NationStates Jolt Archive

Lets see just what exactly horrible things that free market, invisible-hand wielding Adam Smith has about Taxes. I'll bet he just hates them, especially since his name and economic philosophy are tossed about carelessly whenever anyone wants to abolish a tax.

This is from an electronic copy of the wealth of nations. It shouldn't be that hard to find.

1. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation, is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate.
Oh? what's this? That can't be right. Lets read further.

Every tax, however, is, to the

person who pays it, a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed; but that, as he has some property, he cannot himself be the property of a master.
how can this be? Adam smith blatantly in favor of taxes? what's going on here?

When the toll upon carriages of luxury, upon coaches, post-chaises, etc. is made somewhat higher in proportion to their weight, than upon carriages of necessary use, such as carts, waggons, etc. the indolence and vanity of the rich is made to contribute, in a very easy manner, to the relief of the poor, by rendering cheaper the transportation of heavy goods to all the different parts of the country.

Wow, he's even for taxing the rich more than the poor! Who would have thought.

He's was favor of taxing the rich and poor equally as a percent of their total income. However, the world was much different back then and his ideas were considered radical enough as they were in his time; advocating only resorting to a sales tax would result in his being branded as a heretic.

I for one am shocked. Shocked, I tell you! Mr. Smith always seemed like such a nice, libertarian gentleman.

Adam Smith wrote in the 1770's, the world has much changed since then. I consider Mr. Smith to be one of my personal heroes because he started the foundation for the beautiful system we know as capitalism, however, this does not make him all-knowing. A great man by the name of Milton Friedman just passed away; I suggest you read some of his work. I consider it to be The Wealth of Nations part 2 in a sense. Mr. Friedman is in favor of what’s called a negative income tax. It is a flat tax that provides citizens with a guaranteed minimum income every year. So, if one citizen were to be taxed less than that minimum income the government would be paying him hence his tax would be negative. I know you're probably thinking well where’s the incentive to work? The incentive to work is provided because we make sure the guaranteed minimum income is not enough to live off, just enough to contribute to the economy with.

Keep reading. You'll find out more about Adam Smith which most capitalists that talk about Smith ever convienetly forget or are ignorant of. I think the phrase 'Invisible hand' only mentioned thrice. And as I remember it wasn't in the Wealth of Nations but the Theory of Moral Sentiments... actually I'm not sure about that last bit. But Smith was deeply suspicious of the free market.

As yes, Smith makes a distinction between natural and market prices. The invisible hand only operates in market conforms only to natural prices. Smith, in a round about way suggests that this is practically never likely to happen (because it requires an even distribution of power so that prices cannot be manipulated to be higher or lower than natural prices.

Smith also talks of the dehumanising effects of capitalism (a precursor to Marx's alienation?).

He's was favor of taxing the rich and poor equally as a percent of their total income.

Really? He seems to be advocating different rates in that last quote.

However, the world was much different back then and his ideas were considered radical enough as they were in his time; advocating only resorting to a sales tax would result in his being branded as a heretic.

You realize that there was no income tax in the eighteenth century?

Did anyone else just read that as Adam Smith on Texas?

There's a good reason Smith is still required reading for economists. Much of his work is still very applicable and important to the modern world.

If you take a good look, Smith also notes the problems with monopolies/oligarchies, accepts that government has a role to play in economics (the lesser the better, but still a role), and even accepts that infrastructure shoulod often be held in common weal. Not all of that is in The Wealth of Nations, as he wrote several other pieces, but they all build from his understanding of the underpinnings of business and commerce.

Smith wasn't a Libertarian. He simply believed that economics was something that benefitted primarily from the absence of government interference. And he's been pretty much continuously proved right ever since.

Really? He seems to be advocating different rates in that last quote.

He was advocating different rates of sales tax on luxury items; bread would be taxed less than a big-screen TV. However, he did not advocate different rates of income taxation.

You realize that there was no income tax in the eighteenth century?

Yes, the government derived its income mostly from excise taxes and tariffs. Since Adam Smith disagreed with the latter, he would need something to compensate for that lost revenue. Unless he wanted to radically decrease the size of government (something he would be branded a heretic for) he would need to institute another policy to bring in the money; an income tax.

He was advocating different rates of sales tax on luxury items; bread would be taxed less than a big-screen TV. However, he did not advocate different rates of income taxation.

The two amount to the same thing.

The two amount to the same thing.

No, they're actually quite different. A rich man can opt to not purchase luxury products, but cannot evade an income tax.

Did anyone else just read that as Adam Smith on Texas?

Yes.

