Ekaterina Ilin

I enjoy reading what people learned, or what changed their minds on Mastodon. I'd like to see more of that 🤔

A #ThingILearnedToday :

Early #FreeMarket advocates like #AdamSmith did not foresee #EconomiesOfScale.

Their idea of free markets works as long as most employees eventually become self-employed. Economies of scale ruined that in a way. Large companies are much more efficient, so being self-employed will never pay off for most people.

[from Elizabeth Anderson's Private Government]

Feb 12, 2023 at 8:03pmWeb
Show threadEkaterina IlinFeb 12, 2023
Adam Smith assumed that companies would never grow beyond groups of ten people or so 🤷‍♂️
Show threadSJ BeepFeb 12, 2023
@astroilin I think it goes even further than that. Smith was actively opposed to large corporations, like the East India Company, which he saw as actively hostile to the free market and as inevitably leading to immorality and corruption - “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public”
Show threadSJ BeepFeb 12, 2023
@astroilin Smith’s vision was that human beings are fundamentally imbued with sympathy that causes us to act morally, except in the specific case where they were trading with one another. However, even in this case there seemed to be this ‘invisable hand of providence’ that seemed to prevent them from actively harming one another so long as they were not empoered by the corupt power of a state or corporation to do so. He would have hated the 21st century economy so very much!
Show threadSJ BeepFeb 12, 2023
@astroilin much of what survives of early political economy in present economics really comes out of Malthus, Ricardo, and Mill, all of whome did build upon Smith’s ideas but were also very senior civil servants in the East India Company who wished to make econmoics safe for large corporations such as the one that paid them. It is really a very tragic history!
Show threadSJ BeepFeb 12, 2023
@astroilin And one of the ways that this happened was by incorporating ideas from utilitarianism, a philosophy developed by Bentham, Mill Sr, and Mill Jr (again all senior East India Company employees) that moved away from the idea that morality is something that stems from human’s innate sympathy and postulated the existence of a greater good that could be aggregated across people, so that so long as enough ‘value’ was being created it no longer mattered who’s value it was.
Show threadSJ BeepFeb 12, 2023
@astroilin I should perhaps be clear that I don’t think Ricardo, Malthus, Bentham and the Mills were evil geniouses who just wanted to mess everything up. Actually they all wanted to use the principles of economics and philosophy to make John Company (and society more generally) better; it’s just that in developing these ideas in ways that make sense to such a large organization they invariably changed them in ways that changed the way we think about value forever.
Show threadEkaterina IlinFeb 14, 2023
@SJBeard Thanks for the context! I feel that at some point I'll have to bite the bullet, and actually read the Wealth of Nations 😅
Show threadSJ BeepFeb 14, 2023
@astroilin true story: I took my copy on a 6 week long expedition to the arctic when I was in my late teens and read it on glaciers and places. It really gave me the space I needed to get through it (although its actually rather well written and readable imho - lots of anicdotes and stuff as is Smith’s style). However, it means that my bopy is now one of the most beanetn up books I own!
Show threadSJ BeepFeb 14, 2023
@astroilin When I did my Oxford interviews the economics tutor asked me to talk about what Smith meant by his idea of the invisable hand and I started by saying that he only really mentiones it in one aside and the guy was like “what you mean you ACTUALLY read it?!” 🤯
Show threadSJ BeepFeb 15, 2023
@astroilin By the way, if you can get hold of a copy then I would recomend The Essential Adam Smith, edited by Robert Hellbroner. It gives you a nicely cut down version of The Wealth of Nation’s together with extracts from Smith’s Theory of Moral Sentiments and a few other things. Hellbroner’s The Worldly Philosophers is also a pretty nice history of the early development of (mostly Anglo-American) economics!
Show threadEkaterina IlinFeb 28, 2023
@SJBeard Thanks for the recommendation, very much appreciated 🙌 It's often not obvious to me where to start with reading someone's works if it's really extensive and/or widely covered.