Adam Smith

The Wealth of Nations

Questions: 1. How is it possible for each individual to be together if they only pursue their self-interest. 2. What guides the individuals in 3. How the society manage to get tasks necessary for central planning in Self-interest Guides man Its in your interest to pursue what is in the interest of other people He is the only person who knows their capabilities Illustration of the human behavior:

Division of Labor production Human Nature Needs other people out of self-interest Fellow-feeling Limitation: no or not enough knowledge Wealth of Nation (With the division of labor) a. Improvement in the production power of labor b. Separation of trade and industry = specialization c. Advancement of societies Free Market Laissez Faire: Economic environment in which transactions between private parties
are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression.

Laws of the Market: a. Controls priceshigh prices = self-curing disease b. Reduces prices c. Produces demanded goodseconomy itself dictates what is to be produced = competition d. Similar incomes Division of Labor

Invisible hand Industrialization ++ Human Nature Division of labor Wealth of nations Self-Interest Laws of the Market

proportional increase of the productive powers of labor

Consequences of the division of labor: a. Separation of diff trades and employments from one another. (Only in countries with highest degree of industry and improvement b. quantity of work c. Great multiplication of the productions of all the different arts Effects of the division of labor: a. Productive powers of labor b. Greater part of the

Skill Dexterity Judgment

3 Different circumstances: a. Increase of dexterity: Increases the quantity of work he can perform. Reducing one task for one man making it the soul employment of his life. b. Saving of time from passing one sort of work to another c. Invention of machines How do people obtain from one another the greater part of those mutual good offices (gives occasion to the division of labor): treaty Every man may purchase whatever part of the barter produce of other men's talents he has occasioned for. purchase The division of labor is limited by 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 power to exchange all that surplus part of the produce of his own labor, which is over and above his own consumption, for such parts of the produce of other men's labor as he has occasion for. Mediterranean sea: first civilized people

David Ricardo
Principles of Political Economy and Taxation

a. Landlords rent Share of rent is land Land is being rented by the people (landlord gets part of the workers profit) Use of unproductive land

Theory of Comparative Advantage Advantageous for country who has absolute advantage over all products Widens division of labor Each country focus on particular product = benefit Natural Price of labor Needs of a family to survive Market Price of labor Price of labor (actual wage) depending on the law of supply and demand MP > NPhappy worker; wasted surplus (going to vices, etc) MP < NPwretched worker life

b. Capitalists profit Heroes of the economy Uses profit to re-invest wage = profit in economy (less growth) c. Workers wage Addicted to domestic delights of society Vices/ something spent and goes to waste

On Profits Whole value of commodities: a) profits of stock b) wages of labor On Wages Labor a. Natural Price of labor Price necessary to enable the laborers to subsist and to perpetuate their race, without increase or diminution. The power of the laborer to support himself, and the family which may be necessary to keep up the numbers of laborers Quantity of food, necessaries, and conveniences required for the support of the laborers and his family o Progress of society=NP o Improvements in agriculture, discovery of new markets=NP o Progress of wealth and population=NP b. Market Price of labor Price which is really paid for it, from the natural operation of the proportion of the supply to the demand Labor is: a)Dear=scarce b) Cheap=Plentiful MP>NP = worker Power to command a greater proportion of the necessaries and enjoyments of life. wages population = laborers wages fall to their NP MP<NP = worker Poverty deprives them of those comforts which custom renders absolute necessaries privations or demand for labor MP will rise to its NP moderate comforts (gradual and constant) capital = demand of labor workers Capital Part of wealth of a country which is employed in production , and consists of food, clothing, tools, raw materials, machinery, necessary to give effect to labor capital=capital value

First Case NP (dependent on the price of food, clothing, and other necessaries) Stable/ NP NP , NP = Market rate of wages for Capital = Demand of labor ; Work = Workers Population = MP Price of food = Wages Second Case Condition of laborer = Wages w/o Price = Commodities Population = MP Capital = Market wagespermanent if NP Wages (may rise/fall) a. Supply and demand of laborers b. Price of commodities on which the wages of labor are expended Productive powers of labor = fertile lands 2 Population (25 yrs) = 2 Capital (shorter period) Wages because demand for labor Capital > Population, if laborers are not supplied = Price of labor

Karl Marx and Friedrich Engels

Communist Manifesto

Negative view on industrialization and capitalism = child labor and working hours Background of the Communist Manifesto: On Alienation Hegel Man is alienated from nature = we are not ourselves anymore Cognitive: natural sciences = knowledge = one with nature = understanding ourselves Cure for alienation: Understanding nature Ideas influences the material world Men are thinkers Marx Man is alienated because of capitalism Cure for alienation: Communism Men are free creators
I believe that Hegel is wrong in assuming that our alienation will end through a cognitive act. We are not here to interpret the world/ nature. We are here to change it

Alienation ( Capitalism) All labors are forced labors Self-alienation= bringing alienation to self cause by neglect of change/action. Capitalist Society Capitalist > Proteletariat (but if self-alienated) On Dialectics Hegel Dialectics: world of idea Thesiscommon knowledge Antithesis Synthesisidea + idea = deliberations (presence of both elements) new thesis Marx Use dialectics in the material world On Religion Feuerbach Man is alienated because of religion Man was not created Man created religion, God=an idea SuperiorJudges himAll, man is nothingJust a projection Cure for alienation: Accept that we created God Marx Religion is the opiate of the massesmakes people high = accept reality Cure for alienation: Do away with religion To be liberated from religion = man is God Historical Dialectic Materialism Stages in history Exploitation End: Communism a. Primitive Communalism (Hunting and Gathering Stage) Division of labor is natural acc. to sex b. Pastoral Society Master (w/ property) and Slave (w/o property)

