Below are the 20 most recent journal entries recorded in skzbrust's LiveJournal:

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Sunday, July 5th, 2009
11:13 am	TWoN Book 2 Chapter 3 This chapter deals with the accumulation of capital.  The second half of the chapter isn’t especially interesting to me, as it concerns itself with the way an individual might spend his capital (luxeries or production, and the kind of luxeries) and the effect this has on the capital of the nation.  Today, the issue is much more the degree of concentration of wealth in a few hands, and much less whether those with wealth spend it on feasts or expensive trinkets. The first half of the chapter is more interesting in terms of the economic laws.  On page 270 he writes: “There is one sort of labor which adds to the value of the subject upon which it is bestowed: there is another which has no such effect.”  In the first category he includes farmers and manufacturers; in the second servants.  Later, he implies this also includes opera-singers, opera-dancers, lawyers, churchmen, &c. “A man grows rich by employing a multitude of manufacturers: he grows poor by maintaining a multitude of servants.”  In Marxist terms, the latter are not performing labor because they are not adding value to a commodity; but I think Smith’s distinctions make sense; in any case, both Marx and Smith arrived at the same place in terms of use of capital to create value.  It is interesting that Smith ignores the profit made by, for example, the owner of the opera company by employing singers and dancers; apparently to him this does not constitute value, though clearly it does increase capital. Further down on 270 he speaks of labor invested in machinery as labor stocked up and stored against later use.  This is profound, and helps to understand why machinery cannot, itself, increase the value of a commoodity, but only transfer it.  “That subject, or what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labor equal to that which had originally produced it.”  This is well known in physics, and seems to also apply to economics: machines can store, transfer, or alter the form of energy (or work, or labor), but cannot create it.  Where we depart from physics is that machinery can multiply the effect of labor by increasing its efficiency, but this is still qualitatively different from creating it. Speaking again of lawyers, clergymen, prostitutes, and similar laborours: “Like the declamation of the actor, the harrangue of the orator, or the tune of the musician, the work of all of them perishes in the very instant of production.”  This has changed because of the improvement in technology to preserve information: now, a singer is able to add value to a commodity: a CD or DVD.  But even if the case has changed, his method is spot on.  (Sidenote: One might consider that pornographic film and video has changed some forms of prostitution from unproductive to productive labor; I wonder what Smith would say?) Page 273: “The proportion, therefore, between the productive and unproductive hands, depends very much in every country upon the proportion between that part of the annual produce which, as soon as it becomes either from the ground or from the hands of the productive laborers, is destined for constituting a revenue, either as rent, or as profit.  This proportion is very different in rich from what it is in poor countries.” This is very important in a couple of ways.  First, the difference between rich and poor countries consists in several things, but most importantly on the cultural level–by which I mean, specifically, the technological level: how productive is labor in that country?  To what extent can labor be multiplied?  The other interesting thing that came to mind is that it struck me, when he spoke of rent and profit, that is often treating those two things in the same way.  It is not so big a leap after all from Smith’s saying that ground-rent is a division of value (along with wages and profit) to saying that ground-rent and profit are among the ways that suprlus value is divided. Page 281: “The value of consumable goods annually circulated within the society being greater, will require a greater quantity of money to circulate them.” Page 283: “Such people, as they themselves producing nothing, are all maintained by the produce of other men’s labor.”  He is not speaking here of capitalists, but, notwithstandind their useful (and, in a market economy, necessary) role in production, he could be. Page 284: “The productive powers of the same number of laborers cannot be increased, but in consequence either of some addition and improvement to those machiens and instruments which facilitate and abridge labor; or of a more proper division and distribution of employment.  In either case, addtional capital is almost always required.  It is by means of an additional capital only, that the undertaker of any work can either provide his workmen with better machinery, or make a more proper distribution of employment among them.”  Very nice!  That is, indeed, how a market economy works.  That’s why it is called capitalism. Originally published at Words Words Words. Please leave any comments there.
Saturday, July 4th, 2009
7:51 pm	Food discovery I got to have dinner with The Amazing Mris and her Merry Band, and she cooked, and I discovered that one can make something with paprika and saffron and it is very, very good.  I had never even thought of combining paprika and saffron. Yum. Originally published at Words Words Words. Please leave any comments there.
