Profit, Labor, Zero-Sum

At first glance, the following scenario seems to involve Profit with no corresponding loss: someone, who already owns the appropriate set of tools, cuts down a tree, and fashions it into a table that sells for $50. However, according to the thesis that Economics is a zero-sum game, corresponding to the $50 gain is the loss of energy in the process of transforming the tree into the table. So, this analysis, to which Smith subscribes, shows that Labor, including what is usually termed 'Service', is more fundamental to an Economic system than is Exchange, i. e. is presupposed by a Propensity to Barter, and, so, that Profit can enter into the system that is built upon such processes subsequently, via an inequitable Exchange. In other words, Smith's advocacy of the Labor-Theory of Value renders any denial that Economics is zero-sum problematic.

Profit and Zero-Sum

A profit can be constituted within a simple Exchange, namely, when what is received has greater value than what is given. But, one party can also realize a profit even when the exchange is equitable, possibly encouraging some to conclude that, contrary to the thesis that Economics is zero-sum, a profit can obtain in the absence of any corresponding loss. However, others will consider that the increase is with respect to some prior moment, often because in the interim, labor has added value to some previous rawer material. Now, while in some cases, the eventual seller is also the laborer, in others, the latter is an employee of the former. It is at this point that the analysis of the Marxist diverges from that of the Capitalist, discerning in the Labor-Wage exchange of the two parties an inadequacy of Wages to Labor. Still, the Capitalist, in ignoring or even in denying that inequity, remains in agreement with the Marxist that the scenario is a zero-sum game, with respect to which their denial of which elsewhere, e. g. 'a rising tide lifts all boats', is inconsistent.

Profit, Maximization, Stealing

The term 'profit' is indefinite, since it can connote a range of quantities of increase. Now, usually, the use of it in the context of Capitalism means, more precisely, 'the maximization of profit'. Furthermore, the maximization of profit always entails the minimum of loss, i. e. zero loss, or, in other words, getting something for nothing. But, stealing is getting something for nothing, and so is ratified by unfettered Capitalism. Thus, when Marx accuses the Capitalist of profiting from the work of another, his target is not merely some specific event in the marketplace, it is the criminality that is a fundamental principle of a system in which Self-Interest is equated with Profit.

Surplus and Profit

In Smith's Propensity to Barter, the possession of a surplus is entailed as a means to an exchange for a fulfillment of a some deficiency. Now, a profit is a species of Surplus, and, hence, has value as a means to the fulfillment of some deficiency. But, the identification of Self-Interest and Profit treats the latter as an end. Thus, the concept, pervasive in Capitalism, of Barter and Exchange as means to Profit not merely supervenes on Smith's original premises, but inverts, and, perhaps, perverts, them.

Capitalism and Profit

Smith's Propensity to Barter seeks an equitable exchange, constituted by two surpluses filling two deficiencies. Thus, it does not include Profit-seeking. Now, the Market, in general, is the concatenation of such simple exchanges. Hence, a free-market, i. e. Capitalist, system which excludes Profit-seeking and -taking, can be derived from Smith's premises. Now, such a system might better explain the satisfaction of all the needs of all the members of a society, than the best means to an accumulation of wealth. But, it might also avoid the Marxist critique that targets the exploitation that is constituted by profiting from the labor of another. Regardless, that variety of Capitalism is distinguishable from the more prevalent one, i. e. from the one in which Profit-seeking, and, perhaps, Greed, is the groundlessly posited as the fundamental Psychological principle.

Self-Interest and Profit

What is beneficial to one is in one's Self-Interest, and food that suffices to replenish energy and quell hunger pangs is beneficial to one. If so, then, eating more than enough, in the absence of a storage organ, is not only not beneficial, but is likely harmful. Thus, eating an excess of food is not in one's Self-Interest, nor is the excessive acquisition of any item of use. So, at minimum, in a transaction, the increment between breaking even and turning a profit is not necessarily beneficial, and, hence, is not necessarily in one's Self-Interest. That the identification of Self-Interest and Profit is widely taken for granted is no argument to the contrary, rather, the dogmatic insistence of it only tends to confirm the diagnosis that Greed is a deeply entrenched malignancy in Capitalism.

