Profit: The concept and its moral features

Social Philosophy and Policy

Volumn 15, Issue 2, 1998, Pages 243-281

  Child, James W ^a  

^a NONE

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EID: 0344682193     PISSN: 02650525     EISSN: None     Source Type: Journal    
DOI: 10.1017/s0265052500002004     Document Type: Article

References (116)

1. See W. B. Gallie, "Essentially Contested Concepts," Proceedings of the Aristotelian Society 1955-56, vol. 56, pp. 167-98.
2. In a speech in New York City, November 27, 1920.
3. F. A. Hayek, The Fatal Conceit: The Errors of Socialism (Chicago: University of Chicago Press, 1988), p. 46.
4. Peter Drucker, The Concept of the Corporation (New York: John Day, 1946), p. 234.
5. Pierre-Joseph Proudhon, What Is Property? (New York: Howard Fertig, 1966), p. 286.
6. Ludwig von Mises, Human Action, 3d rev. ed. (Chicago: Contemporary Books, 1966), ch. 1.
7. See Eric L. Kohler, A Dictionary for Accountants, 5th ed. (Englewood Cliffs, NJ: Prentice Hall, 1975), entry under "profit center," p. 380.
8. Ibid., entry under "profit," p. 379 (emphasis added). To appreciate just how complex the notion of profit can be in accounting, see William Paton, Corporate Profits (Homewood, IL: Irwin, 1965). The entire volume is pertinent, but chapter 2 is especially on point.
9. Ibid., entry under "profit," p. 379 (emphasis added). To appreciate just how complex the notion of profit can be in accounting, see William Paton, Corporate Profits (Homewood, IL: Irwin, 1965). The entire volume is pertinent, but chapter 2 is especially on point.
10. Benjamin Newman and Martin Mellman, Accounting Theory: A CPA Review (New York: John Wiley and Sons, 1967), p. 58 (emphasis added).
11. See, for example, David Schweickart, Against Capitalism (Boulder, CO: Westview Press, 1996), esp. chs. 3, 4, and 5; and, for a more evenhanded view, Allen Buchanan, Ethics, Efficiency, and the Market (Totowa, NJ: Rowman and Allanheld, 1985), chs. 2 and 3, esp. pp. 19-36, 55-59, and 87-101.
12. See, for example, David Schweickart, Against Capitalism (Boulder, CO: Westview Press, 1996), esp. chs. 3, 4, and 5; and, for a more evenhanded view, Allen Buchanan, Ethics, Efficiency, and the Market (Totowa, NJ: Rowman and Allanheld, 1985), chs. 2 and 3, esp. pp. 19-36, 55-59, and 87-101.
13. See Herbert Marcuse, One Dimensional Man (Boston: Beacon Press, 1968),
14. and J. K. Galbraith, The New Industrial State, 2d ed. (New York: Mentor, 1970), which jointly form the locus classicus of this argument.
15. In its most unvarnished form, this argument is found in Bernard Mandeville, The Fable of the Bees, 2 vols. (Oxford: Oxford University Press, 1924); see also F. B. Kaye's long and very helpful introduction.
16. Adam Smith, The Wealth of Nations (New York: Random House, 1937), p. 14.
17. Ibid., p. 423.
18. See Ellen Frankel Paul, Moral Revolution and Economic Science (Westport, CN: Greenwood Press, 1979), ch. 1, esp. pp. 22-25.
19. Allan Gibbard, "What's Morally Special about Free Exchange?" Social Philosophy and Policy, vol. 2, no. 2 (Spring 1985), p. 21 (emphasis added).
20. This micro-macro distinction is essentially the distinction John Rawls set out in "Two Concepts of Rules," reprinted in Ethics, ed. Judith Thomson and Gerald Dworkin (New York: Harper and Row, 1968), pp. 104-35.
21. Of course, the more typical expression in game theory is that a game is zero-sum. But the idea that gains and losses sum to zero, and thus cancel each other out, can easily be extended to a single transaction. (Indeed, a transaction can be treated like a two-by-two game, where each player can elect to trade or not to trade, giving rise to four possibilities in a four-celled [two-by-two] matrix. However, since the zero-sum theory is wrong, the transaction will not come out to be zero-sum.) In any case, for now, I will use the term a little loosely and go no further into game theory.
