Victorian Economists

Usually after Marx (1818-1883), economic books goes to the next great economic genius: Alfred Marshall (1842-1924) and the establishing of marginalism analysis. Of course Marshall was a noteworthy mathematical genius, but, is there more people in between? I mean, there are 52 years between the Manifesto and the «Principles of Economics» (the ruling book of economics written by Marshall). Heilbroner noted some interesting people between Marx and Marshall and divided these people in two groups: The Victorian Economists and The Underground Economists. Rather than a time division, it is a style division.
The Victorian Economists were characterized by they academician love for rigorous mathematical models. They wanted to describe economics just as physicists and mathematicians were doing in their fields. Maybe this is the reason why during this time, Political Economy was now being called just Economics. Some of these Victorians were:

 Johann Heinrich von Thunen (1783-1850) a landowner mathematician that came with this pearl:



R: Rent.
Y: Units of comoddity per land.
p: Market priceper unit of commodity.
c: Production expenses per unit of commodity.
m: distance to market.

Just put it here because it is funny to think in a landowner german writing equations. Can someone please make a caricature of this guy? (put some pigs, beer and a mustache).

Francis Ysidore Edgeworth (1845-1926), a man fascinated with political economy only because it deals with quantities, and anything that deal with quantities could be translated to mathematics. Edgeworth based his analysis on the assumption: «every man is a pleasure machine» (I only say that when I’m drunk). So, based in Jeremy Bentham principle of human pleasure mechanisms competing for shares of society’s stock of pleasure, it could be show that in a world with perfect competition, each pleasure machine would achieve the highest amount of pleasure that society could ever reach. Edgeworth could be one of the first economists to treat this practice as a world phenomena, just as physics or mathematics, and not that human (can I say that this is the beginning of the end?).

León Walras (1834-1910) Famous for proving that you could deduce the exact prices that would clear the market (supply equals demand on the general equilibrium theory), if you have an equation for every single economic good on the market. Now is up to you to solve these millions of equations. His masterpiece was Elements of Pure Economics, published in 1877. In the future, Schumpeter will have some words to Walras:

«Walras is … greatest of all economists. His system of economic equilibrium, uniting, as it does, the quality of revolutionary creativeness with the quality of classic synthesis, is the only work by an economist that will stand comparison with the achievements of theoretical physics«

These men were great academics, but, is it necessary to be a mathematical genius to talk about economics? isn’t economics a day-a-day issue that we all have to fight? could a simple man say something about main economic issues?

Academic economists could and do great job modeling economics, but, is their work really improving our everyday life? is their rigorous labor paying off? I mean, we are now around two hundred years since Adams Smith and all the great minds that followed him; all them geniuses dedicated to economics and we still have people dying from hunger everyday. So, if we consider economics aimed to the material welfare of all, we are clearly missing some points.

Some guys did believe the same. Some guys did believed that they could say and do something about economics. The academic world largely ignored them. Maybe because of not being part of them. Maybe because these new guys touched some really weak points of the economics development (none of the academics wanted to change a model where most their work rested).

These guys are called The Underground Economists.

Dedicated to The Boss, the only one with the social pressure to read this.


Maybe not that popular, but Robert Owen was a really a hero in his time. Could be described as one of the first utopian socialists (with Thomas More permission). The amazing thing about Robert Owen, is that he wasn’t only utopian, but practical. He transformed a little mill village (New Lanark) in something not far from utopian society. He changed the life of hundreds for good!. Owen’s main contribution to socialist thought was the view that human social behavior is not fixed or absolute, and that human beings have the free will to organize themselves into any kind of society they wished.

