At the dawn of capitalism, we meet Adam Smith, and what I find the most interesting of his ideas is that wealth isn’t gold in a vault.
In his view, wealth is, as he said, "the annual produce of the land and labour". To be rich means to possess a lot of money.
However, to be wealthy means to possess a lot of means of production. Your money can eventually be depleted, but production is a continuous process.
And here begins the story of making money, and the story of making money with money. The latter is an interesting point.
Historically, and you can even find it in the Bible and the Quran, in some way, we feel uncomfortable with the practice of making money with money.
That was then. I think that today, nobody in the world of finance has an explicit moral problem with it.
However, let's get back to Smith. You have money, buy a stock. That is all the effort you perform, and afterwards you collect your profits.
You did nothing immoral. Maybe you even did something good for society. By participating, you made large-scale projects possible.
You were even willing to take the risk of losing your money if, for instance, the VOC ship never returned, but you made global trading possible.
Yet Adam Smith was somewhat skeptical as he wrote: “The directors of such companies… being the managers rather of other people’s money than of their own,
it cannot well be expected that they should watch over it with the same anxious vigilance.”
Smith was even more critical of government debt, that is, of bonds issued by the state.
He observed that modern states increasingly financed wars and spending through bonds rather than taxes.
While this made war easier politically, Smith saw it as dangerous. It postponed costs to future generations. Just think of the 800 billion debt of the US to China.
He thought that it could encourage fiscal irresponsibility, like ...let's do it. We put out bonds and thus collect the money for our plans.
It concentrated wealth in the hands of creditors. He wrote that public debt had "enfeebled every state which has adopted it.”
To put it exaggeratedly: Smith might see this as a form of the US is, in fact, financing China with the huge interest payments it is obliged to.
And there we get again at the core of Smith's worries about making money with money. Finance could become a mechanism for living off interest rather than producing value.
If Smith looked at today’s financial system, he would likely ask, for instance: Why are profits increasingly detached from production?
Or he would ask: Why are losses socialized while gains are privatized? Do you recall the banking crisis of 2008, and the huge amount of taxpayer money that was used to save the world of finance?
If Smith were to return to our age, I guess he would wonder. This was not his idea of capitalism: a stock-market civilization, a debt-driven economy, or a system dominated by speculative finance.
He envisioned: production before finance, labor before paper wealth, markets serving society, not ruling it.
This tension between productive capitalism and financial capitalism will be at the heart of our next focus.
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
[13:17] .: Beertje :. (beertje.beaumont): Thank you Herman
[13:17] Max Chatnoir: Yikes! Do we really owe 300 B to China???
[13:18] Particle Physicist Bejiita (bejiita.imako): Smith's vision might have been good but unfortunately the greed came ad ruined it all
[13:18] Max Chatnoir: The US "we"
[13:18] Particle Physicist Bejiita (bejiita.imako): including tax boney bailing out the billionaires
[13:18] Particle Physicist Bejiita (bejiita.imako): tax money
[13:18] herman Bergson: 800 billion, Max
[13:18] Max Chatnoir: Good grief!
[13:19] herman Bergson: and another so many billions to Japan
[13:19] Max Chatnoir: If we're in that much debt, could they just call it in and make us China?
[13:19] herman Bergson: Well,they could sell the bonds and this destroy US economy
[13:20] herman Bergson: But it is more complicated....not that simple
[13:20] Particle Physicist Bejiita (bejiita.imako): well Trump is busy already with doing that so
[13:20] Päivi (nicolesteel): EU has the same capacity to ruin US economy by selling off bonds.
[13:20] Stranger Nightfire: they don't because there is so much interdependence
[13:20] herman Bergson: But China could put some pressure on the US by threatening to sell lots of bonds
[13:20] Stranger Nightfire: when it comes to international finance, it is indeed a very tangled web we have woven
[13:21] herman Bergson: Yes, Stranger,that is what I mean...
[13:21] Particle Physicist Bejiita (bejiita.imako): aah
[13:21] herman Bergson: This web is incredible....
[13:21] herman Bergson: only a few on this planet really understand how it works
[13:22] herman Bergson: Adam Smith would have a heart attack, if he were here now
[13:22] Particle Physicist Bejiita (bejiita.imako): indeed true
[13:22] Particle Physicist Bejiita (bejiita.imako): its a greedy mess, everything
[13:22] Particle Physicist Bejiita (bejiita.imako): at momet
[13:22] Particle Physicist Bejiita (bejiita.imako): not at all his vision i guess
[13:23] Particle Physicist Bejiita (bejiita.imako): corporate CEOS hoarding everything
[13:23] Particle Physicist Bejiita (bejiita.imako): and an insane US president cheering on
[13:23] herman Bergson: Smith saw the dangers of corruption and money hoarding
[13:24] Stranger Nightfire: Similarly i suspect that the US could destory China with a massive cyber attack and they could do the same to the US
[13:24] Stranger Nightfire: but the blowback economically would be self-destructive
[13:24] herman Bergson: I wouldn't be surprised Stranger...