22. Plato, Euthydemus, 304, in The Dialogues of Plato, trans. Benjamin Jowett (New York: Random House, 1937), p. 167.
23. Plato, Euthydemus, 304, in The Dialogues of Plato, trans. Benjamin Jowett (New York: Random House, 1937), p. 167.
24. Aristotle, Nicomachean Ethics, ed. and trans. Richard McKeon (New York: Random House, 1941), 1133a26, p. 1011.
25. Ibid., 1133a-1133c, pp. 1010-12. Below, I shall argue that Aristotle's view, even if based on demand and relational in nature, cannot be truly subjective. Still, in contemporary economics, we naturally think of demand as based upon subjective preference. For us, demand just is aggregated preference, and preference must be subjective.
26. The Politics of Aristotle, ed. and trans. Ernest Barker (Oxford: Clarendon Press, 1946), Book I, ch. X, 1258a38-40, p. 28.
27. Aristotle, Nicomachean Ethics, 1132b18-20, pp. 1009-10 (emphasis added).
28. See, for example, Henry William Spiegel, The Growth of Economic Thought, 3d ed. (Durham, NC: Duke University Press, 1991), pp. 24-27; Eric Roll, A History of Economic Thought, 4th ed. (London: Faber and Faber, 1973), pp. 31-35, esp. pp. 32-33; Odd Langholm, Wealth and Money in the Aristotelian Tradition (Bergen: Universitetsforlaget, 1983), ch. 4, esp. pp. 50-53; and Thomas J. Lewis, "Acquisition and Anxiety: Aristotle's Case against the Market," Canadian Journal of Economics, vol. 11 (1978), pp. 69-90. It should be noted that Lewis believes his own contribution to the case for Aristotle's anti-commerce point of view lies in having shown that anxiety about livelihood and the destruction of friendship and citizenship counts against market transactions. Nonetheless, Lewis also concurs completely with the more canonical interpretation of Aristotle's critique based upon the unending pursuit of money in retail trade. See pp. 73-77.
29. See, for example, Henry William Spiegel, The Growth of Economic Thought, 3d ed. (Durham, NC: Duke University Press, 1991), pp. 24-27; Eric Roll, A History of Economic Thought, 4th ed. (London: Faber and Faber, 1973), pp. 31-35, esp. pp. 32-33; Odd Langholm, Wealth and Money in the Aristotelian Tradition (Bergen: Universitetsforlaget, 1983), ch. 4, esp. pp. 50-53; and Thomas J. Lewis, "Acquisition and Anxiety: Aristotle's Case against the Market," Canadian Journal of Economics, vol. 11 (1978), pp. 69-90. It should be noted that Lewis believes his own contribution to the case for Aristotle's anti-commerce point of view lies in having shown that anxiety about livelihood and the destruction of friendship and citizenship counts against market transactions. Nonetheless, Lewis also concurs completely with the more canonical interpretation of Aristotle's critique based upon the unending pursuit of money in retail trade. See pp. 73-77.
30. See, for example, Henry William Spiegel, The Growth of Economic Thought, 3d ed. (Durham, NC: Duke University Press, 1991), pp. 24-27; Eric Roll, A History of Economic Thought, 4th ed. (London: Faber and Faber, 1973), pp. 31-35, esp. pp. 32-33; Odd Langholm, Wealth and Money in the Aristotelian Tradition (Bergen: Universitetsforlaget, 1983), ch. 4, esp. pp. 50-53; and Thomas J. Lewis, "Acquisition and Anxiety: Aristotle's Case against the Market," Canadian Journal of Economics, vol. 11 (1978), pp. 69-90. It should be noted that Lewis believes his own contribution to the case for Aristotle's anti-commerce point of view lies in having shown that anxiety about livelihood and the destruction of friendship and citizenship counts against market transactions. Nonetheless, Lewis also concurs completely with the more canonical interpretation of Aristotle's critique based upon the unending pursuit of money in retail trade. See pp. 73-77.
31. See, for example, Henry William Spiegel, The Growth of Economic Thought, 3d ed. (Durham, NC: Duke University Press, 1991), pp. 24-27; Eric Roll, A History of Economic Thought, 4th ed. (London: Faber and Faber, 1973), pp. 31-35, esp. pp. 32-33; Odd Langholm, Wealth and Money in the Aristotelian Tradition (Bergen: Universitetsforlaget, 1983), ch. 4, esp. pp. 50-53; and Thomas J. Lewis, "Acquisition and Anxiety: Aristotle's Case against the Market," Canadian Journal of Economics, vol. 11 (1978), pp. 69-90. It should be noted that Lewis believes his own contribution to the case for Aristotle's anti-commerce point of view lies in having shown that anxiety about livelihood and the destruction of friendship and citizenship counts against market transactions. Nonetheless, Lewis also concurs completely with the more canonical interpretation of Aristotle's critique based upon the unending pursuit of money in retail trade. See pp. 73-77.
