In the 18th Century was held at Scottish moral philosopher Adam Smith (1723-1790), like many of his colleagues with the question of how a society of free people can work. This was a central question of philosophy of the Enlightenment which sought to free people indeed. The early English Enlightenment philosopher Thomas Hobbes (1588-1679) had come from an original state of the struggle of all against all, which should be completed by a social contract. In this social contract of the people involved were all wearing their self-determination and self-defense law and thus all their power to a central institution, the state, which should henceforth ensure the protection of each other (monopoly of the state). To this end, the State should extensive Intervene in the right to personal privacy of the parties. In contrast, the Scottish philosopher John Locke emphasized (1632-1704) to every human at birth are entitled individual freedoms, which should be their only limit on the rights of others. He advocated, as Hobbes, the idea of a social contract language, but it is specifically for an individual's right of resistance against an unjust state or its government. The ideas of John Locke influenced the American Declaration of Independence (1776) and the French Revolution (1789).
Adam Smith was in the tradition of these and other philosophers of the Enlightenment, added but some crucial ideas added.
Adam Smith (1723-1790)
In his Theory of Moral Sentiments "(1759) distanced himself from Adam Smith clearly from a very selfish man. People were then determined not only by selfish drives, but for each other as from the "sympathy". Since man can always empathize with his fellow man, he was also able to accept their fate share, empathize so. This capacity for "sympathy" care primarily for the cohesion of a society and not just the monopoly of a state. In addition, a human being by the "sympathy" the opportunity for self-criticism, as he regarded his own behavior from the perspective of others. Such a restrained self-interest, gave Smith a driving force of the people is indispensable, and since the first time comes the invisible hand into the game! By each individual, independently, following his self-interest, work the resulting actions in their entirety, as of a invisible hand out in favor of the common good . This idea is truly revolutionary. The Company is not directed from above by a state, but a free society steers itself! Adam Smith was the first to find the principle of self-organization.
In his most famous work, which is dealing with the economy be "Wealth of Nations, Adam Smith shows how the Invisible Hand works in real life:
Everyone has the tendency to swap things with other people. This can occur when both parties see this as an advantage. An exchange is always optional!
The exchange is an expression of "sympathy". The exchange allows people to make sense of their livelihood activities necessary to divide among themselves their talents or skills learned and the results of these activities then afterwards among themselves. The exchange is therefore the basis of division of labor, which leads to much better results than each individual or each group carry out all activities necessary for maintaining life itself. If you want to find an exchange partner, you have to put yourself in each of his fellow men in order to guess what they need. The "place" of exchange is the market where buyers and sellers to meet. Each market participant takes turns on the role of agency and of the buyer. The activities that are exchanged in a market, these are the goods. An exchange is concluded only if the requested goods to the exchange ends is worth more than its give away merchandise. Adam Smith called this value the utility value . Besides the practical value each product, but also a exchange value. This results in the individual market participants initially from the personal effort that is necessary for the give away merchandise and a desired product is worth. Since all market participants act, they exchange the goods, on average, to their labor values. The more "average work" is, in a goods infected, the more valuable is that product. The labor value of a product depends not only from the work time for their preparation, but also on the severity of the specially appointed working and for the work necessary training. The thus resulting in the market replacement value of a commodity is its price .
The extent of division of labor depends on the size of the market for a particular product. In a small market is an extensive division of labor does not pay, because only small quantities of goods are exchanged, and vice versa.
One problem is finding an exchange partner that offers the desired product, and asks the self-provided goods. The solution is the invention of money. It is always about the marketability of goods, ie goods that can be found for the most easily exchange partners. This give away the goods are initially against the merchantability Goods traded. Then is usually found quickly, another exchange partner who has the desired product, and actually for the marketability of goods, money, therefore, happy to accept. As merchantability of goods called for by some time, the precious metals gold and silver, which are in great demand and also still be stored indefinitely, easily portable and well divided. The exchange value of all goods by the money directly comparable to each other and express themselves in their respective bid prices. The Invisible Hand
ensure that the goods are used to, get in sufficient quantities to those who most want.
The Invisible Hand (The Atlantic online)
off by the providers to adapt to the needs of customers, so put yourself in it (see above). Secondly, they also adjust the desired amount offered. If, for example in a product to a shortage of supply, so the demand is greater than supply, so does the price of this product because the buyers outbid each other. Those who want the goods at the most, they are also, because they are willing to pay the highest price. This makes it worthwhile, which is now offering more expensive goods. The suppliers are expanding their offerings or new entrants emerge in the market. The Supply of previously scarce goods to be better and the price falls, to keep supply and demand back in balance. There is an oversupply of a commodity, its price falls and the suppliers reduce their offer or even divorced from the market. The excess supply is falling, demand and supply are similar to each other, and the released funds can be used to provide other, more important goods.
A = End, N = Demand, GG = balance, P = price
The Invisible Hand works only with a sufficiently uniform distribution of money income really good. If the differences between rich and poor, too big, so only the rich come into the possession of the goods and not those who want the most and most urgently need. The poor can not simply bid. This problem Adam Smith in "Wealth of Nations" is not treated directly, it can be derived from but I think the logic of his thought. After all, Adam Smith speaks of, but a necessary minimum to live a dignified life.
Adam Smith advocated for free trade and against any kind of protectionism. He saw in the free trade the basis for, and international division of labor, so the prosperity of all peoples to stand together and to secure peace.
Jens Christian Heuer
Sources:
studies on the nature and causes of the wealth of nations
("Wealth of Nations) by Adam Smith,
new translation of Erich W. Streissler
Wikipedia, entries Adam Smith, John Locke and Thomas Hobbes
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