Friday, July 3rd, 2009
1:17 pm	Dark fantasy recommendations, please A friend just asked me to recommend some dark fantasy, and I realized that, with the exception of anything by Tim Powers, I don’t know much about it.  You can argue about what “Dark Fantasy” means, if you wish*, but also throw in some reading suggestions.  Thanks! *One friend recently explained, “If I like it, it’s dark fantasy, if I don’t like it, it’s horror.” Originally published at Words Words Words. Please leave any comments there.
Monday, June 29th, 2009
10:14 pm	…but I’m his biggest fan! So, I just joined my fan club on Facebook.  Is that, um, weird? Originally published at Words Words Words. Please leave any comments there.
10:39 am	TWoN Book 2 Chapter 2 Part 5 On page 251 he discusses what happens when a bank tries to circulate more currency than what the country can employ, and how the excess is almost immediately returned.  I suspect this is another area that is no longer applicable; at least directly. Similarly, on page 254: “What a bank can with propriety advance to a merchant or undertaker of any kind, is not either the whole capital with which he trades, or even any considerable part of that capital; but that part of it only, which he would otherwise be obliged to keep by him unemployed, and in ready money for answering occasional demands.”  Not so much any more–banks have become completely intertwined in every branch of every industry.  Indeed, Lenin defined Imperialism as that stage of capitalism which is dominated by finance capital, with industrial capital taking a back seat. He goes on in this vein for some time, cautioning banks against making loans which cannot be returned for many years.  Page 258: “It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country.”  I may be brushing over this too lightly, but it just seems to me to no longer apply.  Perhaps there would be value in tracing exactly when and how it stopped applying, and what the consequences are, but there’s no way I could pull that off.  A man’s got to know his limitations. Page 259, quoted mostly because I like it: “The commerce and industry of the country, however, it must be acknowledged, though they may be somewhat augmented, cannot be altogether so secure, when they are thus, as it were, suspended upon the Daedalian wings of paper money, as when they travel upon the solid ground of gold and silver.” He then goes on to discuss the reglulation of banks by government, arguing that small denominations of paper should be avoided, and admitting that some people may see such regulations as infringement upon personal liberty.  Page 263: “But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as of the most despotic.  The obligation of bulding party walls, in order to prevent the communication of fire, is a violation of natural liberty, excactly of the same kind, with the regulations of the banking trade which are here proposed.” He then asserts that paper money is exactly the same as gold and silver, under certain conditions: “issued by people of undoubted credit, payable upon demand without any condition, and in fact always readily paid as soon as presented.” He discusses errors in the banking trade which no longer, I think, apply.  He talks about the North American colonies (most of which would no longer be colonies within a decade), and how these colonies attempted, by law, to declare certain paper currencies to be above their actual value, with Smith condems as, in essence, debtors attempting to steal from their creditors.  Page 266: “No law, therefore, could be more equitable than the act of parliament, so unjustly complained of in the colonies, which declared that no paper currency to be emitted there in time coming should be a legal tender of payment.” Page 268: The proportion between the value of gold and silver and that of goods of any other kind, depends in all cases , not upon the nature or quantity of any particular paper money, which may be current in any particular country, but upon the richness of poverty of the mines, which happen at any particular time to supply the great market of the commercial world with those metals.” Which brings us, at least, to the end of the this chapter.  I only hope that my confusion over much of what was covered here won’t interfere with my understanding further chapters, because if it does, I’ll have to go back to this one and try again, and I may jump off the Mendota Bridge instead. Originally published at Words Words Words. Please leave any comments there.
Sunday, June 28th, 2009
6:46 pm	TWoN Book 2 Chapter 2 Part 4 On page 244, Smith reiterates what he said before about not counting money when reckoning wealth.  This–both his reasoning and my problems with it–are covered in my earlier posts, so there’s no point my restating them. On page 245 he talks about the substitution of paper for gold and silver, and from there discusses the proportion of money (gold, silver, and paper) that is in circulation at any given time to the total value of the produce of a nation.  He speaks in particular of the money destined for maintainance of industry.  What is interesting here is that he seems to be implying that money is often the limiting factor in production, on a national level, whereas earlier I thought he was saying that labor was the limiting factor.  I think I’m just confused here. NB: Page 247: The phrase “discounting bills of exchange,” which is used a lot, means “advancing money upon them before they are due.”  Now, if I just knew what “bills of exchange” were, I think I’d have it. On page 249 he gives an example, referring to “cash accounts” as practiced at the time in Edinburgh–basically automatic short-term loans, presumably for relatively small amounts.  He talks of how merchants without access to this cash account must keep funds on hand to pay bills as they become due.  Suppose the amount this merchant must keep in hand for lack of this account is five hundred pounds.  Then, “His annual profits must be less by all that he could have made by the sale of five hundred pounds worth more goods; and the number of people employed in preparing his goods for the market, must be less by all those that five hundred pounds more stock could have employed.”  Well yes, except that he is ignoring the interest the merchant must pay on that cash account as he uses it.  He is assuming that the interest he pays must be less than what 500 pounds invested in his business would bring in; I’m not sure that is always the case. Further down.  “The whole paper money of every kind which can easily circulate in any country never can exceed the value of the gold and silver, of which it supplies the place, or which (the commerce being supposed the same) would circulate there, if there was no paper money.”  Here he is warning against putting into circulation more paper within a country than the amount of gold and silver that would circulate there.  This says nothing about circulation (of gold and silver) outside of the country, which, added to the paper circulating within, will be a significantly greater total than the amount of gold and silver.  His objection, then, is to excess currency within a country; not to producing currency in excess of that which is backed by precious metal. On page 250 he mentions two expenses unique to bankers.  “First, in the expence of keeping at all times in its coffers, for answering the occasional demands of the holders of its notes, a large sum of money, of which it loses the interest; And, secondly, in the expence of replenishing those coffers as fast as they are emptied by answering such occasional demands.”  I’m having trouble seeing how those two things aren’t just two ways of saying the same thing.  Moreover, it seems that, in some sense, every business must have money on hand to meet occasional expenses, barring access to a “cash account” as discussed above (in which case, there is the replacement cost of the interest on the cash account). Originally published at Words Words Words. Please leave any comments there.
Thursday, June 25th, 2009
8:27 am	Vlad novels - Spoilers - Part 2 Topic started by request.  I’m about a third of the way through the first draft of Tiassa.  Or, as I affectionately call it, Hadassah. – Hadizsákmányapa Originally published at Words Words Words. Please leave any comments there.
Wednesday, June 24th, 2009
2:12 pm	A Walking Tour of the Shambles by Neil Gaiman & Gene Wolfe I hope you’ve read Invisible Cities by Italo Calvino.  If not, go read it.  If you have, imagine stopping at one of those cities and finding the weirdest, darkest little area in it.  Then imagine a description of that area by Gaiman and Wolfe.  That the city in this case happens to be Chicago is besides the point.  It is a perfect little gem of delightful madness and charming evil.  Go read it. Originally published at Words Words Words. Please leave any comments there.
10:37 am	TWoN: Sidebar–Confusion and hidden mechanisms One of the reasons the study of capitalism is so difficult (and, in some ways, so much fun) is that so many of the processes are hidden.  In, for example, a feudal economy, things are pretty straightforward: peasant grows crops, gives some to landlord, eats the rest and makes most of his goods at home and uses them himself.  Exchanges at the market are subsidiary to the basic flow of the economy, and not all that hard to understand (need iron to make a plow?   Give me ten bushels of corn.  Thanks.  Cheers). A market economy by it’s nature hides a lot of its activity.  For example, the exchange value of a commodity is not realized until it reaches the market; therefore, it looks as if the value is created at the market, which leads to no end of confusion.  Lord Kyenes, for example, never was able to shake the notion that the market created value, and the economists who followed him are still stuck there.  The explosive power of TNT is created when the compound is formed, but not realized until it is detonated; to say that value is created at the market would be like saying that the explosive power of TNT is created by the explosion. Smith’s ability to lay bare many of the processes of a market economy (the creation of value by labor, the effect of infrastructure on the realization of profit, money as a circulating commodity that eases production) may not have resulted in a full understanding of these processes, but showed that they could be understood, and pointed the way to understanding them. The role of money–a commodity used for universal exchange–in a market economy is inherently difficult to understand.  I don’t blame myself terribly for having so much trouble with it in spite of lots of smart people trying to explain it to me; I think it is just the nature of the beast.  I started this project in order to understand rent, because I need to for a book I’m working on.  I may never understand rent, and I may never understand money; but the struggle to do so is amazingly gripping, and I want to thank all of you who have been helping me with it for your patience. Originally published at Words Words Words. Please leave any comments there.