During Malthus and Ricardo days wasn’t that hard to understand why that gloomy vision of economy and life in general. From Heilbroner:

«In 1828, The Lion, a radical magazine of the times, published the incredible history of Robert Blincoe, one of eighty pauper-children sent off to a factory at Lowdham. The boys and girls (they were all about ten years old) where whipped day and night, not only for the slightest fault, but to stimulate their flagging industry. And compared with a factory at Litton where Blincoe was subsequently transferred, conditions at Lowdham were rather humane. At Litton the children scrambled with the pigs for the slops in a through; they were kicked and punched and sexually abused; and their employer, one Ellice Needha, had the chilling habit of pinching the children’s ears until his nails met through the flesh. The foreman of the plant was even worse. He hung Blincoe up by his wrists over a machine so that his knees were bent and then he piled heavy weights on his shoulders. The child and his coworkers were almost naked in the cold winter and (seemingly a purely gratuitous sadistic flourish) their teeth were filed down!».

Probably this story was exaggerated, but surely inhuman practices were accepted and was none business. Even in these days news about slaves appears once in a while in my own country.

Not only bad practices at job were a problem. Technology was the rage, and machinery meant displacement of laboring hands by efficient machines. In 1779 a mob of 8.000 workers attacked a mill and burned it to the ground, because it was taking jobs.

Even Ricardo, who was very respected, admitted that maybe machinery did not always operate to the immediate benefit of the workman. To an observer, the working class were getting out of control, and something must be done. Repression is the first thought, but not the only one.

In those dark times, one small light shone. That light was New Lanark. And as a good light in the dark, New Lanark was visited by over 20.000 moths who wanted to see the miracle by their own eyes. Tsar Nicholas I of Russia was one of those moths. They all came to see that horrible industrial life was not the only and inevitable social arrangement, some good practices were possible too. Some of the good practices were:

  • Workers had two room houses, the garbage was neatly piled up awaiting disposal instead of being strewn in filthy disarray.
  • Factories: Over each employee hung a little cube of wood with a different color painted each side: black, blue, yellow and white. From lightest to darkest, the colors stood for different grades of performance: white was excellent, yellow good blue indifferent; black bad. At glance, the factory manager could judge the performance of his workforce.
  • There were no children under ten or eleven in factories. Those that did, work only for 10 \frac{3}{4} hours per day (the norm were 16). Most important, they were not punished; discipline seemed to be wielded by benignity rather than fear.
  • The factory manager was available for objections to any rule or regulation, or bad cube rating (just like a good school or university).
  • Little children, instead of being in the street by their own, they played in schoolhouses. The small ones were learning the names of plants, animals and trees. Older boys were learning grammar. Regularly, children gathered to sing and dance under young ladies sight. Young ladies were instructed that no child’s question was ever to go unanswered, not child was ever bad without reason, punishment was never to be inflicted, and that children would learn faster from the power of example an from admonition.

Beside all that marvels, New Lanark was profitable. So, this town was not run only by a saint, but by a business saint: Robert Owen, the «benevolent Mr. Owen of New Lanark». A man that born poor and made a fortune as a capitalist. From a capitals to a opponent of private property. From advocated to benevolence (because it pays dividends) to urge the abolition of money. So take your time if you want to classify him, you will need it.

So first Mr Owen was an entrepreneur (a successful one), then as a capitalist, a philanthropist. When he ran of money, he became a social leader. Most important, he was able to build his dreamed society, and it did work. At least once.

Napoleonic wars threatened with general gluts. To avoid the coming misery, the Dukes of York and Kent and other respectable people formed a committee to look forward for solutions for the arriving gluts. They called Owen to present his views. He didn’t came with just that, he came with the blueprints for a new society: Villages of Cooperation.

For Owen, the problem was that paupers became non productive in general gluts, so the solution was to make them productive. Paupers could become the producers of wealth if they were given a chance to work, and they deplorable social habits could easily be transformed into virtuous ones under the influence of a decent environment. Why would anyone believe that paupers were not able to produce wealth given the resources?. I mean, being pauper is not an illness. Owen knew they were people, just like everybody else.