32. See Antony G. N. Flew, The Politics of Procrustes (Buffalo: Prometheus Press, 1981), pp. 148-54; Fred D. Miller, Jr., Nature, Justice, and Rights in Aristotle's "Politics" (Oxford: Clarendon Press, 1995), p. 321 (in fairness to Miller, he suggests that this interpretation, while legitimate, "requires considerable speculative unpacking"); and Scott Meikle, "Aristotle and Exchange Value," in A Companion to Aristotle's "Politics", ed. David Keyt and Fred D. Miller, Jr. (Oxford: Blackwell, 1991), pp. 156-81. Meikle has other, more original, interpretations of some of Aristotle's views on trade, but he makes it clear that, in addition, he adheres to the interpretation of Aristotle which sees trade as inherently zero-sum. See esp. pp. 163-64.
33. See Antony G. N. Flew, The Politics of Procrustes (Buffalo: Prometheus Press, 1981), pp. 148-54; Fred D. Miller, Jr., Nature, Justice, and Rights in Aristotle's "Politics" (Oxford: Clarendon Press, 1995), p. 321 (in fairness to Miller, he suggests that this interpretation, while legitimate, "requires considerable speculative unpacking"); and Scott Meikle, "Aristotle and Exchange Value," in A Companion to Aristotle's "Politics", ed. David Keyt and Fred D. Miller, Jr. (Oxford: Blackwell, 1991), pp. 156-81. Meikle has other, more original, interpretations of some of Aristotle's views on trade, but he makes it clear that, in addition, he adheres to the interpretation of Aristotle which sees trade as inherently zero-sum. See esp. pp. 163-64.
34. See Antony G. N. Flew, The Politics of Procrustes (Buffalo: Prometheus Press, 1981), pp. 148-54; Fred D. Miller, Jr., Nature, Justice, and Rights in Aristotle's "Politics" (Oxford: Clarendon Press, 1995), p. 321 (in fairness to Miller, he suggests that this interpretation, while legitimate, "requires considerable speculative unpacking"); and Scott Meikle, "Aristotle and Exchange Value," in A Companion to Aristotle's "Politics", ed. David Keyt and Fred D. Miller, Jr. (Oxford: Blackwell, 1991), pp. 156-81. Meikle has other, more original, interpretations of some of Aristotle's views on trade, but he makes it clear that, in addition, he adheres to the interpretation of Aristotle which sees trade as inherently zero-sum. See esp. pp. 163-64.
35. See Langholm, Wealth and Money, p. 55, and especially Odd Langholm, The Aristotelian Analysis of Usury (Bergen: Universitetsforlaget, 1981).
36. See Langholm, Wealth and Money, p. 55, and especially Odd Langholm, The Aristotelian Analysis of Usury (Bergen: Universitetsforlaget, 1981).
37. Although the whole book is pertinent, chapter 4, entitled "The Teleology of Money," pp. 54-69, is most directly on point.
38. Joseph Schumpeter, History of Economic Analysis (Oxford: Oxford University Press, 1954), pp. 60-62.
39. Ibid., p. 61.
40. Ibid. "Positive economics" is that part of economics which is capable of empirical confirmation and which does not engage in value judgments or normative claims.
41. I believe this is true despite Sir Ernest Barker's claim that, for Aristotle, "value depends upon demand, felt utility" (emphasis added); see Barker, The Political Thought of Plato and Aristotle (London: Methuen, 1906), p. 379, n. 2. This claim seems fatuous, a case of reading modern conceptions back onto Aristotle, much like Schumpeter's points. Given Aristotle's notion of use as proper use in accord with his notions of formal and final causes (see below), a "felt utility" is either an empty notion or an exiguous one. It is also anachronistic in the extreme. Indeed, although it would take us too far afield to pursue the matter further, I do not believe that Aristotelian (or Platonic, for that matter) philosophy of mind could give rise to a modern notion of subjective preference. For that, we need Descartes, Locke, Hume, et al.
42. See Aristotle's discussion of his four causes and what point each serves in Physics, Book II, chs. 7-9, and Metaphysics, Book VII, chs. 7-9, in McKeon, The Basic Works of Aristotle.
43. See Aristotle's discussion of his four causes and what point each serves in Physics, Book II, chs. 7-9, and Metaphysics, Book VII, chs. 7-9, in McKeon, The Basic Works of Aristotle.
44. See Aristotle's discussion of his four causes and what point each serves in Physics, Book II, chs. 7-9, and Metaphysics, Book VII, chs. 7-9, in McKeon, The Basic Works of Aristotle.
45. See Aristotle, Politics, Book I, ch. 11, and Nicomachean Ethics, Book V, ch. 5.
46. See Aristotle, Politics, Book I, ch. 11, and Nicomachean Ethics, Book V, ch. 5.
47. Matthew 19:21 and Matthew 6:24.
48. Quoted in The Great Thoughts, compiled by George Seldes (New York: Ballantine Books, 1985), p. 210.
49. See, inter alia, Roll, A History of Economic Thought, p. 46; Ronald L. Meek, Studies in the labor Theory of Value (London: Lawrence and Wishart, 1973), pp. 12-14; and R. H. Tawney, Religion and the Rise of Capitalism (New York: Harcourt Brace, 1937), p. 37.
50. See, inter alia, Roll, A History of Economic Thought, p. 46; Ronald L. Meek, Studies in the labor Theory of Value (London: Lawrence and Wishart, 1973), pp. 12-14; and R. H. Tawney, Religion and the Rise of Capitalism (New York: Harcourt Brace, 1937), p. 37.
51. See, inter alia, Roll, A History of Economic Thought, p. 46; Ronald L. Meek, Studies in the labor Theory of Value (London: Lawrence and Wishart, 1973), pp. 12-14; and R. H. Tawney, Religion and the Rise of Capitalism (New York: Harcourt Brace, 1937), p. 37.
52. Alejandro A. Chafuen relates demand in Aquinas to "common estimation"; see his Christians for Freedom: Late-Scholastic Economics (San Francisco: Ignatius Press, 1986), p. 95 and ch. 7 passim.
53. See ibid.; David O. Friedman, "In Defense of Thomas Aquinas and the Just Price," History of Political Economy, vol. 12, no. 2 (1980), pp. 234-42; and Barry Gordon, "St. Thomas Aquinas," The New Palgrave: A Dictionary of Economics (New York: Macmillan Press, 1987), pp. 99-100.
54. See ibid.; David O. Friedman, "In Defense of Thomas Aquinas and the Just Price," History of Political Economy, vol. 12, no. 2 (1980), pp. 234-42; and Barry Gordon, "St. Thomas Aquinas," The New Palgrave: A Dictionary of Economics (New York: Macmillan Press, 1987), pp. 99-100.
55. See ibid.; David O. Friedman, "In Defense of Thomas Aquinas and the Just Price," History of Political Economy, vol. 12, no. 2 (1980), pp. 234-42; and Barry Gordon, "St. Thomas Aquinas," The New Palgrave: A Dictionary of Economics (New York: Macmillan Press, 1987), pp. 99-100.
56. See a very persuasive argument to this effect in Samuel Hollander, "On the Interpretation of Just Price," Kyklos, vol. 18, no. 4 (1965), pp. 615-34.
57. Aquinas, Summa Theologica, II-II, question 77, in St. Thomas Aquinas on Politics and Ethics, ed. Paul Sigmund (New York: Norton, 1988), pp. 73-74.
58. Hollander, "On the Interpretation of Just Price" (supra note 38).
59. Smith, The Wealth of Nations (supra note 13), p. 30.
60. Ibid., p. 47 (emphasis added).
61. Ibid., p. 30 (emphasis added). Thorough discussions of Smith's labor theory of value may be found in Samuel Hollander, The Economics of Adam Smith (Toronto: University of Toronto, 1973), ch. 4; and Meek, Studies in the Labor Theory of Value, ch. 2. Hollander, in a judicious discussion, gives fair weight to those places where Smith seems to use demand, utility, and other concepts related to contemporary neoclassical economics, yet concludes that Smith is, at heart, a partisan of some sort of labor theory of value.
62. Ibid., p. 30 (emphasis added). Thorough discussions of Smith's labor theory of value may be found in Samuel Hollander, The Economics of Adam Smith (Toronto: University of Toronto, 1973), ch. 4; and Meek, Studies in the Labor Theory of Value, ch. 2. Hollander, in a judicious discussion, gives fair weight to those places where Smith seems to use demand, utility, and other concepts related to contemporary neoclassical economics, yet concludes that Smith is, at heart, a partisan of some sort of labor theory of value.
63. Ibid., p. 30 (emphasis added). Thorough discussions of Smith's labor theory of value may be found in Samuel Hollander, The Economics of Adam Smith (Toronto: University of Toronto, 1973), ch. 4; and Meek, Studies in the Labor Theory of Value, ch. 2. Hollander, in a judicious discussion, gives fair weight to those places where Smith seems to use demand, utility, and other concepts related to contemporary neoclassical economics, yet concludes that Smith is, at heart, a partisan of some sort of labor theory of value.
64. Smith, The Wealth of Nations, p. 33. See also a similarly categorical statement on p. 36.
65. The Dictionary of Modern Economics, 2d ed. (Cambridge, MA: MIT Press, 1983) defines "Pareto optimality" as that state "when the economy's resources and output are allocated in such a way that no reallocation makes anyone better off without making at least one person worse off" (p. 332). It defines a "Pareto improvement" as "[a] reallocation of resources which makes at least one person better off without making anyone else worse off" (ibid.). Obviously, an ethical exchange makes both parties better off (or, in the limit, leaves one of them unchanged in his utility) and makes no third parties worse off, so such an exchange is Pareto-improving. Exchange is a kind of "reallocation of resources" referred to in the definition. On Paretian conditions generally, see Andrew Schotter, Free Market Economics (New York: St. Martin's, 1985), chs. 1 and 2 and p. 134.
66. The Dictionary of Modern Economics, 2d ed. (Cambridge, MA: MIT Press, 1983) defines "Pareto optimality" as that state "when the economy's resources and output are allocated in such a way that no reallocation makes anyone better off without making at least one person worse off" (p. 332). It defines a "Pareto improvement" as "[a] reallocation of resources which makes at least one person better off without making anyone else worse off" (ibid.). Obviously, an ethical exchange makes both parties better off (or, in the limit, leaves one of them unchanged in his utility) and makes no third parties worse off, so such an exchange is Pareto-improving. Exchange is a kind of "reallocation of resources" referred to in the definition. On Paretian conditions generally, see Andrew Schotter, Free Market Economics (New York: St. Martin's, 1985), chs. 1 and 2 and p. 134.
67. There is one very limited exception to this blanket assertion. But first let me remind the reader what I mean by "gains from trade." I mean this as a term of art for those gains realized by individuals who exchange as recognized by formal economics, either through the notion of consumer and producer surplus or through the Edgeworth Box (an economic model for analyzing exchange which presupposes a world of two traders, where they possess reciprocal preferences and there exists a bilateral monopoly). For a typical treatment, see Jack Hirshleifer, Price Theory and Applications, 3d ed. (Englewood Cliffs, NJ: Prentice Hall, 1984), pp. 210-26 (consumer surplus) and pp. 400-410 (the Edgeworth Box). All this sounds very fancy, but it really only means that if I have an apple and I love oranges far more than apples, and you have an orange and have a confirmed preference for apples, we will both gain from the exchange simply because of our reciprocal preferences. That is gains from trade or what I earlier set out as pure surplus or transaction surplus. However, I do not mean for the expression "gains from trade" to refer to the more general improvement of position due to market transactions in all conceivable circumstances. For example, Smith does realize that when the city trades with the country, both benefit (The Wealth of Nations, p. 356) - although he attributes the gain to division of labor, not to the mere act of exchange in the context of reciprocal preferences. Moreover, he clearly recognizes that free international trade benefits all countries involved, for without this assumption, his war against mercantilist regulation and tariffs on trade makes no sense. Again, however, everything he says indicates that he bases this mutual improvement (as in the case of trade between city and country) on division of labor, or even on a vague glimpse of comparative advantage, but not on an aggregation of individual "gains from trade" that come from transactions alone. One must, of course, carefully differentiate (1) "gains from trade" which arise exclusively because of reciprocal preferences of individual transactors, and which result in an improvement in each individual's situation, from (2) more general improvement in the position of two collective parties (countries or regions) engaged in aggregations of transactions, resulting from specialization and division of labor. The necessity of making this distinction with great care was made clear to me in a very helpful conversation with Robert Sugden.