Example: Women are superior than men Men are superior than women Dogs are superior than men and women

Private Property: domesticated animals = new class/new way of life

c. Feudal Society Domesticated plants Landlords, vassals, merchant (bourgeoisie) Institution of state to protect property Monogamy d. Capitalism Own capital (burgis) Proletarians e. Imperialism f. Socialism g. Communism Labor a. Use Valuevalue of the products b. Exchange ValueMP + NP being the same Actual wage will be kept to you in order for you to survive c. Surplus Valuediff between use and exchange value Theft if kept by capitalists Communist Manifesto Capitalismalienation Division of labor Competition Profit Laborers Free trade *Industrial Reserve Army Seed of destruction=bourgeoisie + proletarian capitalism Man becomes the appendage of the machine Luddites: opponent of the technological progress Bourgeoisie competition=bankers vs industrialists Capitalism Simplifies class anarchism Imperialism Political, take hold of other countries Overproduction of goods Revolution Develop consciousness of the proletarians Abolish family Overthrow capitalism no more private property = common ownership State is a neutral arbiter created by bourgeoisie role of socialism Dictatorship of the proletariat wither away: coercive power of the state Remove prestigeness of capitalism Socialism from each according to ability, to each according to toil Communism from each according to ability, to each according to his needs

Max Weber
Theory of Social and Economic Organization

Social Action belief in the existence of a legitimate order Social Order Bourgeoisie class has control over the proletarians Value-free social science? Social science is biased, prejudiced, subjective Weber: It is possible Order

Social relationship governed by rules=order belief in legitimate order Legitimate/Valid if people think that the rules/maxims are binding on you Disobedience to order A person who disobeys just not follow the rules and this does not necessarily mean that he believes the order is illegitimate

Different types of legitimate order: a. Convention Legal order applicable to a social group Conformity: voluntary Sanction: Social Disapproval b. Law Legal order applicable to a social group Conformity: involuntary Sanction: Legal Sanctionsfines, imprisonment, death Implemented by a group of men with specialized function of maintaining enforcement of order Guarantees for the existence of the legitimate order a. Self-interest You dont want sanctions Expectations of specific ulterior consequences b. Disinterested motives Affectual/emotional attitudes Rational belief in absolute validity of order as an expression of ultimate values (ex. Nature=reusable bags=environment) Religious influences Types of legitimate authority a. Rational legal authority (Rational grounds) Royalties Power in positionpresident Belief in the legality of patterns of normative rules and the right of those elevated to authority under such rules to issue commands Base of legitimacy: Rational belief in its absolute value Legality: Readiness to conform with rules which are formally correct and have been imposed by accepted procedure qualification, candidacy, campaign, win, oath taking=power b. Traditional (Traditional grounds) Immemorial traditions and legitimacy of the status Loyalty to family Monarchy Fear of magical penalties confirms the general psych inhibitions against any sort of change in customary modes of action Conformity depended on belief in the legitimacy of the prophet Tradition

c. Charismatic (Charismatic grounds) Devotion to the specific and exceptional sanctity, heroism, or exemplary character of an individual person, and of the normative patterns or order revealed or ordained by him Come from actions, appearance trust (obedience) =acceptance to authority bec. of emotional attachment Wealthy, inspirational, influential Affectual attitudes Conflict Oriented intentionally to carrying out the actors will against the resistance of the other party. a. Peaceful conflictwithout physical violence b. Competitiontry to gain control over opportunities and advantages which are also desired by others Rules: Selectionbet individuals for survival without meaningful mutual orientation in terms of conflict 1. Natural Selectionsurvival of inherited characteristics 2. Biological Selectionhappen in a long term 3. Social Selectionwithin lifetime Skills: Strength, wit, flattery, creativity, adaptability Issues: Are all rational legal authorities ethical? Abortion, Lethal Injection Ethical beliefs are guaranteed by religious motives

Emile Durkheim
Division of Labor in Society

Function System of vital movements, without reference to their consequences Relation existing between these movements and corresponding needs of the organism Role of the Division of Labor Necessary condition of development in societies, both intellectual and material development Source of civilization accompanied by economic activities Civilization has no intrinsic and absolute value; what makes it valuable is its correspondence to certain needs It does not go forward without a demand for greater expenditure of energy, man is led to seek certain goods from civilization. Morality Compels us to follow a determinate path to a definite end Science presents a moral character and is nothing else than conscience carried out to its highest point of clarity Everything that has certain nobility and value Everything that is an object of elevated aspirations Friendships/Relationships We like those who resemble us We feel kindly towards those who do not resemble us Heraclitus: Contrariety is expedient, and that the best agreement arises from things differing, and that all things come int o being in the way of the principle of antagonism Difference, as likeness, can be a cause of mutual attraction Bain: There is a type of difference which repels, another which attracts, one which leads to rivalry, another to friendship. We seek in our friends the qualities we lack One plays a role conformable to his character, where theres is a true exchange of services The image of the one who completes us becomes inseparable from ours, not only because its frequently associated with ours, but particularly because it is the natural complement of it Division of Labor Creates feeling of solidarity