdity. Every calamity that befals them, every injury that is done them, excites in the breast of the spectator ten times more compassion and resentment than he would have felt, had the same things happened to other men…. To disturb, or to put an end to such perfect enjoyment, seems to be the most atrocious of all injuries. The traitor who conspires against the life of his monarch, is thought a greater monster than any other murderer. All the innocent blood that was shed in the civil wars, provoked less indignation than the death of Charles I.\n",
    "\n",
    ">A stranger to human nature, who saw the indifference of men about the misery of their inferiors, and the regret and indignation which they feel for the misfortunes and sufferings of those above them, would be apt to imagine, that pain must be more agonizing, and the convulsions of death more terrible to persons of higher rank, than to those of meaner stations.\n",
    "\n",
    ">Upon this disposition of mankind, to go along with all the passions of the rich and the powerful, is founded the distinction of ranks, and the order of society. Our obsequiousness to our superiors more frequently arises from our admiration for the advantages of their situation, than from any private expectations of benefit from their good-will…. Neither is our deference to their inclinations founded chiefly, or altogether, upon a regard to the utility of such submission, and to the order of society, which is best supported by it. Even when the order of society seems to require that we should oppose them, we can hardly bring ourselves to do it.\n",
    "\n",
    ">That kings are the servants of the people, to be obeyed, resisted, deposed, or punished, as the public conveniency may require, is the doctrine of reason and philosophy; but it is not the doctrine of Nature. Nature would teach us to submit to them for their own sake, to tremble and bow down before their exalted station, to regard their smile as a reward sufficient to compensate any services, and to dread their displeasure, though no other evil were to follow from it, as the severest of all mortifications. To treat them in any respect as men, to reason and dispute with them upon ordinary occasions, requires such resolution, that there are few men whose magnanimity can support them in it, unless they are likewise assisted by familiarity and acquaintance…\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">Observe the accommodation of the most common artificer or day-labourer in a civilized and thriving country, and you will perceive that the number of people of whose industry a part, though but a small part, has been employed in procuring him this accommodation, exceeds all computation. The woollen coat, for example, which covers the day-labourer, as coarse and rough as it may appear, is the produce of the joint labour of a great multitude of workmen. The shepherd, the sorter of the wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their different arts in order to complete even this homely production.\n",
    "\n",
    ">How many merchants and carriers, besides, must have been employed in transporting the materials from some of those workmen to others who often live in a very distant part of the country! how much commerce and navigation in particular, how many ship-builders, sailors, sail-makers, rope-makers, must have been employed in order to bring together the different drugs made use of by the dyer, which often come from the remotest corners of the world! What a variety of labour too is necessary in order to produce the tools of the meanest of those workmen! To say nothing of such complicated machines as the ship of the sailor, the mill of the fuller, or even the loom of the weaver, let us consider only what a variety of labour is requisite in order to form that very simple machine, the shears with which the shepherd clips the wool. The miner, the builder of the furnace for smelting the ore, the feller of the timber, the burner of the charcoal to be made use of in the smelting-house, the brick-maker, the brick-layer, the workmen who attend the furnace, the mill-wright, the forger, the smith, must all of them join their different arts in order to produce them….\n",
    "\n",
    ">If we examine, I say, all these things, and consider what a variety of labour is employed about each of them, we shall be sensible that without the assistance and co-operation of many thousands, the very meanest person in a civilized country could not be provided, even according to what we very falsely imagine, the easy and simple manner in which he is commonly accommodated…\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were perhaps very much alike, and neither their parents nor playfellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance.\n",
    "\n",
    ">But without the disposition to truck, barter, and exchange, every man must have procured to himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do, and there could have been no such difference of employment as could alone give occasion to any great difference of talents. As it is this disposition which forms that difference of talents, so remarkable among men of different professions, so it is this same disposition which renders that difference useful.\n",
    "\n",
    ">Many tribes of animals acknowledged to be all of the same species derive from nature a much more remarkable distinction of genius, than what, antecedent to custom and education, appears to take place among men. By nature a philosopher is not in genius and disposition half so different from a street porter, as a mastiff is from a greyhound, or a greyhound from a spaniel, or this last from a shepherd's dog. Those different tribes of animals, however, though all of the same species, are of scarce any use to one another.\n",
    "\n",
