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One of my favourite passages from Adam Smith, I believe it was from the Wealth of Nations, though I don’t remember the chapter. When I was underemployed I took

One of my favourite passages from Adam Smith, I believe it was from the Wealth of Nations, though I don’t remember the chapter. When I was underemployed I took the time to read it (skimming the obsolete chapters on colonial administration: the American revolution is referenced as an ongoing disturbance) >“We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate…Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution; and when the workmen yield, as they sometimes do without resistance, though severely felt by them, they are never heard of by other people…” [In contrast, when workers combine,] “…the masters..never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combination of servants, labourers, and journeymen.”

BuyMyBitcoins 5y ago
I’m not well versed in Smith’s writings and I’m not good at parsing older English. What are your key takeaways or epiphanies from what was quoted?
- UncleMeat 5y ago
  Capitalists will coordinate to pay labor less. When labor is diffuse, this goes unnoticed and unchallenged. When labor organizes, they can fight it. It calls for unionization.
  - guerrilla 5y ago
    I don't read it as calling for unionization, but half-way through the section titled "Inequalities occasioned by the Policy of Europe," I think he argues that trade unions are inevitable. > People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible, indeed, to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary. Search the text[1] for this and you'll see it goes on a bit more and is preceded by some historical context. 1. https://www.gutenberg.org/files/3300/3300-0.txt https://www.gutenberg.org/files/3300/3300-0.txt
- tooltower 5y ago
  It means the system is asymmetric. The "masters" can collude to reduce wages, can ask for government assistance to weaken worker unions. But workers don't seem to have the same rights.
  - AnthonyMouse 5y ago
    The fundamental problem with labor unions is that they're stuck on negotiating with capital as an employer when the real threat is capital's corruption of the political system. Consider where the wages of labor go. The major expenses are housing, taxes, transportation and healthcare. Housing is artificially scarce. Zoning prevents new construction in areas with high demand, benefiting capital (i.e. landlords) who get higher rents. People who can't afford the higher rents have to live further from the city, increasing their transportation expenses (more money for Big Oil). Workers pay taxes but instead of going to some kind of UBI or anything else that would benefit workers, or just letting workers keep more of their money, most of it goes to things like the F-35 and buying the votes of retirees in the important swing state of Florida by enacting benefits which are really handouts to Big Pharma. And healthcare regulations are passed to make healthcare more expensive, i.e. more profitable, because of regulatory capture. There's nothing in there that a labor union can solve by negotiating employee compensation with Walmart or Amazon. Because the problem is artificial scarcity, corruption and waste. At scale, if you negotiated everyone a raise, prices would just go up. Because everyone is still bidding on artificially scarce housing and paying for wasteful government programs and suffering the effects of regulatory capture. But even when unions do try to lobby for something, it's typically just things to increase their own institutional power (e.g. trying to get Uber drivers into a union which is once again only negotiating employee compensation) instead of doing anything about the real problems that are sucking workers dry.
    - mulvya 5y ago
      > capital's corruption of the political system Capital is a measure of power. Capital's "corruption of the political system" is use of that power. I'm not sure it's coherent to conceive a world where Capital retains its power but not use it to shape the people and instruments that manage society.
- jollybean 5y ago
  Collusion among capital and leverage using state lobbying power etc.. Don't skip the chapters ... just as Adam Smith is misunderstood, so is the American Revolution by those who have never bothered to examine it from the outside looking in.
- heavyset_go 5y ago
  The ownership class are able to organize and conspire with one another to pool and promote their own mutual interests, and no one notices or bats an eye. When workers try to organize in order to promote their mutual interests, the ownership class uses the power of the state to crush them. They enact laws that make such organization illegal and then enforce the laws harshly and without mercy.
  - gunfighthacksaw 5y ago
    A perfect summary. It was written 100 years earlier than the Haymarket affair (1886) and 200 years before Thatcherism and the Miner’s strike (1979, 1984).
    - CryptoPunk 5y ago
