2 ms·
The crazy thing is some people will use this passage to justify not having regulations at all, because "regulating them will only make them conspire together ag
by mwfunk 6y ago
The crazy thing is some people will use this passage to justify not having regulations at all, because "regulating them will only make them conspire together against everyone!", when in fact the main reason Smith connects the two is that without regulation, the competitors (who are described as local artisans, not giant international corporations) might otherwise not know of one another's existence and would never talk to each other about shared concerns. Which was true when it was written, not so much now. Now that they can trivially find each other and conspire against consumers all they like, it's no longer an argument against regulation. Nowadays it's more useful as an argument against industry consortiums, standards bodies, professional organizations, and certifications, but I don't think of any of those things as being net negatives.
If we ever find ourselves in a situation where humanity collectively is frightened to tell some industry that it can't do something for fear that that industry would retaliate by conspiring to do something even worse to us behind our backs, that's not an argument against regulation, that's an argument against the whole industry.
- baryphonic 6y agoI wouldn't cast it quite so simply. Smith and the classical liberal tradition he represented would likely be skeptical of regulations by default, but would evaluate them based on costs and benefits. You make an excellent point about Smith's treatment of firms as local artisans rather than large corporations. Incidentally, he uses the word corporation a paragraph below what I pasted, but it most likely refers to guilds or firms with monopolies, and not our modern idea of corporate bodies. That said, I tend to think of Coase as the sort of successor to Adam Smith's thinking. I find it not coincidental that Coase formulated the modern theory of the firm that economics still subscribes to, as well as extrapolating transaction costs into the realms of legal disputes and the administrative state. Coase himself was also skeptical of government regulation, not as a matter of ideology or principle (in fact, he said that in principle, many regulations could be effective, though he did also argue reductio ad absurdum that the state should regulate speech as vigorously as products [0]), but as a matter of empirical investigation [1]. [0] https://web.ntpu.edu.tw/~guan/courses/Coase74.pdf https://web.ntpu.edu.tw/~guan/courses/Coase74.pdf [1] https://reason.com/1997/01/01/looking-for-results/ https://reason.com/1997/01/01/looking-for-results/