Lets see just what exactly horrible things that free market, invisible-hand wielding Adam Smith has about Taxes. I'll bet he just hates them, especially since his name and economic philosophy are tossed about carelessly whenever anyone wants to abolish a tax.


The only people I, personally, have ever heard suggest that are statist lefties.

The only people I, personally, have ever heard suggest that are statist lefties.

What? That doesn't make sense. Wouldn't statist lefties be in favor of taxes?

Yes, sorry, I meant they claim those things in an attempt to discredit his entire works. Usually just after someone has said something they perceive to be advocating an 'invisible hand' approach.

Lets see just what exactly horrible things that free market, invisible-hand wielding Adam Smith has about Taxes. I'll bet he just hates them, especially since his name and economic philosophy are tossed about carelessly whenever anyone wants to abolish a tax.

This is from an electronic copy of the wealth of nations. It shouldn't be that hard to find.


Oh? what's this? That can't be right. Lets read further.


how can this be? Adam smith blatantly in favor of taxes? what's going on here?


Wow, he's even for taxing the rich more than the poor! Who would have thought.

1. Smith was a bit of a moralist Presbyterian, and thus would support taxing the "excesses" of the rich.
2. Smith was not that important to free-market economics; he proposed a fallacious labor theory of value, the belief that entrepeneurs "exploit" workers, a belief that all laborers are utterly equal (thus defeating the purpose of division of labor), a senseless division between "productive" labor on capital goods and "unproductive" labor on consumer goods, and that exchanges are not driven by mutual benefit but rather irrational urges, among other untruths. The Spanish Late Scholastics and other economists such as Richard Cantillon had already discovered the correct ideas that Smith "proposed" (i.e. plagiarized). Smith's questionable legacy unfortunately blocks out the far greater achievements of the French Liberal School (i.e. Jean-Baptiste Say and Frederic Bastiat) in the Anglophonic world.
3. In light of this, I need not agree with what he has to say, as we are not of the same philosophy.

Smith also talks of the dehumanising effects of capitalism (a precursor to Marx's alienation?).

He talked about the dehumanizing effects of specialization, specifically with mindless tasks, regardless of under what economic scheme it was occuring.

So Adam Smith had no problem with taxes.

So what?

What makes Adam Smith the authoritative answer on what is and is not compatible with a free market?

His justification of the free market is incorrect, anyway--a free market is not desirable because of its practical benefits (the so-called "invisible hand"), it's desirable in and of itself, for its own sake.

Lets see just what exactly horrible things that free market, invisible-hand wielding Adam Smith has about Taxes. I'll bet he just hates them, especially since his name and economic philosophy are tossed about carelessly whenever anyone wants to abolish a tax.

This is from an electronic copy of the wealth of nations. It shouldn't be that hard to find.


Oh? what's this? That can't be right. Lets read further.


how can this be? Adam smith blatantly in favor of taxes? what's going on here?


Wow, he's even for taxing the rich more than the poor! Who would have thought.
I wouldn't particularly mind paying a property tax, if that were the end of it.

No, they're actually quite different. A rich man can opt to not purchase luxury products, but cannot evade an income tax.

A rich man cannot evade an income tax? Which planet are you on?

A rich man cannot evade an income tax? Which planet are you on?

Correction: A rich man cannot evade a properly designed income tax.

I doubt Smith had our current half-assed, half-baked systems in mind.

Mr. Friedman is in favor of what’s called a negative income tax. It is a flat tax that provides citizens with a guaranteed minimum income every year. So, if one citizen were to be taxed less than that minimum income the government would be paying him hence his tax would be negative. I know you're probably thinking well where’s the incentive to work? The incentive to work is provided because we make sure the guaranteed minimum income is not enough to live off, just enough to contribute to the economy with.

Sounds like a welfare program.

A rich man cannot evade an income tax? Which planet are you on?

LOL!:p
But to answer for MTAE, a rich man cannot LEGALLY evade an income tax.

LOL!:p
But to answer for MTAE, a rich man cannot LEGALLY evade an income tax.

Er, actually, he can. There's a lot of methods of reducing income tax that rich people can do that are perfectly legal.

That's what I meant about a properly designed income tax, above. As in, one without those kind of loopholes and snags.

What few people realize about Smith and his writings is that he is first and foremost an Ethicist not an Economist. In his own lifetime he was most well known for the tome: The Theory of Moral Sentiment In which he argues that a very different invisible hand guides how we ought to live our lives and treat eachother, a hand that is rarely in sync with his economic hand. Wealth of nations is a series of positive claims about how Smith thought resources could be most efficiently allocated, Sentiments is concerned with normative claims about how we should live morally. Confusing this has lead many people to misinterpret Wealth of Nations as an endorsement of capitalism rather than an insightful observation.

Conclusion to be reached: capitalism is not necessarily a moral system

Adam Smith is revered by laissez-faire capitalists not because he was a proponent of laissez-faire capitalism.

Adam Smith's contribution was in being the first guy to measure the economy and describe in these terms. He's the father of modern economic analysis. And many laissez-faire capitalists base their positions on measurement. Laissez-faire capitalism producs superior outcomes.

So, no, Adam Smith was not the hardcore libertarian many people seem to think he was. But he did create the framework for those libertarians, and that's why he's so respected.

If it matters, measure it.

Adam Smith is revered by laissez-faire capitalists not because he was a proponent of laissez-faire capitalism.

Adam Smith's contribution was in being the first guy to measure the economy and describe in these terms. He's the father of modern economic analysis. And many laissez-faire capitalists base their positions on measurement. Laissez-faire capitalism producs superior outcomes.

So, no, Adam Smith was not the hardcore libertarian many people seem to think he was. But he did create the framework for those libertarians, and that's why he's so respected.

If it matters, measure it.

The point I was making earlier is that even adam smith says the out comes may be more efficient, but the superior outcomes occure when we act in a MORAL fassion.

He talked about the dehumanizing effects of specialization, specifically with mindless tasks, regardless of under what economic scheme it was occuring.I'm not sure what you're point is? Agreement, disagreement, clarification?

I presume clarification. Marx theorised that the rate of profit falls with the incorporation of new technologies. It is a history of continous attempts to increase productivity - which will require specialisation. Hence capitalism causes specialisation which will cause alienation. One of Marx's forms of alienation was was from oneself. This was caused by specialisation. Another form of alienation was from the product of ones labour.

I'm confusing myself. mainly because Marx is confusing. So I'm going to stop.

The point I was making earlier is that even adam smith says the out comes may be more efficient, but the superior outcomes occure when we act in a MORAL fassion.
Which is consistent with my assertion that he wasn't a laissez-faire capitalist. Thinkers of Smith's period were often overly concerned with morality. But, without a precise definition of justice or fairness his moral arguments have no weight whatever.

The point I was trying to make was that Smith's failure to endorse laissez-faire capitalism is not a weakness in the position of modern laissez-faire capitalists.

1. Smith was a bit of a moralist Presbyterian, and thus would support taxing the "excesses" of the rich.
2. Smith was not that important to free-market economics; he proposed a fallacious labor theory of value, the belief that entrepeneurs "exploit" workers, a belief that all laborers are utterly equal (thus defeating the purpose of division of labor), a senseless division between "productive" labor on capital goods and "unproductive" labor on consumer goods, and that exchanges are not driven by mutual benefit but rather irrational urges, among other untruths. The Spanish Late Scholastics and other economists such as Richard Cantillon had already discovered the correct ideas that Smith "proposed" (i.e. plagiarized). Smith's questionable legacy unfortunately blocks out the far greater achievements of the French Liberal School (i.e. Jean-Baptiste Say and Frederic Bastiat) in the Anglophonic world.
3. In light of this, I need not agree with what he has to say, as we are not of the same philosophy.
My sentiments exactly.

I always though our systems today were more based on John Maynard Keynes's views. Although Adam Smith seemed to be correct on taxation.

I always though our systems today were more based on John Maynard Keynes's views. Although Adam Smith seemed to be correct on taxation.
It is. Smith is merely deemed to be the founding father of the discipline of Economics. Keynes' theories are dominant right now though.

It is. Smith is merely deemed to be the founding father of the discipline of Economics. Keynes' theories are dominant right now though.

The reasons Keynes' theories are dominant are a combination of Keynes' relative recentness and the fact economists have found them to be good/interesting. Economists tend to be pretty eclectic in what theories they believe in. Someone said something along the lines," we're all neoclassical, keynesian, monentaristic, REers now and no one knows what that means."

The reasons Keynes' theories are dominant are a combination of Keynes' relative recentness and the fact economists have found them to be good/interesting. Economists tend to be pretty eclectic in what theories they believe in. Someone said something along the lines," we're all neoclassical, keynesian, monentaristic, REers now and no one knows what that means."
Indeed. I will be interested to see how much longer Keynesianism holds out as long as the status quo continues to exist.

He's was favor of taxing the rich and poor equally as a percent of their total income. However, the world was much different back then and his ideas were considered radical enough as they were in his time; advocating only resorting to a sales tax would result in his being branded as a heretic.

You are to modern conservatism what Edwardis is to the Bible.