Tuesday, June 23rd, 2009
9:54 pm	TWoN Book 2 Chapter 2 Part 3 On page 239 we find: “As the same guinea which pays the weekly pension of one man to-day, may pay that of another to-morrow, and that of a third the day thereafter, the amount of the metal pieces which annually circulate in any country, must alwys be of much less value than the whole money pensions annually paid with them.”  The point appears at first glance to be reasonable: we cannot count the metal coins because we are already counting the, if I may, virtual coins as part of each person’s income.  The trouble is, we also have the actual metal coins which are, at any given time, somewhere.  These coins have value (for the metal they contain, if no other way).  It seems to me that there is something unresolved here.  In spite of several excellent remarks in previous posts, I do not believe that a mere agreement among a set of people that a certain commodity will be used to trade for any other commodity, to mediate among them, removes all value from that commodity.  Among societies (mentioned, I believe, by Smith in Book 1) where pigs are a medium of exchange, pigs could still be, and were, eaten. Well, let’s move on.  Page 240: “The whole capital of the undertaker of every work is necessarily divided between his fixed and his circulating capital.  While his whole capital remains the same, the smaller the one part, the greater must necessarily be the other.  It is the circulating capital which furnishes the materials and wages of labor, and puts industry into motion.  Every saving, therefore, in the expence of maintaining the fixed capital, which does not diminish the productive powers of labor, must increase the fund which puts industry into motion, and consequently the annual produce of land and labor, the real revenue of every society.” Okay, there are a couple of problems here.  First, yes, it is certainly the case that, by cutting the costs of machinery, more capital is available for production.  But any reduction in wages and material that doesn’t reduce production (ie, cutting wages, or finding cheaper material), also provides more capital for putting into production: If you are paying 10 workers $100 a day, and cut their wages to $90 a day, you can hire another worker, and even have $10 to invest in material.  The more significant problem, however, is that, in point of fact, that is not how capitalism works: the tendency is for more and more capital to be invested in machinery.  As technology improves, the capitalist is forced, by competition and the need to maintain market share, to upgrade his machinery, in many cases, before the old machinery has been paid for.  Of course, this was probably not as true in the 1760s, and I can’t think that Smith is culpable for not knowing it. On page 241, he talks about the importance of confidence in a banker issuing notes.  Today, this is the pervue of a government, but his point is no less valid.  Notes have value insofar as it is believed that there is a commodity with actual value backing them.  Further down, he speaks of a banker with one hundred thousand pounds worth of notes in circulation, but requiring only twenty thousand pounds of actual metal to have available for demands of payment.  He says, “Eighty thousand pounds of gold and silver, therefore, can, in this manner, be spared from the circulation of the country; and if different operations of the same kind should, at the same time, be carried on by many different banks and bankers,, the whole circulation may thus be conducted with a fifth part only of the gold and silver which would otherwise have been requisite.”  Okay, am I missing something, or is this not a recipe for inflation? **Edited later, because I was muddled the first time** He goes on to speak of notes circulating within a country leaving the actual metal for circulation out of the country.  While I can see where this would bring additional profit to the banker, it also points out yet another reason for imperialism–that is, for capitalism to necessarily expand.  Markets, not only for products, but for metals must always be available.  He speaks of a “channel” within a nation being full, and therefore money being sent outside of the nation.  In other words, a given nation can only, because of the amount of available labor and material, make use of a given amount of currency.  However, he says, bank notes may be circulated within the country sufficient to fill the channel, leaving the actual coinage available to send (ie, invest) in other channels–that is, in other countries.  This is only one, but a very important reason why capitalism becomes international.  The trouble is, it seems to me,   that nation to which we send the coins has it’s own “channel.”  This was probably not a problem in his time (there were colonies galore, after all), but looking forward a hundred years or so, we start to see where conflicts over who gets to use what channel might eventually need to be backed up by armed might. Originally published at Words Words Words. Please leave any comments there.
4:43 pm	Carolyn is married The bride was beautiful.  Tons and tons of cool people were there.  It was pretty nifty. Fourth Street was good, too.  I suck at reports, so I won’t give one, but I’m pleased with how hard everyone worked to make it come off. I don’t have working email yet, but I hope to by tomorrow. Originally published at Words Words Words. Please leave any comments there.
