Traditional philosophers such as Plato, Aristotle, Aquinas, and Kant discuss issues of right and wrong in economic activity.
They sometimes examine specific business ethics puzzles, including the ethics of the profit motive, just price in trade, usury in lending, and ethics in negotiation.
As we already learned, business has always been a matter of ethics, and now we have arrived at the real birth of capitalism.
The name closely related to this moment in economic thought is Adam Smith (1723 - 1790),
One of the most influential political economists of Western society first became known as a moral philosopher.
He is in economics, well known for his book "An Inquiry into the Nature and Causes of the Wealth of Nations" (1776).
Smith opposes the mercantilist beliefs that money is wealth and that the best economic policy for a country
is the retention within its borders of as much gold and silver as possible.
He argues, rather, that wealth is consumable goods and that the wealthiest country is one that either produces itself or can command from others the greatest quantity of consumable goods.
We already mentioned this issue in a previous lecture, when we discussed the difference between being rich and being wealthy.
What struck me most was that Smith in 1776 could already describe the basics of industrial mass production.
The development of a full-blown economic system requires some people in a society to possess
a supply of either raw materials or manufactured goods greater than is required to fulfill their own immediate needs.
The surplus stocks provide the opportunity for trade among people with various needs.
Where the demand for a certain kind of thing is great enough to assure a producer that his other wants may be supplied in exchange for producing this certain good, he will specialize in its production.
This kind of division of labor will continue, according to Smith, until some laborers are producing a very small part of a manufactured product
because the master finds that a division of labor enables his workers to produce a greater quantity of goods in a shorter time.
Smith’s analysis of the division of labor, while focused on efficiency, would later be critiqued by Marx for its dehumanizing effects in the industrial era.
To be continued next Thursday....
Main Sources:
MacMillan The Encyclopedia of Philosophy, 2nd edition
of Economic Thought (2012)
TABLE OF CONTENT -----------------------------------------------------------------
1 - 100 Philosophers 9 May 2009 Start of
2 - 25+ Women Philosophers 10 May 2009 this blog
3 - 25 Adventures in Thinking 10 May 2009
4 - Modern Theories of Ethics 29 Oct 2009
5 - The Ideal State 24 Febr 2010 / 234
6 - The Mystery of the Brain 3 Sept 2010 / 266
7 - The Utopia of the Free Market 16 Febr 2012 / 383
8. - The Aftermath of Neo-liberalism 5 Sept 2012 / 413
9. - The Art Not to Be an Egoist 6 Nov 2012 / 426
10 - Non-Western Philosophy 29 May 2013 / 477
11 - Why Science is Right 2 Sept 2014 / 534
12 - A Philosopher looks at Atheism 1 Jan 2015 / 557
13 - EVIL, a philosophical investigation 17 Apr 2015 / 580
14 - Existentialism and Free Will 2 Sept 2015 / 586
15 - Spinoza 2 Sept 2016 / 615
16 - The Meaning of Life 13 Febr 2017 / 637
17 - In Search of my Self 6 Sept 2017 / 670
18 - The 20th Century Revisited 3 Apr 2018 / 706
19 - The Pessimist 11 Jan 2020 / 819
20 - The Optimist 9 Febr 2020 / 824
21 - Awakening from a Neoliberal Dream 8 Oct 2020 / 872
22 - A World Full of Patterns 1 Apr 2021 / 912
23 - The Concept of Freedom 8 Jan 2022 / 965
24 - Materialism 7 Sept 2022 / 1011
25 - Historical Materialism 5 Oct 2023 / 1088
26 - The Bonobo and the Atheist 9 Jan 2024 / 1102
27 - Artificial Intelligence 9 Feb 2024 / 1108
28 - Why Am I Here 6 Sept 2024 / 1139
The Discussion
[13:11] herman Bergson: Can you imagine....
[13:11] herman Bergson: A man in 1776 already foresaw the division of labor....mass production....
[13:11] Max Chatnoir: Wow
[13:12] .: Beertje :. (beertje.beaumont): he was his time far ahead
[13:12] herman Bergson: yes...amazing to me....
[13:12] herman Bergson: He also saw that owning the means of production was the way to get wealthy
[13:13] herman Bergson: Also an issue Marx addressed a hundred years later
[13:13] Max Chatnoir: So the question will become, what is a fair share for the laborers?
[13:14] herman Bergson: Well, Max, just look around...large cooperations make huge profits but don't distribute that among their workers who create these profits...all goes to shareholders
[13:15] Max Chatnoir: Yes, shareholders are a third piece of the action.
[13:15] herman Bergson: With their capital, they are the actual owners of the means of production...
[13:16] herman Bergson: and who possesses those controls the money earned by these means...