Greed and Self-Interest

Greed is typically treated and judged as a social phenomenon--usually condemned on the grounds of malign effects on others, or occasionally defended as a manifestation of some 'natural' order. However, as Aristotle and Spinoza, notably, show, Greed is also a Psychological condition that can be analyzed and evaluated as such. So, for example, because it is a drive determined by its object, it involves a loss of self-control. Furthermore, because the drive seeks a localized satisfaction, e. g. at the reproductive organs, it is disequilibrating. So, as imbalanced and out of control, Greed can hardly be conceived as in one's own self-interest, which is a problem for Capitalists who identify Self-Interest and Profit, but neglect to distinguish Profit-seeking from Greed.

Profit and Greed

Neither Smith nor any of his successors distinguishes Profit-seeking from Greed, thereby exposing Capitalism to the charge that it is predicated on a Psychological and/or Moral disorder. The vulnerability is tacitly acknowledged in the attempt to re-classify Greed as 'good'. But such a defense is unnecessary, given that the identification of Self-Interest and Profit has been uncritically incorporated into many contemporary societies. Even Marx bypasses the consideration that the profiting that he diagnoses as constituting exploitation is only a special case of a more general ill.

Justice and Profit

Basic Exchange in Smith's system is governed by a tendency toward balance, i. e. a surplus of each party fills a deficiency of the other. Likewise, the Invisible Hand guides the Market in general to an equilibrium of Supply and Demand. In other words, his system, writ both small and large, is governed by a principle of Justice. Now, the relation between Justice and the system's apparent highest Good, Wealth, is not explicit, though some passages seem to suggest an implicit trickle-down of any excess to where goods are needed. So, likewise, Profit is not an end-in-itself in his version of Capitalism, despite the advocacy to the contrary of some of Smith's successors.

Luddism, Capitalism, Socialism

Commonly, and sometimes condescendingly, associated with the 'hate of Technology', Luddism is, more precisely, a protest against the loss of skilled jobs occasioned by industrialization requiring minimal abilities. Thus, Luddism has been perhaps more prescient than either Capitalism or Socialism regarding the Economic significance of Technology--the latter is not an accelerator of productivity, but a replacement of human labor, as the proliferation of empty factories continues to demonstrate.. Now, Marx briefly dismisses Luddism as a superficial critique of Capitalism. Still, Socialism can better accommodate the perhaps ultimate consequences of technological innovation than can Smith's system or any of its successors. For, despite the loss of a job, a co-owner of the means of production can still benefit from the process, whereas if recent political rhetoric is any indication, the best that Capitalism can offer a replaced worker is the promise of 're-training' for a position that may itself be moribund.

Exchange, Need, Demand

Smith's transition from Propensity to Barter to Division of Labor abstracts from an essential factor in the former--Need, as does, therefore, any subsequent derivation of Productivity, and of Wealth. His awareness of the disappearance of that factor is expressed in his vacillation between the advocacy of a Labor-Theory, and of an Exchange-Theory, of Value, i. e. Need is incorporated into the latter as Demand, but not into the former. Accordingly, his concept of Wealth is independent of that of Health, which consists in the total satisfaction of Needs. However, the representation of Need as 'Demand' is inadequate, as the concept of Marginal Utility, which does not distinguish vital need from ersatz wish, reflects. The specific moment of inadequacy is the implicit transition from the concept of Exchange as a means to the fulfillment of a deficiency, to that of Exchange as a means to profit.

Technology, Labor-Force, Division of Labor.

Technology is embodied Force, and Force is proportionate to Acceleration. Thus, Technology applied to Productivity accelerates, and, so, increases it. Hence, insofar as Productivity and Wealth are correlated, Technology is the primary determinant of Wealth. Furthermore, as applied to Productivity, it can be called 'Labor-Force'. Hence, Labor-Force is the primary determinant of Wealth. Now, contributing to the maximization of Labor-Force is efficiency of organization, one factor of which is the avoidance of redundancy. It is the avoidance of redundancy that Smith calls 'Division of Labor', which, therefore, is, more precisely, 'Division of Labor-Force', and, so, presupposes Labor-Force. Likewise, his proposition that Division of Labor is the primary determinant of Wealth is implicitly derived from the proposition that Labor-Force is the primary determinant of Wealth.

Capitalism and Technology

Given Smith's recognition of the Economic impact of Industrialization, it is difficult to understand why he arrived at the proposition that the Division of Labor, rather than Technology, is the decisive factor in the generation of Wealth. Analyses of some of his fundamental concepts only support the ample empirical evidence. For, the basic unit of Technology is the Tool, and the primary influence of the Tool on Labor is to accelerate it, and, hence, to increase productivity. Furthermore, as complex machinery illustrates, a division of labor is determined by the diversity of functions of the available technology. Also, Money can be understood as a tool of Communication that facilitates the bartering process. So, for example, if Technology is the motor, literally, of Capitalism, then the Individualism that some attribute to the system as inherent in it, is only a reflection of the simplicity of tools, and, hence, is only a contingent characteristic of it.

Capitalism and Isolationsim

The basic unit of Capitalism is the Exchange, and the totality of Exchanges can be called 'the Market'. Similarly, any party to an Exchange is a member of the Market, and is an 'individual' only qua individual member of the Market. Likewise, the Good to which Self-Interest is a means is that of the Market. Thus, any subset of the Market, membership in a subset of the Market, or promotion of the interests of any subset of the Market, is extrinsic to the fundamental principles of Capitalism. Hence, the Nation, Patriotism, and the privileging of domestic over foreign wealth reflect more Protectionist Mercantilism than Capitalism. So, for example, the political platform, such as that of some American Libertarians, that embraces both Capitalism and Isolationism, is incoherent.

Nation and Invisible Hand

In Wealth of Nations, the Economic theme, the transition from Agrarian to Industrial, is subordinated to the Political, i. e. emergent Nationalism. The priority further undermines the credibility of the Invisible Hand thesis, which already seems to violate Empiricist methodology, and, since it can be applied to any outcome, is ultimately trivial. The further problem is that in book IV, chapter 2, Smith ascribes it to a Nation, thereby compromising the premise that it is a natural principle inhering in market activity itself, and, hence, transcending any Political divisions. The purported manifestation of Justice in his system is thus exposed as biased towards domestic interests.

Capitalism, Market, Nation

In some cases, Smith characterizes the arena of Economic activity as 'the market', but, more frequently, as a 'nation'. The two are not equivalent in his system, for activity in the former is 'free', while that in the latter is delimited, to the advantage of domestic profitability. Now, reflecting the rise of Nationalism in 18th-century Britain, Wealth of Nations privileges domestic prosperity over foreign, though it is not as protectionist as Mercantilism. In contrast, more recent Capitalism has been more globalistic, e. g. NAFTA, the EU, the current TPP, etc. So, underlying the political tensions occasioned by these policy developments is the still unresolved inconsistency between Market and Nation in Smith's original model.

Specialization, Labor, Unity

The flaw, previously discussed. in Smith's apparent transition from Specialization to Division of Labor is illustrated in a perhaps unlikely place--Thus Spoke Zarathustra, by someone who some conceive to be a champion of Capitalism. There, in the chapter 'On Redemption', Nietzsche characterizes the Specialist as an 'inverse cripple', and an aggregate of inverse cripples as fragmentary. Likewise, there is no Division of Labor without a preceding unifying concept of a labor force, which, in turn, requires a comprehensive vision of all the needs that must be served by the production of goods. Plato, though not Smith, nor, apparently, Marx, offers such a vision, in the absence of which both Capitalism and Socialism are groundless.

Propensity to Barter and Division of Labor

The decisive development in Smith's system is from its basic psychological premise, the propensity to barter, to its proposed fundamental determinant of wealth, namely, the division of labor. However, his exposition of the transition is so hasty, it is unclear if he notices the significant lacuna in it. Mediating the transition seems to be the concept of Specialization, i. e. the concentration of one party on the production of one good. However, Specialization does not suffice for the derivation of the concept of a Division of Labor. For, just as Division presupposes a Unity that has been divided, Division of Labor presupposes some togetherness of a plurality of laborers. In turn, such Togetherness is either biologically given, or else is the result of some instinct, neither of which can be derived from the Propensity to Barter. Thus, there is a significant, if not fatal, flaw in Smith's system, i. e. that the Propensity to Barter is not an adequate ground of it, one that inheres in all of its Capitalist successors in subsequent centuries.

Barter and Atomism

While, as has been previously discussed, Smith's system can be classified as an Event-Atomism, it still presupposes an Entity-Atomism. For, in his examples, the basic unit of the system, the Exchange, which originates in the propensity to Barter, is constituted by two parties, each seeking to trade a surplus product for something needed. But, it is far from unthinkable that a multiplicity within any such party is any less primitive than an individual, e. g. two brothers. Now, in some cases, e. g. a contractual partnership, that multiplicity can be itself analyzed as the product of an exchange, but, in others, e. g. blood relatives, the reduction is more difficult. Furthermore, the latter not only presents a possible counter-example to either variety of Atomism, it suggests that the social-instinct that informs the propensity to Barter is itself a special case of a more fundamental organic togetherness, i.e. that Barter is already molecular.

Atomism, Event, Exchange

'Atomism' is any system in which each constituent is either a simple, discrete element, or an association of such elements. Now, 'Atom' can be either an Ontological, a Nominal, or a methodological category. Notably illustrating the first contrast is Chemistry, in which erstwhile Ontological Atoms, e. g. Hydrogen, Helium, etc., have, with the discovery of 'sub-atomic' particles, become merely Nominal, while the search for Ontological Atoms, i. e. fundamental particles, continues. An example of the contrast between the first and the third categories is in British Empiricism, in which a Sense-Datum is originally a methodological atom, but soon becomes Ontological, e. g. Hume's definition of a 'Self' as a 'bundle of perceptions'. Now, traditionally, Atoms have been entities, e. g. particles, people, etc., but one of Wittgenstein's innovations is the introduction of the Proposition as the Atom of the Tractatus, corresponding to which are the State-of-Affairs, and the Event, in other systems. So, while, the Atom of Capitalism is often conceived to be an individual person, Smith plainly establishes his system as an Event Atomism, in which the Exchange is the basic element.

Barter, Equilibrium, Competition

Smith's system is a generalization of its basic unit-Barter, i. e. a two-party, two-good exchange--that incorporates the complexities of party and good, in a context being rapidly transformed by unprecedented innovations in production, transportation, and money. So, one of his aims is to similarly generalize the features of the basic unit, one of which is mutual beneficiality, one condition of which is equilibrium of Supply and Demand. Accordingly, as is clear in the text of Wealth of Nation, the primary function of Competition in the system is in the service of achieving that Equilibrium, i. e. as a corrective to monopolistic imbalance favoring Supply. Thus, the more recent glorification of Competition as a process of selection, has no ground in the original concept of Capitalism.

Enlightened Self-Interest and Narrow Self-Interest

While 'enlightened self-interest' and 'narrow self-interest' are sometimes used as antitheses, they are, rather, incommensurate. For, the former connotes an absolute condition, the logically proper opposite of which is the unused 'unenlightened self-interest', the latter is a comparative term, the proper opposite of which is 'broad'. Now, insofar as the Capitalist 'self' is Atomic, 'enlightenment' could consist in the crossing of the threshold from Self- to Other-Interest, though that would leave unrecognized any further transcendence, e. g. from the assumption of partisan goals, to that of general ones, e. g. the wealth of a nation. An alternative is to define the moment of 'enlightenment' as a transition from an Atomist to an Ordinal concept of social experience, i. e. from a discontinuous to a continuous concept of the I-Other relation, within which 'narrow' is distinguished from 'broad', or, more properly, 'narrower' from 'broader'. Regardless, no adoption of any such more rigorous parlance seems imminent.

Barter, Reason, Empiricism

Smith's "propensity to barter" is constituted by the concept of mutually beneficial exchange. Thus, it includes the rudiments of what is often characterized as 'enlightened self-interest'. Now, according to Kant, insofar as that concept entails that of an other as an end-in-itself, it is derived from Reason. Thus, an unaddressed methodological problem for Smith is the relation of Barter to Empiricism.

Barter. Individual, Society

According to Hobbes, social relations are by inherently antagonistic.  In sharp contrast, Locke regards the association with others as naturally an occasion for personal enhancement.  Now, Smith's concept of human nature is Lockeian--Barter is for an individual not a constraint on 'freedom', but an opportunity for growth, on the basis of which increase in both general well-being and general wealth are systematically possible.  However, contemporary Capitalism is more pervasively Hobbesian--Individual vs. Collective is accepted as an ontological conflict, and personal wealth has eclipsed national wealth as the primary goal.

Barter and Growth

In Smith's concept of Barter, what is exchanged is a surplus from each party, each of whom thereby gains in the process.  Barter could thus be interpreted as a special case of Communication, if only the concept of Gain that the latter analogously entails were adequately grounded.  But, such grounding is problematic in the absence of a sufficient principle of Growth, which is difficult to establish in a system in which the 'Self' is conceived as a fixed concept, whether on Empiricist or on Rationalist grounds, e. g. as 'Self-Preservation', or as a 'bundle of perceptions', or as 'Cogito'.  In contrast, given a principle of Growth, Communication, Barter, and, subsequently, according to Smith, an increase in general Wealth, thus has an adequate organic basis.