Villages of Cooperation were an structure to make people productive. Owen proposed their way of living. From Heilbroner:

The families were to live in houses grouped in parallelograms, with each family in a private apartment but sharing common sitting rooms and reading rooms and kitchens. Children over the age of three were to be boarded separately so that they could be exposed to the kind of education that would best mold their characters for later life. Around the school were gardens to be tended by slightly older children, and around them in turn would stretch out the fields where crops would be grown. In the distance, away from the living areas, would be a factory unit; in effect this would be a planned garden city, a kibbutz, a commune.

The committee thanked Mr Owen’s plan, and his ideas were carefully ignored. Laissez faire was the beauty girl and planned economy, well, none seemed to care. But passiveness was not an option for Owen. He sold his interests in New Lanark, and set about building his own community of the future. He chose the place where dreams came true, where the grass is green and the girls are pretty: America (North America please), Indiana. It’s name: New Harmony.

New Harmony was a disaster (maybe it wasn’t so easy to have a community without the strong support of a stable business as New Lanark did with it’s own prosperous mill). After loosing four fifths of is fortune in New Harmony, Mr. Owen went back to England to participate actively in leading a new section of the country: the working classes. Indeed, he started the english working class movement by the name of The Grand National Moral Union of the Productive and Useful Classes. Some marketing genius changed the name to just Grand National. The Grand National gathered 500.000 members. It was huge!

The Gran National was a fiasco too. It appears that England was prepared for a national trade union just as US was prepared for a community paradise. Local union could not control their members and local strikes prospered. Grand National only lasted for two years.

So, who was Robert Owen? He was not only an economist, but a economic innovator who wanted to change the world (and he did it, a bit). While others wrote, he went ahead and tried to change it.

Mr. Owen, my greatest respect to you.


We could consider the faith on the invisible hand as an optimistic view: If society act based on individuals choices everything will be OK. But, is there a pessimist view?. Of course! And it is handled by Thomas Robert Malthus. Most known as poor Malthus, the first professional economist.

Thomas Malthus was son of Daniel Malthus, an eccentric old gentleman who enjoyed to discuss the utopian and optimistic views of the future. Daniel Malthus found a mate to discuss, nonetheless than his son Thomas Robert Malthus, who was at the oposite side of the optimistic utopian views. Let’s call Thomas directly a party pooper.

According to the party pooper, the basic problem with society was that too many people lived on it and there was a lack of food for all of them. Even worst, there was going to get even been worst with time: people will grow a geometric ratio and food only in an arithmetic ratio.

Thomas wrote his ideas trying to convince his father of the not so bright future. Daniel was so impressed with the brightness and clarity of his son’s ideas, that he insisted to publish them in an anonymous treatise called An Essay on the Principle of Population as It affects the Future Improvement of Society. In that essay Thomas postulated that there was a tendency in nature for population to outstrip all possible means of subsistence. Instead of ascending in higher life standard, society was in caught in a trap in which the humans reproductive urge would inevitably shove humanity to a precipice of existence. Even though he wasn’t the first one to notice (B. Franklin and J.S Mill published previous essays pointing the problem of too many people), Malthus used strong phrases and images that made him well known.

An example of the strong idea: What could save us from geometric ratios of growing? preventive and positive checks. For preventive he meant to delay parent- hood (not that bad). For positive he meant: war, famine and plagues (not that good either. Not positive at all). In Malthus words, there is no more evil in the world than what is absolutely necessary.

But those solutions weren’t finals. They were just weeks forces against the giant power of reproduction. Of course moral restraints would be not enough for such a immense power.

If we consider his scientific interpretation of data was right, and his eloquence admirable. What happened with the doomed view of future? I mean, the essay appeared in 1798 and we are still alive and not dying from hunger (at least, in this part of the world). I hardly say precipice of existence. What Malthus missed in his rigorous calculations? Beside poor data information, he missed an important aspect (here is the key): technology improvement. I prefer, the nonlinearities of the human behavior.