Tuesday, June 16th, 2009
8:41 pm	Liminal spaces: Dive bars, stoner haunts, and so on Hey everyone. I haven’t written here in a while as I’ve moved out of the Dream Café and into Houston. I’ve been settling into my new digs and exploriong the better parts of this sprawling city. I’ve been discovering great little hidden places here and it’s got me thinking on the nature of a city’s hidden secrets. In this case, the little hidden haunts and hangouts. For example, here in Houston is a little dive bar I’ve recently been introduced to and grown to love. It has no sign outside, so you’d never know it’s there unless you knew. From what I’ve been told, everyone from the homeless to police chiefs have frequented the bar over its storied history (it’s the sort of bar where a new visitor may be regaled with its history by an old timer), yet the back yard patio is a place where anything goes, whether it’s, cigarettes, smoking pot or sharing a little bump of white powder, depending on their vice of choice. There’s no television but a great jukebox and a couple pool tables, and the drinks are cheap and so strong I order a rum & coke and a coke on the side and mix the two together. It’s a place no one goes out of their way to keep secret but a place no one really advertises either. I’m fascinated by these hidden urban treasures, be it dive bar or secret pot cafe or secret gathering place for moonlight drum circles — places where the city and the law and life seem to move around them, leaving a little bubble or oasis. I’m fascinated by their commonalities and their differences. You don’t have to name names, but I’d like to hear about a favorite one you’ve experienced — a great between space of the past or one you frequent now. -Kit Originally published at Words Words Words. Please leave any comments there.
7:28 pm	Traveling I’m off to Minnesota.  I expect to be there for a few weeks.  During this time, my normal email won’t work, so if you have to reach me use the one this my first three initials and my last name at gmail dot com. Originally published at Words Words Words. Please leave any comments there.
Monday, June 15th, 2009
5:14 pm	TWoN Book 2 Chapter 2 Part 2 I have found places in this book where I respectfully differ with Mr. Smith.  They fall into two categories: 1. Those things which he couldn’t have understood simply because the information wasn’t available at the time he wrote (one cannot expect advanced metallurgy from a culture which just that morning discovered iron, or or full understanding of a market economy just as it’s gearing up), and 2. Occasional objections to his method, where it seems to me made complex, contradictory processes seem linear and mechanical (as for example when he speaks of acquiring stock coming first, then division of labor). One trouble I’m having in this chapter is that I’m seeing what appear to be a different sort of error–false deductions and cases of ignoring significant data.  It seems to me that if I’m seeing those kinds of errors, I’m missing something; I am more likely to be mistaken about that kind of thing than he is.  All I can think of to do is try to grasp what he means, point to the mistakes I’m seeing, and hope some Smart Person can, using small words, help me figure out what I’m missing. That said, let’s look at Page 236: “Money, therefore, is the only part of the circulating capital of society, of which the maintenance can occasion any diminution of their neat revenue.”  Doesn’t this ignore the cost of transport, payment of storage of finished commodities, and the cost of various middlemen, who, by definition, concern themselves with circulating capital? Page 237: ” A certain quantity of very valuable materials, gold and silver, and of very curious labor, instead of augmenting the stock reserved for immediate consumption…is employed in supporting that great but expensive instrument of commerce, by means of which every individual in society has his subsistence, conveniencies, and amusements, regularly distributed to him in their proper proportion.”  Is this the answer to my point above?  That is, is he here referring to the market itself, as well as the infrastructure that supports it? “…as the machines and instruments of trade, &c, which compose the fixed capital either of an individual or of a society, make no part either of the gross or of the neat revenue of either,; so money, by means of whichthe whole revenue of the society is regularly distributed among all its different members, makes itself no part of that revenue.  The great wheel of circulation is altogether different from the goods which are circulated by means of it.  The revenue of the society consists altogether in those goods, and not in the wheel which circulates them. He becomes more specific about this point later.  His point is that money is the means whereby commodities circulate, and, in calculating the revenue of an individual or nation, one can count the money, OR the commodities one can purchase with the money, but not both.  As far as that goes, it makes sense.  The trouble is, money is a commodity.  Whether paper (which he discuses later) or heavy metals makes no difference.  Money in any case, has a use-value, an exchange-value, is interchangable, and was created for exchange.  That is the definition of a commodity.  What makes money unique is that it is the only commodity whose use-value is quantifiable–or, put another way, whose use-value is its exchange-value.  This permits us to exchange commodities using money as a medium, and thus it appears to be a separate thing, but it isn’t.  In actual practice, when determining the “net worth” of an individual, one takes into account the market value of that person’s possessions, AND that person’s money–no one suggests counting the possessions, the money, and what a person could buy with the money. Smith is obviously making a point here, and it is a point I’m missing. Originally published at Words Words Words. Please leave any comments there.