68. There is one very limited exception to this blanket assertion. But first let me remind the reader what I mean by "gains from trade." I mean this as a term of art for those gains realized by individuals who exchange as recognized by formal economics, either through the notion of consumer and producer surplus or through the Edgeworth Box (an economic model for analyzing exchange which presupposes a world of two traders, where they possess reciprocal preferences and there exists a bilateral monopoly). For a typical treatment, see Jack Hirshleifer, Price Theory and Applications, 3d ed. (Englewood Cliffs, NJ: Prentice Hall, 1984), pp. 210-26 (consumer surplus) and pp. 400-410 (the Edgeworth Box). All this sounds very fancy, but it really only means that if I have an apple and I love oranges far more than apples, and you have an orange and have a confirmed preference for apples, we will both gain from the exchange simply because of our reciprocal preferences. That is gains from trade or what I earlier set out as pure surplus or transaction surplus. However, I do not mean for the expression "gains from trade" to refer to the more general improvement of position due to market transactions in all conceivable circumstances. For example, Smith does realize that when the city trades with the country, both benefit (The Wealth of Nations, p. 356) - although he attributes the gain to division of labor, not to the mere act of exchange in the context of reciprocal preferences. Moreover, he clearly recognizes that free international trade benefits all countries involved, for without this assumption, his war against mercantilist regulation and tariffs on trade makes no sense. Again, however, everything he says indicates that he bases this mutual improvement (as in the case of trade between city and country) on division of labor, or even on a vague glimpse of comparative advantage, but not on an aggregation of individual "gains from trade" that come from transactions alone. One must, of course, carefully differentiate (1) "gains from trade" which arise exclusively because of reciprocal preferences of individual transactors, and which result in an improvement in each individual's situation, from (2) more general improvement in the position of two collective parties (countries or regions) engaged in aggregations of transactions, resulting from specialization and division of labor. The necessity of making this distinction with great care was made clear to me in a very helpful conversation with Robert Sugden.
69. Smith, The Wealth of Nations, pp. 4-5. Smith's famous example of the pin factory makes the point well. If one man makes one whole pin at a time, he may only make a few in a day, as there are a variety of operations he must go through. Even if you add workers, where each makes a whole pin, gains in production are merely additive. If, however, you break down the task and have one man draw the wire, one man cut it, one man sharpen it, another make the head, another attach it, etc., you will get multiplicative increases in production. In Smith's pin factory, the division of labor provides 240 times the productive power of the same number of individual pin-makers each making one whole pin at a time.
70. Ibid., pp. 9-10.
71. See, inter alia, ibid., pp. 11-12 and 17-18.
72. Karl Marx, "Free Human Production," in Writings of the Young Marx on Philosophy and Society, ed. Loyd Easton and Kurt Guddat (Garden City, NY: Doubleday, 1967), pp. 278-79.
73. Allen Buchanan, Marx and Justice (Totowa, NJ: Rowman and Allanheld, 1982), p. 39; for Buchanan's full account of exploitation, see generally ch. 3.
74. N. Scott Arnold, Marx's Radical Critique of Capitalist Society (Oxford: Oxford University Press, 1990), chs. 4 and 5 passim. To clarify, Arnold is not a Marxist; rather, he is a strong critic of Marx. Nonetheless, Arnold's analytic rubric for exploitation is highly original and one of the most helpful in the literature.
75. Ibid., pp. 91 and 97.
76. Ibid., p. 90; cf. Buchanan, Marx and Justice, p. 38.
77. Ibid., p. 90; cf. Buchanan, Marx and Justice, p. 38.
78. Arnold, Marx's Radical Critique, pp. 90-91.
79. Jon Elster, Making Sense of Marx (Cambridge: Cambridge University Press, 1983), p. 167. For Elster's coverage of exploitation more generally, see especially ch. 4.
80. Ibid., p. 181. See also John Roemer, A General Theory of Exploitation and Class (Cambridge, MA: Harvard University Press, 1982), pp. 39-40 and ch. 3 generally.
81. Ibid., p. 181. See also John Roemer, A General Theory of Exploitation and Class (Cambridge, MA: Harvard University Press, 1982), pp. 39-40 and ch. 3 generally.
82. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
83. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
84. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
85. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
86. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
87. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
88. This explication of the narrow notion of Marxian exploitation draws on Karl Marx, Capital (New York: Charles Kerr and Co., 1906), esp. vol. 1, Part III, ch. 7. Secondary sources include: Buchanan, Marx and Justice; Arnold, Marx's Radical Critique; Elster, Making Sense of Marx; Roemer, A General Theory of Exploitation and Class; Susan Himmelweit's entry "Exploitation" in A Dictionary of Marxist Thought, ed. Tom Bottomore (Cambridge, MA: Harvard University Press, 1983), pp. 157-58; and Paul Craig Roberts and Matthew Stephenson, Marx's Theory of Exchange, Alienation, and Crisis (New York: Praeger, 1983).
