Tuesday, February 5, 2013

Adam Smith's Short Comings

Unfortunately I have not personally studied Adam Smith near as much as I could have or perhaps should have. Although, with some new information maybe it would be more wise to study some of the folks he learned from rather than himself. Apparently, according to Rothbard, who I have a great deal of respect for, Adam Smith was off base on where prices come from.

To hear that Adam Smith thought perhaps that the price of produce was a direct result of the cost of farms is infuriating to say the least. Of course the long run cost of the production surely must be less than the long run price, or surely the farms would go out of business but the market, supply and demand, couldn't give a hoot about what it cost. As Rothbard correctly points out it is only supply and demand that determine the price.

The point in the reading is that knowledge in science is like a zig zag, sometimes advancing and sometimes retreating. This  is a well made point that I think is correct. He is write to point out that some of what Adam Smith wrote in his most famous book was wrong and led the entire school of thought off for some time until the Austrians could correct it. Unfortunately the people in power are still following various versions of thought on that zig zag and have not joined the more correct line of thought. There are sections of the hard sciences today that I think are suffering from a major zig, I will leave it up to the reader to figure out what I am talking about but I do suspect that in time the correct constitutions will be found.

It is also my opinion that in time the correct conclusions from economics will not only be discovered, as they are now, but will become more influential in practiced political economy.

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