Saturday, June 13th, 2009
8:34 pm	TWoN Book 2 Chapter 2 Part 1 This chapter deals with money, and it makes my head hurt. He begins by restating that the price of the “greater part” of commodities resolves itself into: wages of labor, profit, and rent.  His use of “greater part” here makes me wonder about the rest; unless I missed something, those are the only parts of price he has told us of; but that isn’t the point here, so we’ll let that go. He then goes on to speak of the produce of an entire country: Page 223: “The whole price or exchangeable value of that annual produce, must resolve itself into the same three parts, and be parcelled out among the different inhabitants of the country, either as the wages of their labor, the profits of their stock, or the rent of their land.”  So far, so good.  If the value of each commodity thus resolves itself, so must the the total produce of a country. He then speaks of dividing this produce of the country, as of an individual, into gross and net.  (Which he writes as gross and “neat” giving us the etymology of “net” which, in itself, is neat;  In quoting him, I’ll update the spelling, as I’ve done with a few other words here and there, which I do just to keep things net). His use of gross and net is pretty straightforward, I think: Gross refers to whatever comes in, net to whatever value is left over after expenses. Page 234: “The whole expense of maintaining the fixed capital, must evidently be excluded from the net revenue of the society.  Neither the materials necessary for supporting their useful machines and instruments of trade, their profitable buildings &c. nor the product of the labor necessary for fashioning those materials into the proper form, can ever make any part of it.  The price of that labor may indeed make a part of it; as the workmen so employed may place the whole value of their wages in their stock reserved for immediate consumption.  But in other sorts of labor, both the price and the produce go to this stock, the price to that of the workmen, the produce to that of other people…” If I understand this correctly, he is saying that maintainance of fixed capital cannot be included in the net profit of a society.  If I am understanding correctly, this makes sense, in that maintainance of fixed capital, while in the long run producing profit, does not immediately provide income, but rather is an expense; and he is asserting that this is also true for the total profit of a society. “The intention of the fixed capital is to increase the productive powers of labor, or to enable the same number of laborers to perform a much greater quantity of work.”  Yes, exactly.   By fixed capital here, we mean the means of production, and Smith correctly draws no distinction here between those means that take the form of machines, and those that take the form of land which is or has been made suitable for agriculture. Page 235: “A certain quantity of materials, and the labor of a certain number of workmen, both of which might have been immediately employed to augment the food, clothing and lodging, the subsistence and conveniencies of the society, are thus diverted to another employment, highly advantageous indeed, but still different from this one.”  Right.  Makes sense.  Properly laid out investment in improving machinery does return a profit, but is nevertheless an expense and does not directly add to an individual’s or a country’s net. Page 236: “But, thought the whole expense of maintaining the fixed capital is thus necessarily excluded from the net revenue of the society, it is not the same case with that of maintaining the circulating capital.  Of the four parts of which this latter capital is composed, money, provisions, materials, and finished work, the three last, it has already been observed, are regularly withdrawn from it, and placed either in the fixed capital of the society, or in their stock reserved for immediate consumption.  Whatever portion of those consumable goods is not employed in maintaining the former goes all to the latter, and makes part of the net revenue of the society.” Any provisions, materials, and finished work that isn’t immediately consumed by those who produce it can be sold.  Okay.  He then continues, “The maintainance of those three parts of the circulating capital, therefore, withdraws no portion of the annual produce from the net revenue of the society, besides what is necessary for maintaining the fixed capital.”  I’m still fine.  Other than expenses for maintainance and that tiny portion which might be immediately consumed (the farmer eating some of his corn, the owner of textile factory keeping a few bolts of cloth), produce is available for sale (by circulating) and thus adds to a society’s net. “The circulating capital of a society is in this respect different from that an individual.  That of an individual is totally excluded from making any part of his net revue, which must consist altogether in his profits.  But though the circulating capital of every individual makes a part of that of the society to which he belongs, it is not upon that account totally excluded from making a part likewise of their net revenue.” Where I get lost is, why is the circulating capital of an individual excluded from making any part of his net revenue.  I’ve just reread chapter 1 of Book 2, which is where I should have figured that out, and I don’t get it.  I’m missing something important here.  The circulating capital of an individual consists of that portion of his stock that he exchanges.  Is Smith here making a distinction between *realizing* a profit, which happens in the marketplace, and *creating* a profit, which happens at the point of labor?  That would, indeed, make a great deal of sense, but I don’t think that’s what he’s saying.  Does anyone?  I’m lost. I’ll hold off on continuing this chapter until I think I have some sort of understanding of this part, because after this it gets really tangled. Originally published at Words Words Words. Please leave any comments there.
