1. Adam Smith’s Glorious Vision
Accumulation +
Division of Labor =
Cumulative Progress

2. Adam Smith Accumulation: Division of labor:
“capitals are increased by parsimony and diminished by prodigality and misconduct.”
Division of labor:
“… natural propensity among men to truck, barter, and exchange one thing for another.”

3. Adam Smith:
The division of labor is limited by the extent of the market.
Free Trade  Extended Market

4. Adam Smith: Virtuous Circle of Growth
Accumulation |
Division of Labor
Productivity
Reduced Cost
Extended Market
Profit

5. Adam Smith: Limit to Growth
Accumulation |
Competition Up
Profit Down
Steady State: “that full complement of riches which the nature of [a nation’s] soil and climate, and its situation with respect to other countries, allow it to acquire.”

6. The Dismal World of David Ricardo and Thomas Robert Malthus
Diminishing Returns to Land
- Intensive Margin
- Extensive Margin
Land Rent = Productivity Premium over Marginal Land
Constant Returns to Manufacturing
Iron Law of Wages
- Wage Fund
- Malthusian Law of Population

7. The Dismal World of David Ricardo
Accumulation |
Increase Wage Fund
Increased Workforce
Increased Cultivation
Increased Food Cost
(Labor Theory of Value)
Increased Rent Share
Reduced Profit Share
Reduced Accumulation

8. Ricardo’s Prescriptions
Free Trade
Import Food
Repeal “Corn Law” Tariff
Promote Colonies (J.S. Mill)
Abolish Poor Laws
Population Growth  Wage Below Subsistence
Tax Rents and Luxuries
Vs Malthus Landlords Consume “Glut”

9. Modern Malthusians: The Limits to Growth
Lily – Pond S P R A W L
Finite Resources
Environmental Catastrophe
But why not Tech – Fix ???

10. Karl Marx: Inherent Contradictions of Capitalist Development
Accumulate, accumulate… That is Moses and the prophets.

11. Karl Marx: Inherent Contradictions of Capitalist Development
Capitalists … own means of production
Workers … paid subsistence wage
Exploitation  Surplus Value (Profit)
Accumulation of profit  Crisis
 Monopoly + Immiseration of labor
Revolution  Socialism
The expropriators are expropriated

12. Karl Marx: Inherent Contradictions of Capitalist Development
Flavors of Capitalist Crisis
Falling Rate of Profit
Profit Squeeze
Disproportionality
Uncertainty  Error  Overproduction
Underconsumption
Heightened accumulation
 Increased Supply + Diminished Demand
Crisis: Rush for Liquidity  Breakdown of Monetary Economy

13. Karl Marx: Inherent Contradictions of Capitalist Development
Falling Rate of Profit
Accumulation |
Increased Demand for Labor
Depletion of “Reserve Army”
Rising Wage
Profit Squeeze

14. Karl Marx: Inherent Contradictions of Capitalist Development
Profit Squeeze |
Concentration
Monopoly Capitalism
Profit Squeeze |
Increased “Organic Composition” of Capital
Reduced Long-Run Rate of Profit

15. Vlad Lenin Imperialism: The Highest Stage of Capitalism
Viewed from the center, periphery offers
Untapped Markets +
Cheap Food
Outlet for Investment
(forestall stagnation)

16. Vlad Lenin Imperialism: The Highest Stage of Capitalism
“Imperialism is capitalism in that stage of development in which the dominance of monopolies and finance capital has established itself; in which the division of the world among the international trusts has begun; in which the division of all territories among the great capitalist powers has been completed.”

17. Vlad Lenin Imperialism: The Highest Stage of Capitalism
International Competition for Dependencies |
Capitalist Wars