89. Things get more complicated than this for a variety of reasons. Labor differs in quality, intensity, and required training, so a notion of "abstract labor" must be formulated. That leads to further complications. For our purposes, however, the foregoing simple sketch will do.
90. See Karl Marx, Capital (New York: International Publishers, 1967), vol. 3, pp. 594-97 and 609.
91. This particular example comes from Bertrand Russell, The Problems of Philosophy (Buffalo: Prometheus Books, 1988), pp. 97-98; for his discussion of relations generally, see chs. 9-13 passim.
92. Robert Heilbroner, The Worldly Philosophers (New York: Simon and Schuster, 1980), p. 24 (emphasis added).
93. Ibid., p. 22 (emphasis added).
94. Ibid., p. 34.
95. Some volumes that take this approach are actually pro-capitalist. See, for example, George Brockway, Economics (New York: Harper and Row, 1985), ch. 2. Most, however, take Heilbroner's highly critical position. See, for example, Gerald Cavanaugh, American Business Values, 3d ed. (Englewood Cliffs, NJ: Prentice Hall, 1990), chs. 1,2, and 3; and Barry Schwartz, The Battle for Human Nature (New York: Norton, 1986), chs. 3, 6, 9, and 10.
96. Some volumes that take this approach are actually pro-capitalist. See, for example, George Brockway, Economics (New York: Harper and Row, 1985), ch. 2. Most, however, take Heilbroner's highly critical position. See, for example, Gerald Cavanaugh, American Business Values, 3d ed. (Englewood Cliffs, NJ: Prentice Hall, 1990), chs. 1,2, and 3; and Barry Schwartz, The Battle for Human Nature (New York: Norton, 1986), chs. 3, 6, 9, and 10.
97. Some volumes that take this approach are actually pro-capitalist. See, for example, George Brockway, Economics (New York: Harper and Row, 1985), ch. 2. Most, however, take Heilbroner's highly critical position. See, for example, Gerald Cavanaugh, American Business Values, 3d ed. (Englewood Cliffs, NJ: Prentice Hall, 1990), chs. 1,2, and 3; and Barry Schwartz, The Battle for Human Nature (New York: Norton, 1986), chs. 3, 6, 9, and 10.
98. Robert Heilbroner, The Nature and Logic of Capitalism (New York: Norton, 1985), pp. 65-66.
99. John Locke, Second Treatise, in Locke, Two Treatises of Government [1690], ed. Peter Laslett (Cambridge: Cambridge University Press, 1960), ch. 5. The Lockean proviso is formulated several times and in several different ways in the Second Treatise. The two clearest, most explicit, and most famous formulations are in section 27, where "enough and as good" is used, and in section 33.
100. John Locke, Second Treatise, in Locke, Two Treatises of Government [1690], ed. Peter Laslett (Cambridge: Cambridge University Press, 1960), ch. 5. The Lockean proviso is formulated several times and in several different ways in the Second Treatise. The two clearest, most explicit, and most famous formulations are in section 27, where "enough and as good" is used, and in section 33.
101. Throughout, I have used these three expressions as if they were synonymous. Of course, they are not. Utility in the canonical formulation is a mapping of a preference ordering into the real numbers - that is, a function in the technical, mathematical sense, where both the range and the domain are subject to a variety of limitations. Preference satisfaction is the psychological basis for utility maximization. However, welfare is the term that differs most from the others, for it (typically and at least prima facie) suggests "objective" elements of undesired needs and unrecognized constituents of well-being. That is, I may need a medicine for my welfare but not know it, or I may know it, but not prefer it or desire it. For our purposes, however, the three terms can be used interchangeably.
102. See, for example, Fernand Braudel, The Wheels of Commerce (New York: Harper and Row, 1979); Nathan Rosenberg and L. E. Birdzell, How the West Grew Rich (New York: Basic Books, 1988); and E. L. Jones, The European Miracle (Cambridge: Cambridge University Press, 1981).
103. See, for example, Fernand Braudel, The Wheels of Commerce (New York: Harper and Row, 1979); Nathan Rosenberg and L. E. Birdzell, How the West Grew Rich (New York: Basic Books, 1988); and E. L. Jones, The European Miracle (Cambridge: Cambridge University Press, 1981).
