Adam Smith (1723-1790)

Adam Smith (1723-1790) WWW. Rostow, Theorists of Economic Growth from David Hume to the Present. With a Perspective on the Next Century, New York, Oxford, Oxford University Press, 1990[sublinierile ne aparţin]

Generalitati Hume si Smith 1 LUMEA, INTRE BINE [normal] SI RAU [anormal] • First, the problem of good and evil. Clearly, Hume and Smith viewed man as capable of “sin and error, ÎN FUNCŢIE DE CONDUITE • translated into avarice and greed ... Rostow, 18

Generalitati Hume si Smith 2 ORDINEA (normalitatea) ESTE ASIGURATĂ PRIN: • [the] man’s need for social approval and sense of kinship with others a tempering force defined as “sympathy” • the sanctity of property ...” ROLUL STATULUI • “... they did not rely wholly on sympathy to hold avarice within civilized bounds. Nor, except over a narrow range—notably, in guaranteeing the sanctity of property - did they rely on THE STATE ROLUL PIEŢEI (competiţiei libere) • They viewed open competition as the most effective reconciling force. Rostow, 18

Generalitati Hume si Smith 3 JUSTITIA SOCIALA – condiţia normalităţii [a liberei competiţii] INTERNĂ ŞI GLOBAL • “Second, they were deeply concerned with the moral problems posed by simultaneous existence of abject poverty and unearned affluence—again a concern deeply rooted in the Christian tradition. As Hont and Ignatieff have reminded us: “the central commitment of Hume and Smith was to justice” • They saw affluence as the friend of civil liberty and, on balance, a civilizing agent over a wide front. ... • Finally, both Hume and Smith were enemies of the barbarities of mercantilism abroad as well as at home. • Finally, both Hume and Smith were enemies of the barbarities of mercantilism abroad as well as at home.” Rostow, 18

Smith – premise 1- Ordinea naturală • “Like his older friend David Hume, Adam Smith spent his professional life formulating and articulating the natural laws governing people in society [vezi mai departe].” • ROLUL AUTORITĂŢII PUBLICE: “the system of natural liberty, the sovereign has only three duties : • first, the duty of protecting the society • the duty of protecting, as far as possible, every member of the society from the injustice or oppression • thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual ...”Smith in Rostow Rostow, 33, 48

Smith – premisele motivaţionale ale economiei – MÂNA INVIZIBILĂ • Smith, like Hume, recognizes that humans may be stirred to increased economic effort by the attraction of consumers goods ... • the willingness of humans to pursue these illusory satisfactions was an essential element in the workings of “an invisible hand” • “Give me that which I want, and you shall have this which you want …”(Smith, Wealth of Nations, 14-15) Rostow, 34, 47

Smith - premisele motivaţionale ale economiei MÂNA INVIZIBILĂ – SELF LOVE [interesul] “We address ourselves not to their humanity but to their self-love” – Smith în Rostow Rostow, 47

Corpul social al “iniţierii” creşterii economice – comercianţii ACEŞTIA AU FUNCŢIA DE RELEU SOCIAL ŞI SUNT DEPOZITARII ATITUDINILOR DE ECONOMISIRE [îndeplineau în sec. XVIII parţial funcţia a ceea ce azi numim “clasă de mijloc”] “«Merchants are commonly ambitious of becoming country gentlemen, and when they do, they are generally the best of all improvers. A merchant is accustomed – p.48 to employ his money chiefly in profitable projects; whereas a mere country gentleman is accustomed to employ it chiefly in expence.” – Smith in Rostow Rostow, 47

“Ecuaţia creşterii economice” 1 • (R) Hume:„In Hume’s version of the basic growth equation, capital formation (saving-investment) appears virtually as a by-product of the expansion of trade and the plowback [capital reinvestit] of the creative but miserly merchant’s profits ...” • Smith: “In Smith, labor, land, and capital are unambiguously the three factors of production; but the system is driven forward, as in Hume, by the savings of the frugal, who are assumed to invest all savings, without leakage [CONDUITE – etica].” Rostow, 35