      The UK coal industry was destroyed by the labor movement, so I don't see how you imagine the coal company shareholders won that. Had contract liberty not been destroyed by the UK socialist/labor movement in the decades prior, the coal companies could have fired the strikers, and survived. That would have been better overall for UK workers. The disappearance of UK Coal, and much of the UK manufacturing sector, played no small part in the stagnation of UK wage growth since the 1970s. When Adam Smith's maxim, that contract freedom not be infringed upon by government, was in force, in the late 1800s, unions could not single-handedly bankrupt industries, and wages, alongside industry, grew at their fastest rate in both US and UK history.
  - CryptoPunk 5y ago
    When workers organize, to lock down the market with the assistance of government intervention, they create exactly the same kind of corruption. For example, thanks to the dominance of public sector unions, New York now has nearly 300,000 unionized public sector employees receiving over $100,000 a year: https://www.forbes.com/sites/adamandrzejewski/2020/05/26/why-new-york-is-in-trouble--290304-public-employees-with-100000-paychecks-cost-taxpayers-38-billion/ https://www.forbes.com/sites/adamandrzejewski/2020/05/26/why... NYS public school teachers with 35 years of experience receive a pension of $87,945 per year on average: https://www.nydailynews.com/news/politics/pensions-retired-nyc-educators-high-88g-article-1.2968845 https://www.nydailynews.com/news/politics/pensions-retired-n... When you amortize the average amount paid out in total in pension, over the work years, and add that to the other components of their annual compensation, this puts NYS public school teachers in the top 10% of income earners in the US. It's also incredibly hard to fire New York state public school teachers: https://www.the74million.org/article/investigation-nyc-tried-to-fire-154-teachers-for-incompetence-or-misconduct-75-were/ https://www.the74million.org/article/investigation-nyc-tried... Why this is so important was explained by Smith: The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence. Without fear of dismissal, fraud and negligence multiplies, and thus we see growing inefficiency in the public sector, even as public sector unions direct an increasingly large share of economic output to their members: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long...
- bejelentkezni 5y ago
  Masters [capitalists/bosses] conspire together with each other. Whoever denies this is naive. They conspire together in lots of ways, but especially to keep wages down. They keep things quiet until they act on lowering the wages or whatever they're doing, and [somehow] do so in such a way that keeps the workers from communicating with each other about it. In contrast, when workers conspire [unionize] the masters will loudly beg for help from the state to keep the workers from achieving anything.
- grapist420 5y ago
  Employers collude to lower the wages they pay to employees. https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust...
- howaboutnope 5y ago
  > People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. -- Adam Smith
  - thow-58d4e8b 5y ago
    > Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many [...] Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all -- Adam Smith
  - nickik 5y ago
    The whole point of his book is that if there are proper functioning markets is that these conversations are not actually effective. Compared to a system of mercantilism that he was opposing.
    - int_19h 5y ago
      Sure, but "proper functioning markets" in this case means competitive markets, not laissez-faire as such, as modern libertarians like to imagine. That's kind of the problem of taking the words of someone writing at the time when governments were granting monopolies, and trying to apply them to the time when governments are busting them.
      - nickik 5y ago
        You vastly underestimate 'modern libertarians' probably because your exposure to them is based on angry twitter or whatever. In reality during the last 200 years classical liberal tradition has thought more about markets and how they work then anybody else. Constitutional economics, institutional economics, law&economics, market process theory are partly built on Smith work and are explorations of the context of markets. So I don't really know what you are referencing with 'Sure, but "proper functioning markets" in this case means competitive markets, not laissez-faire as such' as I don't know what definitions you for these words. People like FA Hayek, Armen Alchian, Ronald Coase and many others have done a lot of work and all look back and build on Adam Smith. The idea of some people in this thread that modern libertarians only read the understand Adam Smith as 'invisible hand' is nonsense. 'Invisible hand' was adopted because it is a good shorthand for the idea of processes that are not centrally guided are very important. There was also a lot of historical work done on English Common law and its evolution and how modern market relations evolved and actually functioned.
SAI_Peregrinus 5y ago
That's from Wealth of Nations, Book I, Chapter VIII, pg.80.