Industrial revolution started, and with it, new ways to produce far more food at cheaper prices. At the beginning of the eighteenth century, European agricultural productivity was no higher than twenty centuries earlier. But from 1700 to 1800, output per worker doubled in England. In France, despite the effects of revolution and war, output grew by roughly 25% between Malthus’s birth and the first edition of An Essay. Several innovation accounted for the leap, including crop rotation, seed selection, better tools, and de use of the horse instead of oxen, reducing plowing time by nearly 50%.

With that quantity of food, why did we not explode having more and more children? Why higher standard of living did not lead to Malthusian birth spiral? I believe the answer is simple: we changed too. More education and job goals persuade us to have fewer children. So we changed, and we changed in a way that was not seeing from the past. The importance of this is that, it can happen again. It surely will be.

Once in a While, we remember the poor Malthus:

  • 1970 Donella Meadows presented The Limits to Growth. In this book (to read) the data and trends predicted disaster within hundred years unless pre- ventatives were taken. Those preventatives were: immediately stop economic growth, stop population expansion, and recycle resources. They even propose, with hard data, that we are already living in a non sustainable way of life. We are living this way since 1980.
  • 1973 Robert McNamara, president of the World Bank, compared the population explosion to the threat of nuclear war. (Malthus surely would have used the nuclear term as positive check.)
  • 1974 Robert Heilbroner published An Inquiry into the Human Prospect in which he concluded that resources could not keep up with industrial demand.
  • 1980 the State Department and the Council on Environmental Quality released Global 2000 Report proclaiming : If present trends continue, the world in 2000 will be more crowded, more polluted, less stable ecologically, and more vulnerable to disruption than the world we live now.

Were those guys just the ghost of poor Malthus trying to gain popularity? Or are those threats really going to happen? (if they are already not happening) Let’s pray for not to.

Maybe more important than his doom prophecy, is his scientific approach (even him missed). In Malthus words:

The principal cause of error, and differences which prevail at present among the scientific writers on political economy, appears to me to be, a precipitate attempt to simplify and generalize…[and not to] sufficiently try their theories by a reference to that enlarged and comprehensive experience, which, on so complicated a subject, can alone establish their truth and utility.

Malthus has been wrong, for a while, and that’s good for us, for a while.

Karl Marx

Whereas the utopians believed that people must be persuaded one person at a time to join the socialist movement, Marx believed that people would tend to act in accordance with their own economic interests. So no persuasion needed. This belief is known as historical materialism, an argument which support that the world is changed not by good wishes and ideas but by actual physical-material activity and practice. Thus, appealing to the working class best material interest would be the best way to mobilize them to make a revolution and change society. Sounds like a very good plan. The best thing of the plan is that it was, according to Marx, inevitable; capitalism should fall by its own weight. Moreover, is not just any kind of capitalism; Marx states that perfect capitalism (modeled capitalism) falls, and consequently, all others.

This is said by a man that dedicated almost 20 years of his life going to a library to study all there was to be known about economics. If you are not impressed by that, knowing that four children of him died because the poverty he was living because of that hard study, should impress you. And if passion is not enough for you, the almost 2.500 pages of cold analyzing of capitalism in in four volumes of  Das Kapital should make you respect him, at least.

So what could be so power to dedicate your life to? I don’t know, but Marx gives you a hint: «philosophers have only interpreted the world in various ways, the point is to change it». But why to change society? Maybe Marx didn’t even question that; there were a lot people unhappy with social arrangement in those times (See more in Owen). John Stuart Mill (See more in Mill) characterized the French government as «wholly without the spirit of improvement and… wrought almost exclusively through the meaner and more selfish impulses of mankind«. Nicholas I (despite the Tsar’s one-time visit to Robert Owen’s New Lanark) was characterized by the historian Tocqueville as «the cornerstone of despotism in Europe«. Industrial workers realized that for all their work, they weren’t receiving enough compensation. First, they were frustrated, then they become angry. Revolution was in the air. Changing wasn’t longer an option; it was the only way. 1848 was the terror year for the old order in Europe.