[13:16] Max Chatnoir: But they don't actually contribute to production.
[13:16] herman Bergson: the workers are just an annoying costs factor...so keep wages as low as possible
[13:17] herman Bergson: No they don't....
[13:17] .: Beertje :. (beertje.beaumont): but without worker, there is no production of goods
[13:17] Max Chatnoir: exactly, so they are a really important piece of the process!
[13:18] herman Bergson: But that is the system...not those who create the profits benefit from it, but those who invest money in the means of production do
[13:18] Particle Physicist Bejiita (bejiita.imako): indeed its we who run the production who are the most important ones
[13:18] herman Bergson: Well, Marx understood that the workers are in fact the core of the business....
[13:18] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:19] .: Beertje :. (beertje.beaumont): shh Bejiita
[13:19] Particle Physicist Bejiita (bejiita.imako): haha
[13:19] herman Bergson: Careful with the cardboard lady....
[13:20] Max Chatnoir: Well, they should be rewarded, too.
[13:20] herman Bergson: The weird thing is that we all seem to accept this system....
[13:20] .: Beertje :. (beertje.beaumont): so if I want more money I have to become a shareholder
[13:20] herman Bergson: The only ones who put up some of a fight are unions...
[13:21] herman Bergson: Oh yes Beertje...if you have inactive money in the bank...buy stock and gather dividends...is risky ...but nevertheless
[13:21] Max Chatnoir: So what's a fair way to distribute the profits?
[13:22] herman Bergson: I'd say that the workers should see it in their wages...get at least 50% of the profits
[13:22] Particle Physicist Bejiita (bejiita.imako): This AI crazy is however, proof that corporates and shareholders/CEOS have no limit when it comes to chasing profit
[13:23] Particle Physicist Bejiita (bejiita.imako): like claiming all hardware for computers for years ahead to their data centers so noone can afford computers anymore
[13:23] herman Bergson: But the CEOs line their pockets with the profitts...earning often 300 times more than the basic worker in the company
[13:23] herman Bergson: Oh yes...was you who talked about RAM, Bejiita
[13:24] Particle Physicist Bejiita (bejiita.imako): but its also part of their greedy plan i thinnk, force u into subscription through dumb termianls/thin clients by making sure this is all we will be able to affor
[13:24] Particle Physicist Bejiita (bejiita.imako): d
[13:24] herman Bergson: My son wanted to buy a RAM extension...was formerly 120 Euro...now 440 euro
[13:24] Particle Physicist Bejiita (bejiita.imako): hire cpu, emoru storage software
[13:24] Particle Physicist Bejiita (bejiita.imako): everything is rented
[13:24] Particle Physicist Bejiita (bejiita.imako): you will own nothing and be happy, is a thing i have heard many timed
[13:25] Particle Physicist Bejiita (bejiita.imako): like guuh
[13:25] Particle Physicist Bejiita (bejiita.imako): no i wont be happy then
[13:25] Particle Physicist Bejiita (bejiita.imako): as ssaid, they have no limit
[13:26] Particle Physicist Bejiita (bejiita.imako): everything for profit
[13:26] herman Bergson: That is called capitalism and the free market....
[13:27] Particle Physicist Bejiita (bejiita.imako): the thing saying that it would somehow balance itself is out the window at the moment now however, its more like a runaway RBMK reactor at this point
[13:27] herman Bergson: Next lecture I'll talk about what made Adam Smith famous....his theory of "The Invisible Hand" that controls economics....
[13:27] Particle Physicist Bejiita (bejiita.imako): financial chernobyl
[13:27] Max Chatnoir: I think it's fine for creators and entrepreneurs and industrialists to make a profit. It's just the distribution that seems unfair.
[13:27] herman Bergson: Watch your language Bejiita lol
[13:27] Particle Physicist Bejiita (bejiita.imako): haha
[13:28] Particle Physicist Bejiita (bejiita.imako): profit is one thing but that only a few should have EVERYTHING
[13:28] Particle Physicist Bejiita (bejiita.imako): and this craving for infinite growth
[13:28] herman Bergson: Yes, I agree Max.... where else do these billionairs come from...?
[13:28] Particle Physicist Bejiita (bejiita.imako): which is btw, impossible but they dont care
[13:29] herman Bergson: One of our current problems is the distribution of wealth and the huge inequality in our societies...
[13:29] Particle Physicist Bejiita (bejiita.imako): yes
[13:29] Even Nightfire (strangereven): I suppose I'm getting a bit ahead of things but the big problem Soviet and Chinese style communism was that while they theoretically may have given ownership of the means of production to the proletariat they in fact left control of the means of production to an authoritarian system of government bureaucrats who simply replaced the capitalists as the dictators
[13:30] .: Beertje :. (beertje.beaumont)Billionaires could do so much more with their money than just take it to themselves
[13:30] herman Bergson: At least that applies to China indeed Even....