“Ecuaţia creşterii economice” 2 DIVIZIUNEA MUNCII - componente “the division of labor increases productivity, Smith identifies three forces: the worker’s increase in dexterity; the saving of the worker’s time as he concentrates on a single task rather than moves from one task to another; and “the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many. … Rostow, 35

“Ecuaţia creşterii economice” 3 CA SISTEM AUTOMAT – self-reinforcing growth “Smith’s self-reinforcing growth process—in which increased capital investment permits the expansion of the market which, in turn, generates increased profits and further investment—does not proceed indefinitely. A limit is set by a nation’s “soil and climate, and its situation with respect to other countries” as well as by its “laws and institutions.” This statement would appear to imply diminishing returns to agriculture and to efforts to expand markets by geographic extension.” Rostow, 35

“Ecuaţia creşterii economice” 4 – teoria investiţiilor [teoria ciclului pozitiv al creşterii, a “creşterii cumulative prin economisire-investiţii”] 1. All savings are [must be] invested; the motive for savings is profit, taking account of risk; savings will rise with the level of income. 2. Enlarged investment is the basis for growth because it is required for (a) enlarging the market; (b) equipping labor to perform increasingly specialized functions; and (c) increasing wages above subsistence necessary to induce the population increase, which will increase effective demand and the scale of the market while also generating the labor necessary to supply the needs of the expanded market. Because savings-investment rises with the increase in income, a cumulative process is set in motion by an initial rise in the investment rate. ... Rostow, 39

“Ecuaţia creşterii economice” 4 – teoria investiţiilor (II) 3. The rate of profit will decline as capital accumulates, income rises, and an economy approaches its “full complement of riches”; but the potentialities for increases in productivity are greater in manufactures than in the primary production sectors.92 [Wealth of Nations, p.242] “It is the natural effect of improvement . . . to diminish gradually the real price of almost all manufactures.” Investment will continue so long as the profit rate (including the risk premium) exceeds the minimum rate necessary to induce men to save.” Rostow, 39

Pe marginea productivităţii INCREMENTAL GROWTH Productivity increases mainly via an incremental refinement of old, familiar technologies to exploit the potentialities of widened markets and specialization rather than via the successive introduction of major innovations creating new industries or radically altering methods of production in old industries. Rostow, 35

SALARIUL ŞI PIAŢA 1 FACTORI ESENŢIAL AI DEZVOLTĂRII • 1. Population size is determined by the availability of means of subsistence. • 2. The rate of change of population is determined by the difference between the market and the subsistence wage rate. If the difference is positive, population will increase; negative, decrease; equal, population will be constant. • 3. The market wage rate is a function of the rate of increase in the demand for labor, which, in turn, depends on the rate of increase in the capital stock that determines the pace at which the market widens, specializationof function proceeds, and the national wealth increases. • 4. A period of rapid increase in capital formation and growth could thus, via high money wages relative to the subsistence wage, set in motion (through early marriages and falling infant mortality) a rise in population and the working force that would, in time, tend to bring down the market wage rate.” Rostow, 35

SALARIUL ŞI PIAŢA 2 – BOGĂŢIA NAŢIONALĂ CEEA CE CONTEAZĂ NU ESTE MĂREŢIA BOGĂŢIILOR CI CREŞTEREA CONSTANTĂ A ACESTORA LA NIVEL NAŢIONAL. EXPRESIA CREŞTERII BOGĂŢIEI NAŢIUNII ESTE DIMENSIUNEA SALARIULUI “«It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour.” It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest. England is certainly, in the present times, a much richer country than any part of North America. The wages of labour, however, are much higher in North America than in any part of England. – Smith in Rostow Rostow, 36

TIPOLOGIA MUNCII – JUSTIŢIA SOCIALĂ • MUNCA PRODUCTIVĂ ŞI NEPRODUCTIVĂ • “A further and fundamental aspect of Smith’s treatment of the working force is his distinction between productive and unproductive labor. The distinction was familiar from the work of the physiocrats who viewed only labor employed in agriculture as productive. Smith widened the concept out to embrace all “labour which adds to the value of the subject upon which it is bestowed. . . . It is, as it were, a certain quantity of labour stocked and stored up to be employed, if necessary, upon some other occasion.”Smith in Rostow Rostow, 38

