Monday, December 17, 2012

'Socialist' Adam Smith on owners v. labor

Rosenberg's latest post is worth reading in full; I'll just copy two quotes he gives from the father of economics Adam Smith regarding the "masters" and "workmen" of the world, because his observations still hold true. The first one relates to collective bargaining, without which individual workers are always at a disadvantage to their employers:

A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

And here's a second one... so apropos the present-day USA!

Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.

Remarks Rosenberg:

This is why economics used to be called "political economy", because the great classical economists never lost sight of the fact that economics was a thoroughly political activity, not something outside of the life of a political community.

Politics -- not economics -- is why our "masters" of business are not only beating our "workmen" in the state-by-state battle against right-to-work laws and a higher minimum wage; it's also why they are able to win expensive federal and local tax breaks, not to mention direct financial incentives -- and meanwhile, nobody bothers to do a cost-benefit analysis, even ex post facto.

But we sure can see the effects on workers' wages over the past 30 years, despite their ever-rising productivity, there's no denying it.


By Paul Rosenberg
December 15, 2012 | Aljazeera

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