Had the despair been channeled and directed, it might have changed into a truly revolutionary one. But it was spontaneous, undisciplined and aimless; they won initial victories, and then, while they were wondering what next to do, the old order slapped them back into place. The revolutionary fervor was abated and crushed. In Paris, 10.000 people died in the mobs by the National Guard. In Belgium, the country decided that it is better to keep the king, and the king acknowledged it by abolishing the right of assembly.

The revolution was over, but not for a few: The Communist League, a group of communists which counted with the presence of Karl Marx and Friederich Engels. For them, 1848 was only the beginning for a massive change scheduled for the future with a undoubtedly success. The Communist League commissioned their ideas to Engels and Marx to produce The Communist Manifesto (See more here).
Deeper into the Manifesto you find a philosophy. It even has a name: dialectical materialism.

  • Dialectical because it incorporates Hegel ideas of inherent change. Change, according to Hegel, was the rule of life. Every idea, every force, irrepressible bred its opposite, and the two merged into «unity» that in turn produced its own contradiction. So there is nothing wrong or right, but always struggle.
  • Materialism because it grounds itself to the real world, not ideas. As Engels put it in his work «Anti-Duhring» «..starts from the principle that production, and with production the exchange of its products, is the basis of every social order; that in every society that has appeared in history the distribution of the products, and with it the division of society into classes or estates, is determined by what is produced and how it is produced, and how the product is exchanged. According to his conception, the ultimate causes of all social changes and political revolutions are to be sought, not in the minds of men, in their increasing insight into eternal truth and justice, but changes in the mode of production and exchange; they are to be sough not in the philosophy but in economics of the epoch concerned«.

So, whatever the solution to the the basic economic problem, society require a «superstructure» of noneconomic activity of thought. This is not an independent superstructure but deeply in connection with real economic activity. Moreover, this relation means that thought and ideas are product of environment, even when they aim to change the environment. Here is the constant struggle, the dialectical part: material life shape ideas, and ideas shapes material life in the next period. As Marx put it:

«Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly found, given, and transmitted from the past«.

The Manifesto wasn’t just a cry for revolution, but a philosophy of history in which a communist revolution was not only desirable but inevitable. Unlike the utopians, who wanted to reorganize society closer to their desires, communist did not appeal to men sympathies and desires. Marx criticized utopian socialists, arguing that their favored small-scale socialistic communities would be bound to marginalization and poverty, and that only a large-scale change in the economic system can bring about real change.
Communists, on the other side, appeal to a cold analysis of what social system inevitable will be; a social system ruled by proletariat. They have only to wait, they could not lose. They did wait; seventy years.

Marx contemplated the possibility of Russia’s bypassing the capitalist stage of development and building communism on the basis of the common ownership of land characteristic of the village mir. Was Russia what Marx had in mind?. Was U.R.S.S a government ruled by proletariat? Was it even a left government? (understanding left wing parties those who opposition social hierarchy). Maybe is not a good idea to bypass development.

The most important impact of Marx and Engels were not their revolutionary activities; none brought too much fruit during their own lifetimes. The most important impact of Marx and Engels were their vision and philosophy. For Engels, it was clear that private property was not a mean for organizing society, but for Marx it was even more: capitalism must finally collapse. As he saw it, pure capitalism must collapse, not by boycott but just itself. Marx didn’t just believe it, he modeled and he prove it (at least, his model of capitalism).

Marx did a complete study of the monster of capitalism and he foresaw his dead. The good thing was that the giant monster won’t need to be killed by armored knight, but just by himself: a monster will eventually fall by his own weight. The thing is that history tell us something different: that the monster did not fall but became stronger; capitalism evolve to neoliberalism. Improves made by Milton Friedman gave our most precious aspects of life to feed the monster: health, education and pensions.

So, the monster did not fall by his own weight, but it became stronger. What happened? Why he didn’t die and became stronger? How is that we are making him even stronger? What are we doing to kill him? Do we really want him to die?

Karl Marx wasn’t communism inventor, just like Adam Smith wasn’t capitalism’s, but they gave a deep and great structured description of the most well known kinds of economy and social order; market economy and planned economy. Is there something else?.