Friday, June 12th, 2009
4:19 pm	TWoN Interum Report I thought the chapter on rent was hard.  Heh.  The one on money is totally kicking my ass.  I’ll read it again, and maybe just get as far as the first time I go, “Huh?” and stop there and see if Smart Internet People can help me figure it out. Originally published at Words Words Words. Please leave any comments there.
Monday, June 8th, 2009
4:17 pm	On the anti-racism discussion It seems to me that many LWPs when discussing AR with POCs and other LWPS (not to mention RSs) sound as they’ve gotten so LiA that they are CI.  Is it necessary to be OttPoA in order to discuss AR?  Does it really help to become LiA to the point where you sound like a TFI?. Just wondering. Originally published at Words Words Words. Please leave any comments there.
Sunday, June 7th, 2009
8:20 pm	Urban myths, gullability, conclusions It started with reading the sidebar of Making Light–a habit I encourage.  On “PNH’s Sidelights”, I came across this.  It’s brief, take a moment to read it. Now, here is my problem.  A certain Walter Williams says “Thirty, 40 or 50 years ago, no one in their right mind would have believed the Merv Grazinski urban legend possible, but not so today.  Personal responsibility has taken a back seat in our increasingly immoral and litigious society.” The author of the blog, John Cole, responds thus: “This is a particular example of wingnut argumentation that I find rather amusing, and it always takes the following form: Sure, I’ve now learned that X is not actually happening, but the fact that I believed that X could be happening is not, as one would think, a commentary on my foolishness and gullibility, but rather it is a scathing indictment of our societal decline.” I think they’re both wrong.  John Cole is wrong in implying that one can’t learn anything from widespread mistakes and urban legends; Walter Williams is wrong about the lesson of this one. For example, In my opinion, the question is not whether Kennedy was killed as the result of a conspiricy (in my opinion, if the CIA had wanted him dead, they’d have found a better patsy than Oswald and given him a semi-auto, but that’s beside the point).  The question is, what is going on in this country if something like half its citizens find it believable that its own Government was involved in a presidential assassination? Yes, it is possible to learn from urban legends and widespread false rumors–the trick is drawing the correct lessons. In my opinion, such urban legends as the Grazinski Winnebago tell us that it is in the interest of certain sections of society to attack the legal system from the Right–in other words, it warns us that efforts to remove the minor protection from big business that the court system provides.  Even though most of us cannot afford to bring a lawsuit, even though even if we do we haven’t the resources to compete fairly, it is still too much protection for many elements in our society–corporations must have nothing to fetter them in their drive for profit, particularly responsibility to the poor bastards who get hurt. Originally published at Words Words Words. Please leave any comments there.
4:04 pm	Defending Tobacco I have set out to write in defense of tobacco.  I do it for the challenge.  There are other things that would be almost equally challenging, but I don’t know enough about them: I’ve never committed  pedophilia or sent out spam emails or run for congress, so  tobacco seems the only remaining choice. I know very well the cards are stacked against me.  The only people who love the big tobacco companies are those who own the big tobacco companies.  In this way tobacco is not unlike oil.  A difference between them is that, in the last twenty years at least, no country has been invaded for its tobacco crop.  To me, this is a point in favor of tobacco, but no doubt others differ. Now, I am aware that tobacco is not good for me.  I have been assured of this by, not only the medical profession, but by other good-hearted folk who, I am certain, have been earnestly told by their doctors and clergymen that they should seek me out and inform me.  I have had kindly people travel a thousand miles merely to tell me that tobacco is bad for me.  Sometimes they bring friends and distant relations and remain for weeks to be certain I have this information.  Such evidence of good will cannot be ignored, and I do not ignore it.  I am convinced that they are right and tobacco is not good for me, that I will live longer if I refrain.  And, as has been said before, even if I do not live longer, it will feel longer, which is the same thing. I am also aware that tobacco is not good for the fellow next to me.  There have been studies indicating that spending forty hours a week for twenty years in smoke-filled rooms may be harmful; it seems reasonable, therefore, to conclude that if a chance whiff of my smoke should infiltrate the air of someone next to me he will drop dead on the spot, and therefore I accept this as a fact.  I know that if it should happen I would feel bad. Another thing that makes it hard to defend tobacco is the recent increase in Federal tax on tobacco.  The tax on loose (roll-your-own) tobacco just increased by a factor of ten.  What makes this especially praiseworthy is that such an increase, like all taxes on goods and services, hits especially hard on the poor.  This will encourage the poor to quit smoking, because as we all know raising the price of something at once causes those addicted or habituated to it to quit; anyone pretending that our government cares little for the poor should be convinced by this statistic.  And it need hardly be said that this tax has the additional benefit of providing much needed funds for bailing out billionaire bankers and invading countries for their tobacco, or whichever resource that was. With all of this working against me, how can I even consider defending tobacco? Suddenly I am at a loss.  Let me light a cigarette.  Ah, yes, now I remember.  My defense is as follows: I like it. Originally published at Words Words Words. Please leave any comments there.