[13:24] bergfrau Apfelbaum: @ Mutual dependencies: that's wonderful.... everyone trusted each other, and it worked... cant it just continue like that? ....with all its ups and downs. just like in a partnership... sigh
[13:25] Particle Physicist Bejiita (bejiita.imako): indeedd Bergie
[13:25] Particle Physicist Bejiita (bejiita.imako): if it was so
[13:25] Particle Physicist Bejiita (bejiita.imako): sadly its not
[13:25] Particle Physicist Bejiita (bejiita.imako): esp at this moment
[13:26] herman Bergson: Well Bergie, do't be too depressed...most of the times the criminals are just a 5% of the totla of people that act honestly and in mutual trust
[13:26] herman Bergson: The problem is that you only need ONE fool to destruct a lot for many
[13:26] herman Bergson: Just look at the White House
[13:27] herman Bergson: America has lost a lot of friends...
[13:27] Particle Physicist Bejiita (bejiita.imako): Exactly, as u said before most people are ok
[13:27] herman Bergson: Europe connects to India, bypassing the US
[13:27] herman Bergson: eyc.
[13:27] herman Bergson: etc
[13:27] Particle Physicist Bejiita (bejiita.imako): but that doesn't help when a few evil oes can cause so much damage
[13:28] Particle Physicist Bejiita (bejiita.imako): like with ICE and also look now at Iran, 1000s dead after the protests
[13:28] Particle Physicist Bejiita (bejiita.imako): :(
[13:28] Particle Physicist Bejiita (bejiita.imako): it feels like evil always win irl and the good forces win only in movies and fairytales :(
[13:29] herman Bergson: No Bejiita...if evill always wins we wouldnt be here
[13:29] Päivi (nicolesteel): the good side always win. It can take some time but it will be so
[13:29] herman Bergson: We win...all the time...
[13:29] bergfrau Apfelbaum: It does not depress me 🌈 i am just annoyed by the kindergarten. right at the top.... directly below God.... I've been on this beautiful Earth for a long time. and there's always been at least one war somewhere in the world
[13:29] herman Bergson: I totally agree with you, Paivi
[13:30] Particle Physicist Bejiita (bejiita.imako): well i hope really something turns
[13:30] herman Bergson: There never has been peace on earth Bergie....
[13:30] Stranger Nightfire: if we are talking about world governments or giant international corporations there simply are no good guys
[13:30] herman Bergson: I mean total peace
[13:31] Stranger Nightfire: We live in a world of villains
[13:31] herman Bergson: weird, isn't it Stranger?
[13:31] Particle Physicist Bejiita (bejiita.imako): OOOOKAY!!
[13:31] Particle Physicist Bejiita (bejiita.imako): it is
[13:31] Particle Physicist Bejiita (bejiita.imako): indeed
[13:31] Particle Physicist Bejiita (bejiita.imako): its 2026, shouldnt be like that
[13:31] Particle Physicist Bejiita (bejiita.imako): i say
[13:32] herman Bergson: I think the biggest evil is SELF-INTEREST.....that is where eventually everyone goes for
[13:32] herman Bergson: and those who don't we call Saints
[13:32] Particle Physicist Bejiita (bejiita.imako): like the Iranian regime, stuck still in the 13th century, murdering anyone daring to oppose and demand freedom
[13:32] Particle Physicist Bejiita (bejiita.imako): regime
[13:32] Particle Physicist Bejiita (bejiita.imako): since 79
[13:32] Particle Physicist Bejiita (bejiita.imako): things like that
[13:33] Particle Physicist Bejiita (bejiita.imako): as said, its 2026
[13:33] herman Bergson: And this self-interest is driven by the insecurity of man..his fear to die....to lose his comfort zone....
[13:34] herman Bergson: We may have a mind, but we are emotionally rather unintelligent....
[13:35] herman Bergson: IQ versus EQ
[13:36] .: Beertje :. (beertje.beaumont): some have no EQ and no IQ
[13:36] bergfrau Apfelbaum: lol die wappler!
[13:36] .: Beertje :. (beertje.beaumont): ツ
[13:36] herman Bergson: right! ㋡
[13:38] .: Beertje :. (beertje.beaumont): i mean some one else:)
[13:38] herman Bergson: You never canmiss, Beertje
[13:38] .: Beertje :. (beertje.beaumont): his name not to be mentioned
[13:39] herman Bergson: Voldomor....
[13:39] .: Beertje :. (beertje.beaumont): smiles...
[13:39] herman Bergson: That was it for today ...
[13:39] bergfrau Apfelbaum: lol @ voldomor
[13:39] herman Bergson: Thank you all again for your participation...
[13:40] .: Beertje :. (beertje.beaumont)Thank you for teaching us
[13:40] herman Bergson: Class dismissed...
[13:40] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:40] bergfrau Apfelbaum: thank you for the interesting time! Herman and class
[13:40] Particle Physicist Bejiita (bejiita.imako): aaa yes
[13:40] herman Bergson: Enjoy your upcoming weekend...and stay healthy
[13:40] Particle Physicist Bejiita (bejiita.imako): ㋡