Dedicated to «Sepu, el Sepulveda».

David Ricardo

A successful trader in stocks who, like Malthus, devastated the optimistic idea of the market as an always way to improves society (basically, Adam Smith idea). While Smith saw the world as a concert, Ricardo saw conflict.

While Ricardo and Malthus shared objections against the mighty market, they had different point of views (sometimes opposite views). Indeed, oddly ones considering they careers.
Ricardo, the rich trader, was interested on economic laws (a theoretician) and against the rich landlords.
Malthus, the modest academician was interested in how well the economic laws were fitted to real world. He even defended the wealthy landowners.

In Ricardo’s view, society was not going up together on a escalator of progress: instead, the escalator worked different for different social classes: some advanced to the top effortless, while the guys who were making the escalator to move did not receive the benefits of their work. Moreover, Ricardo even identified those bad guys who got at the top of the escalator effortless: the landlords.

Ricardo identified two groups in the market: the rising industrialists who were working hard to get rich, and the landowners, already rich and not working that hard to keep their aristocratic parties. These two teams fought hard on parliament: the industrialist wanted to have cheaper food to their work force (that means free trading of crops). Not for humanitarian reasons, but to paid the workforce as low as they could. At the other side the landowners argued for protectionism to their business (not free trading of crops), producing expensive food.

Ricardo took one side which is clear in his statement: «The interest of the landlords is always apposed to the interest of every other class in the community». Ricardo was in the other class in the community.

To understand Ricardo position, we must understand Ricardo’s base vision on economy, which was much more simplistic than Smith. It was a real model; a simplified idea of the complex reality. The mains actors of the model were workers, the industrialists  and the landlords.

To Ricardo, the economy was always growing. Lets explain this in the next steps.

  1. As the capitalist accumulated, they saved and invested their savings in build new shops and factories.
  2. They new shops and factories requiere new workers (increasing the demand of workers). This boosted wages, temporary.
  3. High wages stops when workers started to have more kids, and they have to feed them. This increases population.
  4. As population expanded, there would be more mouth to feed. That means more grain is needed. More grain would demand more fields.
  5. As landlords uses their best lands firsts, the new fields won’t be as productive as the first ones. Then, cost increases (to produce the same quantity per area as a good field, the farmers should invest in fertilizers), and grain price would rise.
  6. As capitalist paid just enough to feed their workers, high grain prices would lead to high wages again.

Those six steps, only lead to one thing: tragedy. The industrialist, the man responsible for the progress, got into a double squeeze. First, he has to pay more to their workers, since grain is higher. So if the new business is not that well, high wages surely is going to struggle the poor industrialist. Secondly, the landlords are earning more, regards their old good lands. Since they are earning more, someone is paying more to him. That someone is the industrialist!.
So the only class that could get better in this growing market are the landlords.
What about the workers? They were condemned to subsistence wages as every time they earn more, they have more children. The industrialist saved and invested, only to find that wages are higher and profit are smaller. Meantime, the landlord just has to sit back and enjoy their profits increased.

That is, up until there is a greater market with more good lands and cheaper grain.

Back in that time, there were the Corn Laws (since 1815). The Corn Laws were trade laws designed to protect UK grain producers from outsiders producers. The laws granted a monopoly to the farmers. Whats the problem with the monopoly? High crop prices. Whats the problem with high crop prices? As we seen, high wages. Whats the problem with high wages? Less profit to invest for the capitalist. Whats the problem with low profit for capitalist? Less investment in machines, factories or development. Don’t forget we are in the rising of Industrial Revolution, and the thirst for development and entrepreneurship was getting in the veins o society. Particularly, Corn Laws were against Ricardo’s vision of UK as the World’s Workshop. But is not only a vision, it is completely logical idea with two purposes in mind: growing and development.