Saturday, June 6th, 2009
9:38 pm	TWoN Book 2 Chapter 1 From the introduction to Book 2: Page 221: “In that rude state of society in which there is no division of labor, in which exchanges are seldom made, and in which every man provides every thing for himself, it is not necessary that any stock should be accumulated or stores up beforehand, in order to carry on the business of the society . . .  But when the division of labor has once been thoroughly introduced, the produce of man’s own labor can supply but a very small part of his occasional wants.  The far greater part of them are supplied by the produce of other men’s labor, which he purchases with the produce, or, what is the same thing, with the price of the produce of his own.” On page 222: “As the accumulation of stock must, in the nature of things, be previous to the division of labor, so labor can be more and more subdivided in proportion only as stock is previously more and more accumulated.”  Actually, this isn’t strictly true–in practice it is more a dialectical process, where “accumulation of stock” and division of labor feed  on each other, each driving and adding to the other.  However, I don’t think this will have a significant effect on the understanding of the substance of the following five chapters. He divides stock into fixed and circulating, according to how profit is realized from it.  For example: Page 226: “The farmer makes his profit by keeping the laboring cattle, and by parting with their maintainance.”  So the cattle (eg, horse or oxen used for plowing) are fixed stock, and the feed for same are circulating stock. Further down the page I found something interesting, though not directly related to the subject: “It consists in the stock of food, clothes, household furniture, &c, which have been purchased by their proper consumers, but which are not yet entirely consumed.” (emphasis added)  In other words, here, very possibly for the first time, is the observation that a commodity has not expanded its use-value until it is destroyed. In any case, this chapter divides stock–of an individual or a nation–first in fixed and circulating.  He also divides it into stock that goes to maintain the person or nation (ie, food for the immediate future, lodging, cloathing), and stock which is intended to create a profit. As he discusses the fixed stock of a nation, he says the following on page 228: “Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society.”  An important point, reminding me of Trotsky’s discussion of culture in the general sense–knowledge and technique acquired by a given society.  “Those talents, as they make a part of his fortune, so do they likewise of that of the society to which he belongs.” Page 229: “Every fixed capital is both originally derived from, and requires to be continally supported by circulating capital.”  True and very important.  Later he discusses improvements in efficiency, ie, if a the amount necessary to maintain one’s capital can be reduced, this necessarily increases the profit, or the rent, or the amount available for wages.  Another thought springs from this:If, as Smith argues (and as seems irrefutable) any reduction in maintainance without reduction in produce is pure gain, and if, as Smith also insists on, all value comes from labor, then maintanance (as Marx would point out in a century) comes out of surplus value, the same place rent and profit comes from. Page 230: “Thus the farmer annually replaces to the manufacturer the provisions which he had consumed and the materials which he had wrought up the year before; and the manufacturer replaces to the farmer the finished work which had wasted and worn out in the same time.  This is the real exchange that is aunnually made between those two orders of people, though it seldom happens that the rude produce of the one and the manufactured produce of the other, are directly bartered for one another . . .”  This is lovely, and very important. Page 231: “It is the produce of land which draws the fish from the waters; and it is the produce of the surface of the earth which extracts the minerals from its bowels.”  Nice! “In all countries where there is a tolerable security, every man of common understanding will endeavor to employ whatever stock he can command in producuring either present enjoyment or future profit.   If it is employed in procuring present enjoyment, it is a stock reserved for immediate consumption.  If it is employed in procuring future profit, it must procure this profit either by staying with him or by going from him.  In the one case it is a fixed, in the other it is a circulating capital.” Originally published at Words Words Words. Please leave any comments there.