    ">The strength of the mastiff is not, in the least, supported either by the swiftness of the greyhound, or by the sagacity of the spaniel, or by the docility of the shepherd's dog. The effects of those different geniuses and talents, for want of the power or disposition to barter and exchange, cannot be brought into a common stock, and do not in the least contribute to the better accommodation ind conveniency of the species. Each animal is still obliged to support and defend itself, separately and independently, and derives no sort of advantage from that variety of talents with which nature has distinguished its fellows. Among men, on the contrary, the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men's talents he has occasion for.\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
  {
   "cell_type": "markdown",
   "metadata": {},
   "source": [
    "&nbsp;\n",
    "\n",
    "Kieran Healy:\n",
    "\n",
    ">Kieran Healy writes:\n",
    "\n",
    ">Teaching Adam Smith: Sources of Sociological Theory.... After a crash course on the state of Europe and America prior to 1780 or so (100% guaranteed to make historians come out in at least hives, and possibly trigger fits), we've started reading Adam Smith. It's always a pleasure to teach Smith as a social theorist. For one thing, he's a clear enough writer (certainly compared to, e.g., Weber) and more importantly his central insight about the possibility of decentralized co-ordination always catches students by surprise. Even though students are all exposed one way or another to the rhetoric of free enterprise, free trade, market capitalism and what have you, in my experience even talented undergraduates have to work a bit to really see the power and elegance of Smith' vision of a complex, co-ordinated division of labor. I do a few classroom exercises (based on ideas from Mitch Resnick and Tom Schelling, amongst others) to bring out the problem of co-ordination, the many ways it can fail, and the distinctive qualities of markets as a solution. (Though, as Schelling notes, not all cases of distributed co-ordination are markets, just as not all ellipses are circles.) Although Smith is often presented as the champion of the individual, and opposed to thinkers who emphasize social structure or the state, it's immediately clear when you read him that Smith was as much a \"discoverer of society\"--that is, of the idea that the social world is a human product consisting of myriad interlocking relationships dependent on specific institutions and human capacities--as any of the other theorists typically recognized as founders of modern sociology. His treatment of the problem of the division of labor also provides a platform to understand the others. Marx is much easier to understand once you know a bit about Smith, of course, but so are Durkheim's ideas about social solidarity and the nonrational foundations of contractual exchange. And much of Weber's work on the origins of capitalism was conceived explicitly with Smith in mind...\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
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    "&nbsp;\n",
    "\n",
    "David Hume to Adam Smith:\n",
    "\n",
    ">From DAVID HUME   \n",
    ">Lisle Street, Leicester Fields   \n",
    ">April 12, 1759\n",
    "\n",
    ">Dear Smith,\n",
    "\n",
    ">I give you thanks for the agreeable present of your Theory [of Moral Sentiments]. Wedderburn and I made presents of our copie to such of our acquaintance as we thought good judges, and proper to spread the reputation of the book. I sent one to the Duke of Argyle, to Lord Lyttleton, Horace Walpole, Soames Jennyns, and Burke, an Irish gentleman, who wrote lately a very pretty treatise on the sublime. Millar desired my permission to send one in your name to Dr. Warburton.\n",
    "\n",
    ">I have delayed writing to you until I could tell you something of the success of the book, and could prognosticate with some probability whether it should be finally damned to oblivion, or should be registered in the temple of immortality. Tough it has been published only a few weeks, I think there appear already such strong symptoms, that I can almost venture to fortell its fate. It is, in short, this--\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">But I have been interrupted in my letter by a foolish impertinent visit of one who has lately come from Scotland. He tells me, that the Univerity of Glasgow intend to declare Rouet's office vacant upon his going abraod with Lord Hope. I question not but you will have our friend, Ferguson, in your eye, in case another project for procuring him a place in the University of Edinburgh should fail. Ferguson has very much polished and improved his treatise on refinement, and with some amendments it will make an admirable book, and discovers an elegant and singular genius.\n",
    "\n",
    ">The Epigoniad, I hope, will do; but it is sometimes uphill work. As I doubt not but you consult the reviews sometimes at present, you will see in the Critical Review a letter upon that poem; and I desire you to employ your conjectures n finding out the author. Let me see a sample of your skill in knowing hands by your guessing at the person.\n",
    "\n",
    ">I am afraid of Lord Kames's Law Tracts. A man might as well think of making a fine sauce by a mixture of wormwood and aloes as an agreeable composition by joining metaphysics and Scotch law. However the book, I believe, has merit; though few people will take the pains of dividng into it.\n",
    "\n",
    ">But to return to your book, and its success in this town, I must tell you--\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">A plague of interruptions! I ordered myself to be denied; and yet here is one that has broken in upon me again. He is a man of letters, and we have had a good deal of literary conversation. You told me that you were curious of literary anecdotes, and therefoare I shall inform you of a few that have come to my knowledge.\n",
    "\n",
    ">I believe I have mentioned to you already Helvetius's book De l'Esprit. It is worth your reading not for it philosophy, whic I do not highly value, but for its agreeable compostion. I had a letter from him a few days ago, wherein he tells me that my name was much oftener in the manuscript, but that the censor of books at Paris obliged him to strike it out.\n",
