RE: Re: theory of interest

["Forstater, Mathew" <ForstaterM@xxxxxxxx>]

Michael, I heartily disagree that for Smith profits were wages of
supervision.  In WN, Smith states that:

"The profits of stock, it may perhaps be thought, are only a different
name for the wages of a particular sort of labour, the labour of
inspection and direction.  They are, however, altogether different, are
regulated by quite different principles, and bear no proportion to the
quantity, the hardship, or the ingenuity of this supposed labour of
inspection and direction."

Profits are regulated by the value of stock employed, and have nothing
to do with how much, how hard, or even whether or not the capitalist
works at all.


-----Original Message-----
From: Michael Perelman [mailto:michael@xxxxxxxxxxxxxxxxx]
Sent: Monday, May 13, 2002 6:26 PM
To: pen-l@xxxxxxxxxxxxxxxxxxx
>Subject: [PEN-L:25973] Re: theory of interest

For Smith, profit was mostly "wages of superintendence."  He also said
that
competition would drive down the rate of profit, but keep in mind that
the
profit was on "stock."  The workers owned their own tools.  Employers
just gave
them the wherewithall to survive.

In any case, he did not have a consistent theory.

"Devine, James" wrote:

> I'm not a Adam Smith scholar: did he believe that the rate of profit
would
> go to zero, so that capitalism would be in essence transformed into
simple
> commodity production?

--

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx