Adam Smith's labor theory of value in a nutshell. Short.
Why is is this significant now? Because rising income and wealth inequality are breathing life into defunct economists that dealt with these issues.
Economic rent was front and center in classical economics and, of course, Marx. It was treated by Veblen also, who can be viewed as the forerunner of what came to be institutional economics. Economic rent is explained away in neoclassical economics (marginalism) based on marginal productivity and "just deserts" in the (free) marketplace by assuming that free markets are perfect markets, that is, minimal asymmetry of power and information.
Thoughts On EconomicsAdam Smith On The Source Of Profits And Rents In The Exploitation Of The Worker
Robert Vienneau
1 comment:
Profit: The most powerful formula of economics
Comment on Robert Vienneau on ‘Adam Smith On The Source Of Profits And Rents In The Exploitation Of The Worker’
Adam Smith, one of the founding fathers of economics, was not a particularly smart guy: “Smith … disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter)
Accordingly, he got the foundational concept of economics ― profit ― wrong. That is bad, but what is worse is that economist did not get it right to this day.#1-#3
To make matters short here, the macroeconomic 3-sector (household, business, government) Profit Law is given with Qm≡(I−Sm)+(G−T)+Yd, Legend: Qm business sector's monetary profit, Sm household sector's monetary saving, G government expenditures, T taxes, Yd distributed profits. #4
The main drivers of macroeconomic profit/loss Qm are the difference between the business sector's investment expenditures I and the household sector's saving Sm, and the government's deficit/surplus (G−T).
The first half of the formula is dominant in early capitalism, the second half is dominant in late capitalism.#5
It is pretty obvious that profit has NOTHING to do with the Labour Theory of Value.#6 So, Adam Smith and Karl Marx got the profit formula wrong and later Keynes.#7
Economics is proto-scientific garbage because economists in their abysmal scientific incompetence do not get the profit formula right to this day. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, materially/formally inconsistent, and ALL get profit wrong.
Egmont Kakarot-Handtke
#1 The profit theory is false since Adam Smith
https://axecorg.blogspot.com/2017/11/the-profit-theory-is-false-since-adam.html
#2 Dear idiots, Marx got profit and exploitation wrong
https://axecorg.blogspot.com/2019/02/dear-idiots-marx-got-profit-and.html
#3 Cross-references Profit
https://axecorg.blogspot.com/2015/03/profit-cross-references.html
#4 Profit
https://axecorg.blogspot.com/2020/06/profit-axiomatic-economics.html
#5 The U.S. economy hangs on the state ventilator for its survival
https://axecorg.blogspot.com/2020/07/the-us-economy-hangs-on-state.html
#6 Ricardo, too, got profit theory wrong
https://axecorg.blogspot.com/2018/02/ricardo-too-got-profit-theory-wrong-sad.html
#7 How Keynes got macroeconomics wrong and Allais got it right
https://axecorg.blogspot.com/2016/09/how-keynes-got-macro-wrong-and-allais.html
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