    "\n",
    ">Voltaire has lately published a small work called Candide, ou l'Optimisme. It is full of sprightliness and impiety, and is indeed a satire upon Providence, under the pretext of criticizing the Leibnizian system. I shall give you a detail of it--\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">\"But what is all this to my book?\" say you--\n",
    "\n",
    "&nbsp;\n",
    "\n",
    ">My Dear Mr. Smith, have patience: compose yourself to tranquillity: show yourself a philosopher in practice as well as profession: think on the emptiness and rashness and futility of the common judgments of men: how little they are regulated by reason in any subject, much more in philosophical subjects, which so far exceed the comprehension of the vulgar.\n",
    "\n",
    ">_Non si quid improba Roma, elevet, accedas examenque improbum in illa, perpendas trutina, nec te quaesiveris extra._[1] A wise man's kingdom is his own breast: or, if he ever looks farther, it will only be to the judgment of a select few, who are free from prejudices, and capable of examining his work. Nothing indeed can be a stronger presumption of falsehood than the approbation of the multitude; and Phocion, you know, always suspected himself of some blunder when he was attended with the applauses of the populace.\n",
    "\n",
    ">Supposing, therefore, that you have duly prepared yourself for the worst by all these reflections; I proceed to tell you the melancholy news, that your book has been very unfortunate: for the public seem disposed to applaud it extremely.\n",
    "\n",
    ">It was looked for by the foolish people with some impatience; and the mob of literati are beginning already to be very loud in its praises. Three bishops called yesterday at Millar's shop in order to buy copies, and to ask questions about the author. The Bishop of Peterborough said he had passed the evening in a company where he heard it extolled above all books in the world.\n",
    "\n",
    ">You may conclude what opinion true philosopher will entertain of it, when these retainers to superstition praise it so highly.\n",
    "\n",
    ">The Duke of Argyle is more decisive than he uses to be in its favour: I suppose he either considers it as an exotic, or thinks the author will be serviceable to him in the Glasgow elections. Lord Lyttleton says that Robertson and Smith and Bower are the glories of English literature. Oswald protets he does not know whether he has reaped more instruction or entertainment from it: but you may easily judge what reliance can be put on his judgment, who has been engaged all his life in public business and who never sees any faults in his freinds.\n",
    "\n",
    ">Millar exults and brags that two-thirds of the edition is already sold, and that he is now sure of success. You see what a son of the earth that is, to value books only by the profit they bring him. In that view, I believe it may prove a very good book.\n",
    "\n",
    ">Charles Townsend, who passes for the cleverest fellow in England, is so taken with the performance that he said to Oswald he would put the Duke of Buccleugh under the author's care, and would endeavor to make it worth his while to accept of that charge. As soon as I heard this, I called on him twice with a view of talking with him about the matter, and of convincing him of the propriety of sending that young nobleman to Glasgow: for I could not hope tht he could offer you any terms which would tempt you to renounce your professorship: but I missed him. Mr. Townsend passes for being a little uncertain in his resolutions: so perhaps you need not build much on this sally.\n",
    "\n",
    ">In recompense for so many mortifying things, which nothing but truth could have extorted from me, and which I could easily have multiplied to a greater number; I doubt not but you are so good a Christian as to return good for evil and to flatter my vanity; by telling me that all the godly in Scotland abuse me for my account of John Knox and the Reformation, etc.\n",
    "\n",
    ">I suppose you are glad to see my paper end, and that I am obliged to conclude with\n",
    "\n",
    ">Your humble servant,\n",
    "\n",
    ">David Hume\n",
    "\n",
    ">[1]\"If foolish Rome underweighs anything, neither go up and correct the false tongue in the balance, nor seek anyone besides yourself.\" Persius, _Satirarum Liber_\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "Adam Smith on the Death of David Hume\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
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    "&nbsp;\n",
    "\n",
    "## <font color=\"880000\">  2. Karl Marx </font>\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
  {
   "cell_type": "markdown",
   "metadata": {},
   "source": [
    "&nbsp;\n",
    "\n",
    "## <font color=\"880000\"> 3. John Maynard Keynes </font>\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
  {
   "cell_type": "markdown",
   "metadata": {},
   "source": [
    "&nbsp;\n",
    "\n",
    "## <font color=\"880000\"> 4. Conclusion </font>\n",
    "\n",
    "&nbsp;\n",
    "\n",
    "----"
   ]
  },
  {
   "cell_type": "markdown",
   "metadata": {},
   "source": [
    "&nbsp;\n",
    "\n",
    "## <font color=\"880000\"> Lecture Notes: History of Economic Thought: Econ 105 </font>\n",
    "\n",
    "<img src=\"https://tinyurl.com/20190119a-delong\" width=\"300\" style=\"float:right\" />\n",
    "\n",
    "### <font color=\"000088\">Catch Our Breath—Further Notes:</font>\n",
    "\n",
    "<br clear=\"all\" />\n",
    "\n",
    "----\n",
    "\n",
    "* weblog support <https://github.com/braddelong/long-form-drafts/blob/master/econ-105-lecture-notes.ipynb>\n",
    "* nbViewer <https://nbviewer.jupyter.org/github/braddelong/long-form-drafts/blob/master/econ-105-lecture-notes.ipynb>\n",
    "* datahub <http://datahub.berkeley.edu/user-redirect/interact?account=braddelong&repo=long-form-drafts&branch=master&path=econ-105-lecture-notes.ipynb>\n",
    "\n",
    "&nbsp;\n",
    "\n"
   ]
  }
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