BuyMyBitcoins 5y ago

I’m not well versed in Smith’s writings and I’m not good at parsing older English. What are your key takeaways or epiphanies from what was quoted?

UncleMeat 5y ago
Capitalists will coordinate to pay labor less. When labor is diffuse, this goes unnoticed and unchallenged. When labor organizes, they can fight it. It calls for unionization.
- guerrilla 5y ago
  I don't read it as calling for unionization, but half-way through the section titled "Inequalities occasioned by the Policy of Europe," I think he argues that trade unions are inevitable. > People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible, indeed, to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary. Search the text[1] for this and you'll see it goes on a bit more and is preceded by some historical context. 1. https://www.gutenberg.org/files/3300/3300-0.txt https://www.gutenberg.org/files/3300/3300-0.txt
tooltower 5y ago
It means the system is asymmetric. The "masters" can collude to reduce wages, can ask for government assistance to weaken worker unions. But workers don't seem to have the same rights.
- AnthonyMouse 5y ago
  The fundamental problem with labor unions is that they're stuck on negotiating with capital as an employer when the real threat is capital's corruption of the political system. Consider where the wages of labor go. The major expenses are housing, taxes, transportation and healthcare. Housing is artificially scarce. Zoning prevents new construction in areas with high demand, benefiting capital (i.e. landlords) who get higher rents. People who can't afford the higher rents have to live further from the city, increasing their transportation expenses (more money for Big Oil). Workers pay taxes but instead of going to some kind of UBI or anything else that would benefit workers, or just letting workers keep more of their money, most of it goes to things like the F-35 and buying the votes of retirees in the important swing state of Florida by enacting benefits which are really handouts to Big Pharma. And healthcare regulations are passed to make healthcare more expensive, i.e. more profitable, because of regulatory capture. There's nothing in there that a labor union can solve by negotiating employee compensation with Walmart or Amazon. Because the problem is artificial scarcity, corruption and waste. At scale, if you negotiated everyone a raise, prices would just go up. Because everyone is still bidding on artificially scarce housing and paying for wasteful government programs and suffering the effects of regulatory capture. But even when unions do try to lobby for something, it's typically just things to increase their own institutional power (e.g. trying to get Uber drivers into a union which is once again only negotiating employee compensation) instead of doing anything about the real problems that are sucking workers dry.
  - mulvya 5y ago
    > capital's corruption of the political system Capital is a measure of power. Capital's "corruption of the political system" is use of that power. I'm not sure it's coherent to conceive a world where Capital retains its power but not use it to shape the people and instruments that manage society.
jollybean 5y ago
Collusion among capital and leverage using state lobbying power etc.. Don't skip the chapters ... just as Adam Smith is misunderstood, so is the American Revolution by those who have never bothered to examine it from the outside looking in.
heavyset_go 5y ago
The ownership class are able to organize and conspire with one another to pool and promote their own mutual interests, and no one notices or bats an eye. When workers try to organize in order to promote their mutual interests, the ownership class uses the power of the state to crush them. They enact laws that make such organization illegal and then enforce the laws harshly and without mercy.
- gunfighthacksaw 5y ago
  A perfect summary. It was written 100 years earlier than the Haymarket affair (1886) and 200 years before Thatcherism and the Miner’s strike (1979, 1984).
  - CryptoPunk 5y ago
    The UK coal industry was destroyed by the labor movement, so I don't see how you imagine the coal company shareholders won that. Had contract liberty not been destroyed by the UK socialist/labor movement in the decades prior, the coal companies could have fired the strikers, and survived. That would have been better overall for UK workers. The disappearance of UK Coal, and much of the UK manufacturing sector, played no small part in the stagnation of UK wage growth since the 1970s. When Adam Smith's maxim, that contract freedom not be infringed upon by government, was in force, in the late 1800s, unions could not single-handedly bankrupt industries, and wages, alongside industry, grew at their fastest rate in both US and UK history.