[13:31] herman Bergson: It has a kind of mixed capitalist system...
[13:31] herman Bergson: As for Russia...a kind of kleptocracy in my view...at the moment
[13:31] Particle Physicist Bejiita (bejiita.imako): ideed
[13:32] Even Nightfire (strangereven): Something along the lines of worker co-ops where the workers actually make the decisions is what is needed
[13:32] Particle Physicist Bejiita (bejiita.imako): also it seems money is all that matters, imagine all things we could do and create if we just did it without demanding profit for everything
[13:33] Particle Physicist Bejiita (bejiita.imako): one example, I repair aroud and my payment is i get a whole an driveable road without potholes
[13:33] Particle Physicist Bejiita (bejiita.imako): a road
[13:33] Max Chatnoir: But the workers can't totally replace the creators of the production process.
[13:33] herman Bergson: Profits aren't bad by definition...you can use them to invest in the development of your company, for instance
[13:34] Particle Physicist Bejiita (bejiita.imako): That is true and then u can serve your customers better
[13:34] herman Bergson: That is why there is a hierarchy in companies, Max...the engineer earns more than the basic worker for instance
[13:34] Even Nightfire (strangereven): The creators of the production process would be another worker Co-op of engineers
[13:35] Max Chatnoir: And workers may have insights into the process of production that the original factory owners don't have.
[13:35] Even Nightfire (strangereven): Indeed Max
[13:35] Particle Physicist Bejiita (bejiita.imako): the problem is today the customers don't matter anymore it seems, we are just for the CEOs to milk, or like in the AI case like with Micron and Nvidia, they abandon them totally
[13:35] herman Bergson: Some companies reward workers who come up with good ideas to improve the production process
[13:36] Particle Physicist Bejiita (bejiita.imako): as it should be
[13:36] Even Nightfire (strangereven): One thing some clever capitalists did was to offer workers a severance bonus if they came up with a way to eliminate their job
[13:37] Max Chatnoir: If their job isn't essential, then whoever designed the production line needs to rethink it.
[13:38] Max Chatnoir: But the whole thing may need redesign, not just the presence or absence of a single cog in the machine.
[13:39] Even Nightfire (strangereven): You may remember the time when a lot of companies were massively getting rid of middle management positions
[13:40] herman Bergson: Still a popular method....got a family member who lost his job because of that
[13:41] herman Bergson: Time to get ready for the lecture on Thursday :-)
[13:41] Particle Physicist Bejiita (bejiita.imako): hmm well lets continue then
[13:42] herman Bergson: We then will see what a man in 1776 thought about the future of economics....
[13:42] .: Beertje :. (beertje.beaumont): it will be interesting
[13:42] Max Chatnoir: Is this still Adam Smith or somebody else?
[13:42] herman Bergson: I am still amazed that someone more than 300 years ago already could foresee our capitalist world
[13:43] herman Bergson: No, still Adam Smith...a man from Scotland...
[13:43] Even Nightfire (strangereven): Adam Smith was not exactly the guy he's often made out to be
[13:43] herman Bergson: So, thank you all again...
[13:44] herman Bergson: Class dismissed ...
[13:44] .: Beertje :. (beertje.beaumont): thank you Herman
[13:44] Even Nightfire (strangereven): He once said that never do three businessmen meet on a street corridor but they do not plot some scheme to rob the general public
[13:44] Max Chatnoir: Thanks, Herman and the rest of you.
[13:44] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:44] herman Bergson: Oh, nice Even....
[13:44] Even Nightfire (strangereven): Or words to that
[13:44] .: Beertje :. (beertje.beaumont): brb
[13:45] Particle Physicist Bejiita (bejiita.imako): ok
[13:45] YYYYYYAYYYYY whispers: Type 'eeee' to booing action
[13:46] Even Nightfire (strangereven): Smith actually had some rather Keynesian ideas
[13:46] herman Bergson: eeee
[13:46] bergfrau Apfelbaum: sorry! my computer was having problems ....
[13:47] herman Bergson: Well, we'll look into that Even :-)
[13:47] bergfrau Apfelbaum: i hope so ...
[13:47] bergfrau Apfelbaum: yes cards:-)
[13:48] Lukkie Sands: See you on thursday :-)
[13:48] Particle Physicist Bejiita (bejiita.imako): aah
[13:48] Particle Physicist Bejiita (bejiita.imako): cu then Luukie
[13:49] Particle Physicist Bejiita (bejiita.imako): what place?