Barter, Division of Labor, Wealth

While Self-Interest, Profit-Seeking, and Competitiveness are each associated with Capitalism, none is the behavioral principle in which Smith actually grounds his system.  Rather, as he plainly articulates at the outset of Wealth of Nations, Economic growth is a function of Division of Labor, which originates in a "propensity to barter" that he observes to be unique to humans.  In other words, as he conceives it, bartering gives rise to specialization, which is organized as Division of Labor, thereby increasing productivity, and, hence, profits.  Thus, any value that he attributes to those Egoistic drives is framed by the context of exchange.  However, one ideal sometimes glorified by some contemporary Capitalists--Self-Sufficiency--is clearly antithetical to Smith's vision.

Competition, Winning, Diversification

According to Smith, the primary value of Competition is to diversify Supply, thereby countering the tendency of monopolistic forces to elevate prices.  Thus, winning per se, is irrelevant to participation.  But, the possibility of winning is essential to the competitive drive.  Hence, there is a discrepancy in his system between the subjective and objective meanings of Competition, indicative of an incoherence, or, perhaps, of an operation analogous to Hegel's 'ruse of Reason', in which a transcendent principle deludes an individual into a course of behavior by presenting it as potentially personally beneficial.  The positing of such a transcendent operation would seem to violate Smith's Empiricist methodology, but no more so than the positing of an Invisible Hand.  In this case, the effects of the purported principle are plainly visible as a diversification of the market.

Competition, Ordinality, Atomism

Inherent in the concept of Ordinality is continuity between and interdependence of its constituents, i. e. First entails the possibility of Second, Third, etc., while each of its successors presupposes the actuality of at least one predecessor.  So, Atomism, the elements of which are discontinuous and mutually independent, cannot accommodate Ordinality, as preeminent Atomist Russell tacitly concedes when he relies on the ordinal Successor Function to generate Numbers.  Now, sports competition can and often does incorporate Ordinality, e. g. First Place, Second Place, etc., corresponding to which are First Prize, Second Prize., etc.  In contrast, the winner-take-all principle that informs competition in Capitalism reflects the inherently limited Atomist orientation of the system.

Competition, Losing, Justice

The widely presumed virtue of Economic competition is that it conduces to the production of better goods.  Hence, implicit in the presumption is the concept of a positive contribution to the result by its losers.  Now, in athletic competition, recognition of that contribution is typically expressed by some proportionate compensation, e. g. a silver medal, a share of a purse, etc.  On that basis, the winner-take-all principle that is common to Economic competition, can be perceived as unust to its losers.

Self-Interest, Sympathy, Competition

As has been previously discussed, in the Sentimentalist Psychological model, there is no essential distinction between selfish and sympathetic pains and pleasures, i. e. either type is privately experienced data. Furthermore, as Hume observes, prevalently evident is that the commonest Morality-significant distinction is between not Self-Interest and Sympathy, but between partial and universal Sympathy. For, virtually everybody identifies with some group or another, family, race, nationality, ethnicity, religion, etc., while very few conceive themselves and act upon identification with every human being. So, the Self-Interest vs. Sympathy conflict implicated in Capitalism is not derived from the Psychological model it presupposes. Rather, it first emerges in a specific context--Competition, in which the priority of Self-Interest is arguably well-justified. Thus, the problem with the antithesis is not that it is falsely posited, but, rather, that it is groundlessly generalized. Likewise, any associated advocacy of Egoism is weakly grounded.

Sympathy, Self-Interest, Utilitarianism

Even the staunchest advocate of Sympathy as a Moral principle might have difficulty denying that it is as much an intra-psychic datum as is any selfish feeling. Accordingly, the only Utilitarian ground for adjudicating between Sympathy and Self-Interest is on the basis of pursuing pleasure/avoiding pain, i. e. the calculus recognizes no inherent distinction between them. Thus, if there is a systematic incoherence entailed in Smith's promotion of Self-Interest in Wealth of Nations, it is not with respect to his advocacy of Sympathy elsewhere, as some propose. It is as a violation of any subscription to Utilitarian methodology, determination by which is lacking in that promotion. Most of his successors and commentators similarly accept the Sympathy vs. Self-Interest false antithesis at face value.