Tuesday, October 20, 2009

The Philanthropy of Financiers: excerpt 3

and before denouncing the unions who helped elect him as thugs and boors, Clinton might have studied the words of Ricardo's predecessor Adam Smith, who remarked on the strange disproportion in the ways that combinations among capital and combinations among labor (whom Smith called masters and workmen) are viewed - "the masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of the workmen - we have no acts of parliament against combining to lower the price of work; but many against combining to raise it ... masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their natural rate - to violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbors and equals - we seldom hear of this combination, because it is the usual, and one may say, the natural state of things ... masters, too, sometimes enter into particular combinations to sink the wages of labour below this rate - these are always conducted with the utmost silence and secrecy ... [Wealth of Nations, Book I, Chap. 7, "On the wages of labour"].

Smith didn't think this was a good thing - later in the wages chapter, he argued that "the liberal reward of labour ... is the natural symptom of increasing national wealth - the scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition that they are going fast backwards" - the "liberal reward of labour" is to be welcomed, Smith said, not lamented; high wages are a spur to diligence; low wages, to over-work and ruin - elsewhere, Smith said that profits were always low in prosperous countries and high in those heading most rapidly towards ruin - you'll never hear an argument like that on McLaughlin.

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