104. See, for example, Fernand Braudel, The Wheels of Commerce (New York: Harper and Row, 1979); Nathan Rosenberg and L. E. Birdzell, How the West Grew Rich (New York: Basic Books, 1988); and E. L. Jones, The European Miracle (Cambridge: Cambridge University Press, 1981).
105. The same point could be made in a couple of ways using the concepts of contemporary economics. One approach is that of consumer and producer surplus. A different perspective that, nonetheless, makes the same point is the example of the two traders in the Edgeworth Box. See note 46 supra.
106. See Robert Nozick's elegant last paragraph in Anarchy, State, and Utopia (New York: Basic Books, 1974), pp. 333-34, for an implicit, but powerful, appeal to Kantianism in this form of rights-based libertarianism. Even more clear is the undeniable moral, as opposed to egoistic, foundation of the position.
107. Although the mathematics of contemporary economics does accept the case where the improvement in Thursday's situation approaches zero in the limit, I reject it on practical and psychological grounds. Just as, in the zero-sum view, exchange at a "just price" was intentional action without motive, so exchanging where your gain "approaches zero in the limit" makes no sense as regards motivation or practical reasoning, for you are also approaching indifference in the limit.
108. John Roemer, Free to Lose (Cambridge, MA: Harvard University Press, 1988), p. 59.
109. It fails to be a market transaction because there is no market (there are not multiple traders of bananas and breadfruit). Rather, this is a case of "bilateral monopoly," with each trader having one kind of item and reciprocal preferences. However, this does not offer the threatening associations that usually go with "monopoly." There is not, indeed there cannot be, coercion, for example. Each trader, but for lacking special knowledge and skills, has access to the other's source of products, and each trader can live quite well (as they did in the pre-trade world) without the other's product. Return to the market point again for a moment. Usually we think of a market as requiring money, if for no other reason than to generate enough exchange to be a market. For our purposes, it can remain a moot point whether a market requires money, for we do not really need a fully developed market.
110. See my essay "Can Libertarianism Sustain a Fraud Standard?" Ethics, vol. 104, no. 4 (July 1994).
111. Hobbes is, of course, the locus classicus for this approach. By far the most important effort in contemporary theory is David Gauthier's Morals by Agreement (Oxford: Oxford University Press, 1986), although most would agree that Gauthier does not quite succeed in a complete reduction of morals to self-interest.
112. See, for example, Joseph Schumpeter, The Theory of Economic Development (New Brunswick, NJ: Transaction Books, 1983), ch. 4.
113. Among several works, perhaps the one most on point is Israel Kirzner, Perception, Opportunity, and Profit (Chicago: University of Chicago Press, 1979), esp. Part 3; but see also his Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973).
114. Among several works, perhaps the one most on point is Israel Kirzner, Perception, Opportunity, and Profit (Chicago: University of Chicago Press, 1979), esp. Part 3; but see also his Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973).
115. A "negotiated sale" involves only one (or one lot) of something versus the vast quantity required for a true market with nearly perfect competition. It does not involve repetitive purchases and sales to many parties. There is no market price set by supply and demand and no assurance that the market will "clear." Indeed, in this case, that could only mean that the item will be sold; but there is no assurance of that. Lastly, the actual transaction price is arrived at through bargaining. Treatments of negotiation, where the points set out here are discussed in detail, may be found in Roy J. Lewicki and Joseph A. Litterer, Negotiation (Homewood, IL: Irwin, 1985), ch. 4; and in an outstanding book by Howard Raiffa, The Art and Science of Negotiation (Cambridge, MA: Harvard University Press, 1983), passim, but esp. pp. 35-65.
116. A "negotiated sale" involves only one (or one lot) of something versus the vast quantity required for a true market with nearly perfect competition. It does not involve repetitive purchases and sales to many parties. There is no market price set by supply and demand and no assurance that the market will "clear." Indeed, in this case, that could only mean that the item will be sold; but there is no assurance of that. Lastly, the actual transaction price is arrived at through bargaining. Treatments of negotiation, where the points set out here are discussed in detail, may be found in Roy J. Lewicki and Joseph A. Litterer, Negotiation (Homewood, IL: Irwin, 1985), ch. 4; and in an outstanding book by Howard Raiffa, The Art and Science of Negotiation (Cambridge, MA: Harvard University Press, 1983), passim, but esp. pp. 35-65.