TIPOLOGIA MUNCII – şi creşterea economică • ... “as it always occasions some accumulation of valuable commodities, as it is more favourable to private frugality, and, consequently, to the increase of the public capital, and as it maintains productive, rather than unproductive hands, conduces more than the other to the growth of public opulence.” (Smith 330-332 în Rostow) Rostow, 40

Tipologia capitalului – circuitului economic: materii prime, fabricaţie, comerţ en-gross, vânzare cu amănuntul[primar, secundar, terţiar] • “«A capital may be employed in four different ways: either, first, in procuring the rude produce annually required for the use and consumption of society; or, secondly, in manufacturing and preparing that rude produce for immediate use and consumption; or, thirdly, in transporting either the rude or manufactured produce from the places where they abound to those where they are wanted; or, lastly, in dividing particular portions of either into such small parcels as suit the occasional demands of those who want them.” (Smith 341 în Rostow) Rostow, 41

Tipologia produselor şi preţurile (teoria preţurilor în funcţie de produs) • “The first comprehends those which it is scarce in the power of human industry to multiply at all. • The second, those which it can multiply in proportion to the demand. • The third, those in which the efficacy of industry is either limited or uncertain. [Smith 217 în Rostow] Rostow, 43

Tipologia produselor şi preţurile (teoria preţurilor în funcţie de produs) 2 • In the progress of wealth and improvement, the real price of the first may rise to any degree of extravagance, and seems not to be limited by any certain boundary. • That of the second, though it may rise greatly, has, however, a certain boundary beyond which it cannot well pass for any considerable time together. • That of the third, though its natural tendency is to rise in the progress of improvement, yet in the same degree of improvement it may sometimes happen even to fall, sometimes to continue the same, and sometimes to rise more or less, according as different accidents render the efforts of human industry in multiplying this sort of rude produce, more or less successful.» [Smith Wealth of nations, p.217] Rostow, 43

1. Smith illustrates his first category, where an expansion of supply is virtually impossible, with scarce birds and fish; ... the third, where the real cost of a basic commodity rises irregularly in the course of economic progress, with the evolution of prices for wool, hides, meat, and fish. 2. … His general proposition is that the relative price of all basic commodities except food will rise, as an economy’s real income increases; e.g., textile raw materials, building materials, minerals, precious metals, and stones. 3. ... it is quite clear that he viewed the prospects for productivity increases in such sectors with less optimism than in manufactures, and he expected, therefore, that the relative prices of manufactures would fall. [preţurile manufacturate scad] Rostow, 44

Ţări bogate – ţări înapoiate • “I. A rich country had a number of inherent advantages over a poor country that ought to permit it to retain its lead, barring failure to conduct correct policies. • 2. These advantages included lower unit labor costs, despite higher real wage rates, resulting from the greater division of labor, in turn made possible by the abundance and cheapness of capital. They included also a more elaborate and efficient transport system reducing the relative prices of basic commodities. • 3. Therefore, a rich country could afford to move toward free trade where it would enjoy the advantages of a large and productive commerce with its partners in the world economy, even with its potential military adversaries.” Rostow, 45

Redescoperirea clasicilor: conduita omului nu este doar calcul raţional • Keynes mentioned animal spirits only twice, in a paragraph on what motivates people to invest and speculate. … Messrs Akerlof and Shiller spin five classes of spirit. First and closest to the original is confidence. This goes beyond a rational estimate of next week’s share price, or the price in ten years’ time of what a new factory might produce. … Second is fairness. Even if economists know that fairness matters, too little of their work reflects it. Third is corruption, or bad faith: what explains a Charles Ponzi or an Enron? Fourth is money illusion: economists have come to assume that people see through inflation, but they don’t, especially when it is low. The fifth they call “stories”. Economists are loth to suppose that people are irrational enough to latch onto plausible tales and forecasts—for example, that house prices will never go down. So their models won’t spot the consequences of misplaced belief until it is too late. (The Economist, 26 mar 2009, An econnomic bestiary)

Adam Smith (1723-1790)