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Smith, for all his virtues, here begs the question of what determines prices. If it were always simply at the whim of the producer why would such individuals and firms limit themselves to (1.05)^n? Why not 1.1? 1.2? 2? 200? 2000?
If each stage could only reap its 5%, why...
If each stage could only reap its 5%, why...
https://twitter.com/isabellamweber/status/1664387403748986889
...would each not strive to acquire all those identifiably up- and downstream of it, collapsing the very division of labour Smith so correctly lauded?
And what of the VALUE of these so easily dictated profits? If the final price rises exponentially, the entrepreneur’s return...
And what of the VALUE of these so easily dictated profits? If the final price rises exponentially, the entrepreneur’s return...
...turns to dust in his hands: his 5% surplus buys only 1/(1.05)^[n-1] finished goods in the worst case, so who benefits? And where does the money come from to pay such a pyramid of rising purchase and sale prices if not from the REAL #inflation determinant - expanding credit!?
...Smith’s principal error here is his Labour Theory of Value: an understandable, but critical error of logic which explains why modern Leftists -whether full-fat or lite Marxists- have jumped in this historically jejune calculation.
The rest of us should know better!
The rest of us should know better!
@threadreaderapp please unroll
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