To David Friedman: Antitrust - humanities.philosophy.objectivism

Message from discussion To David Friedman: Antitrust

Vincent Cook

More options 12 May 1998, 08:00

Newsgroups: humanities.philosophy.objectivism

From: "Vincent Cook" <Use-Author-Address-Header@[127.1]>

Date: 1998/05/12

Subject: Re: To David Friedman: Antitrust

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Gordon Sollars wrote:
>> I'm talking about the minting of coins, not the issuance of
>> paper currency. The world used gold and silver
>> coins as the standard money back in those days.

>The "world" is a big place; what we care about here is Scotland, where the
>banks in fact had a well developed system of bank-notes. Smith held that it
>was proper to restrict the notes to "large" amounts, (I think) because those
>making large transactions would be better able to judge the reliability of
>the bank behind the notes. The "poor" would use coin. Perhaps for this bit
>of paternalism Smith stands condemned.

Scotland still had to trade with the rest of the world, and in any event
banknotes of this era were legally redeemable in coin (albeit with
considerable reluctance on the part of Scottish banks to honor their
obligations and with occasional suspensions of redemption during economic
crises). A monopoly of the mint was also a monopoly over the production of
the commodity used as bank reserves and as the means for settling
international transactions.

>Is there any evidence that the French economists you cite objected to the
>government minting of coins?

Not that I know of, but there is no evidence that they would have objected
to a privatization of the mint either. The point is that, unlike Smith,
the Physiocrats weren't demarcating whole areas of the economy as
being off-limits to private activity, so it is quite plausible to
infer from their theories that they would have reduced the state to
near-Randian levels, financially supported by a single tax on land.

>> I do have a quote from the _Wealth of Nations_ regarding his
>> support of public education:

>> "An instructed and intelligent people besides are always more decent
>> and orderly than an ignorant and stupid one. They feel themselves,
>> each individuallly, more respectable, and more likely to obtain the
>> respect of their lawful superiors, and they are therefore more
>> disposed to respect those superiors. They are . . . less apt to be
>> misled into any wanton or unnecessary opposition to the measures of
>> government."

>And I, too, have a quote from Smith:

>"Domestic education is the institution of nature;
>public education, the contrivance of man. It is
>surely unnecessary to say, which is likely to be the wisest."

>Your Smith quote says nothing about *public* education. I'm curious; did
>your quote come from the Rothbard book you mentioned?

Yes. Rothbard implies that the context of this quote involved the
idea that the state has to inculcate obedience in order to get
sufficient cannon fodder.

>> Turgot's hard-core libertarian attitudes can be discerned from this
>> passage from _Plan for a Paper on Taxation in General_:

>> "It seems that Public Finance, like a greedy monster, has been lying
>> in wait for the entire wealth of the people."

>Was Turgot speaking of government in general, or of his experience with
>French government in particular? That is, if Turgot had been in Scotland and
>Smith in France, what differences might we have seen in their writings?

As to the first question, I think it is fair to say that Turgot's theories
concerning taxation were generally applicable, but that he and his
predecessors had arrived at these views largely in reaction to the sharp
contrast they observed between the oppressive and inequitable conditions in
France and the prosperity of the relatively free-market Dutch.

As for the "what if" scenario in your second question, it is
impossible to speculate intelligently about the outcome. For all we
know, both men might have pursued some completely different interest
than writing about economics.

Aside from the question of how laissez-faire Smith was or might have been,
it is important to reiterate again that economics had risen to prominence
long before Adam Smith and Immanuel Kant (the point which gave rise to this
sub-thread). Rand really can't be blamed for falling victim to the
Smith-as-founder myth, but I would hope that the economists who hang out on
h.p.o. might reexamine it a bit more critically.
--
Vincent Cook <xyzepicu...@xyzcreative.net> Remove the xyz's
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