- CryptoPunk 5y ago
  When workers organize, to lock down the market with the assistance of government intervention, they create exactly the same kind of corruption. For example, thanks to the dominance of public sector unions, New York now has nearly 300,000 unionized public sector employees receiving over $100,000 a year: https://www.forbes.com/sites/adamandrzejewski/2020/05/26/why-new-york-is-in-trouble--290304-public-employees-with-100000-paychecks-cost-taxpayers-38-billion/ https://www.forbes.com/sites/adamandrzejewski/2020/05/26/why... NYS public school teachers with 35 years of experience receive a pension of $87,945 per year on average: https://www.nydailynews.com/news/politics/pensions-retired-nyc-educators-high-88g-article-1.2968845 https://www.nydailynews.com/news/politics/pensions-retired-n... When you amortize the average amount paid out in total in pension, over the work years, and add that to the other components of their annual compensation, this puts NYS public school teachers in the top 10% of income earners in the US. It's also incredibly hard to fire New York state public school teachers: https://www.the74million.org/article/investigation-nyc-tried-to-fire-154-teachers-for-incompetence-or-misconduct-75-were/ https://www.the74million.org/article/investigation-nyc-tried... Why this is so important was explained by Smith: The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence. Without fear of dismissal, fraud and negligence multiplies, and thus we see growing inefficiency in the public sector, even as public sector unions direct an increasingly large share of economic output to their members: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long...
bejelentkezni 5y ago
Masters [capitalists/bosses] conspire together with each other. Whoever denies this is naive. They conspire together in lots of ways, but especially to keep wages down. They keep things quiet until they act on lowering the wages or whatever they're doing, and [somehow] do so in such a way that keeps the workers from communicating with each other about it. In contrast, when workers conspire [unionize] the masters will loudly beg for help from the state to keep the workers from achieving anything.
grapist420 5y ago
Employers collude to lower the wages they pay to employees. https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.m.wikipedia.org/wiki/High-Tech_Employee_Antitrust...
howaboutnope 5y ago
> People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. -- Adam Smith
- thow-58d4e8b 5y ago
  > Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many [...] Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all -- Adam Smith
- nickik 5y ago
  The whole point of his book is that if there are proper functioning markets is that these conversations are not actually effective. Compared to a system of mercantilism that he was opposing.
  - int_19h 5y ago
    Sure, but "proper functioning markets" in this case means competitive markets, not laissez-faire as such, as modern libertarians like to imagine. That's kind of the problem of taking the words of someone writing at the time when governments were granting monopolies, and trying to apply them to the time when governments are busting them.
    - nickik 5y ago
      You vastly underestimate 'modern libertarians' probably because your exposure to them is based on angry twitter or whatever. In reality during the last 200 years classical liberal tradition has thought more about markets and how they work then anybody else. Constitutional economics, institutional economics, law&economics, market process theory are partly built on Smith work and are explorations of the context of markets. So I don't really know what you are referencing with 'Sure, but "proper functioning markets" in this case means competitive markets, not laissez-faire as such' as I don't know what definitions you for these words. People like FA Hayek, Armen Alchian, Ronald Coase and many others have done a lot of work and all look back and build on Adam Smith. The idea of some people in this thread that modern libertarians only read the understand Adam Smith as 'invisible hand' is nonsense. 'Invisible hand' was adopted because it is a good shorthand for the idea of processes that are not centrally guided are very important. There was also a lot of historical work done on English Common law and its evolution and how modern market relations evolved and actually functioned.

SAI_Peregrinus 5y ago

That's from Wealth of Nations, Book I, Chapter VIII, pg.80.