Notes on Ball & Dagger reader
Selections from Adam Smith (1776)
The Wealth of Nations
"Private Profit, Public Good"

Lecture notes:

"Private selfishness is natural but not necessarily bad, since it leads to public good"  [It does so in two ways;  only one is given by the reading.  One is the division of labor & specialization;  the other is the incentive to work hard and innovate.]

Political vs. economic realms [This distinction is questionable;  Marx will attack it soon.]  Commonalities:

• contract:  give to get (We give up some rights to government so as to secure a better total package of rights;  we agree to compete economically in order to reap the collective benefits of wealth)
• liberty & a resulting wealth (although of different natures)

Problem:  discomfort with selfishness.  [Recall it's the basis of liberalism's picture of human nature.]

Lockean liberalism:  political selfishness —» contract —» public benefits, clearly benefiting all, even if not precisely equally

Smith:  economic selfishness.  Trade, division of labor yields greater efficiency (and thus a collective benefit).  The contract is that we don't steal from or interfere with each other.

But Smith's idea goes deeper than that (although the reader's short selection doesn't indicate this).  There's a further contract:  keep the system fair.  At root, this means, fundamentally, no monopolies.  So:  why are monopolies bad?

• Not bad because "it isn't fair that the price is so high".  Well, maybe that's a good reason, but you have to say why it isn't fair.  Why is any price fair, after all?
• Not bad because "it takes money from some people and gives it to others", because it's still just a transfer of goods:  you get some product, I get some money.  Maybe I'm richer and you're poorer than otherwise, but why isn't that fair?  You would do the same thing to me if you had a monopoly;  why shouldn't I charge what the market will bear?
• Bad because monopolies deny us the collective benefits of a free market, to wit, the increased wealth that comes when producers are competing with each other by improving their technologies and production system, and consumers are competing with each other to get the best deal possible.

So once again we have a contract where we mutually give up some of our [economic] liberty in order to obtain a greater collective value that each of us expects to benefit from individually.

Potential quiz questions:

• What is Smith's main point?

The University of Minnesota is an equal opportunity educator and employer.
Copyright © 2004-5 Regents of the University of Minnesota. All rights reserved.