Why UK should become in the World’s Workshop? Because Ricardo believe they were good at manufacturing, and they could get better (be a wealthier country) if they dedicate to do what they are good at. Easy to say, but not that intuitive.
The idea is called Ricardo’s Law of Comparative Advantage. This is the diamond of Ricardo’s theory. Here a way to explain it:

First, recall Adam Smith’s absolute advantage trade model. From Bucholtz:
Imagine him (Adam Smith) espousing his theory and insulting the French by saying, «We don’t like them. They eat frogs. And I had a tedious time in Toulouse. But if they can make wine cheaper than we can, we should toast them and drink their wine. If they cannot make wine cheaply, let’s just snicker at them across the English Channel». A logical, intuitively correct statement.

Ricardo will not snicker at the French, and he could even trade with them!.

Lets say that there are only two guys on a island. One is an urban chilean, and other from the country side (chilean too, of course). Two task must be done in the island, fishing and collecting water.

The countryman, could have a fish dinner in 5 hours, and get a gallon of fresh water in 2 hours. The urban guy, could have a fish dinner in 10 hours, and a gallon of fresh water in 5 hours.

Adam Smith logic would say that the good countryman should move away from the urban guy since the country guy outperforms the urban in everything. But, in Ricardo’s view, they should work as a team!.

To see this, let’s calculate how many fish dinner and fresh water they could have on their own. Let say they work 60 hours per week, each. They also dedicate half time in each activity (30 hours per week making fish dinner, and 30 hours per week collecting fresh water)

If they work separated, they could produce:

Countryman: \frac{30}{5}=6 fish dinners and \frac{30}{2}=15 gallons of fresh water.
Urban guy: \frac{30}{10}=3 fish dinners and \frac{30}{5}=6 gallons of fresh water.

So in total there are 9 dinners and 21 gallons of fresh water per week in the island. Lets say 30 units of production of the island, per week.

What if they specialize? What if they work full time in just one task?
Lets say:

Countryman: \frac{60}{2}=30 gallons of fresh water.
Urban guy: \frac{60}{10}=6 fish dinners.

That is 36 units of production of the island, per week. That is a 20% of increment!. Not even counting that with specializing, they could perform even better in each task.

So, seeing just in rough numbers, task division has brought more production. And even more, it requieres the sociabilization of the system. The countryman and the urban guy could not get along very well at the beginning, but as they could see, their partnership has come with more wealth than working on their own and mumbling bad words against each other.

How different is from Adam Smith view? In Smith model, everybody gradually became better off as division of labor increased and made society more wealthy. But for Ricardo, the only class that could possibly benefits from progress of society were the landlords, unless they hold on grain prices were broken.

So why aren’t we ruled by landlords nowadays? Industrialism saved us, it has put brake on births and increase our ability to raise food from even very bad lands. Not to mention that free trade has ensured us low prices on grains.

What is the most valuable present hat Ricardo gave us then? The powerful tool of modeling. It is Ricardo’s gift for abstraction that we owe the claim of economics to be considered as a science.

One final observation, Ricardo saw the workers a passive class. There was impossible for them to introduce changes at the system. Not even think in a new one. That is about to change, in the next post.

Adam Smith

Adam Smith never taught a course in economics. In fact, Smith never took a course in economics and is considered as the father of actual economics. His great contribution was proposing that nations wealth could be reached based on individuals choices. There is an invisible hand that is acting to get everything OK (by the way, the invisible hand is mentioned no more than three times in the whole Wealth of Nations). Even more, he tell us what increases the wealth of nations: division of labor and free trade.

What I find really majestic of Smith is that everything he proposes comes with limits or advices. He is not mandatory but an advisor. For example, regard division of labor:

The man whose whole life is spent in performing a few simple operations, of which the effect too are perhaps, always the same… has no occasion to exert his understanding, or to exercises his invention in finding out expedientes to removing difficulties….He, naturally, therefore loses the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become”.He even tell us how to deal with this: public education.

He advises us about abnormal high profits too. Those could persist when small groups of merchants join in pacts to keep prices high. Moreover, proposes exceptions to free trade; Infant industries should have temporary benefits to the early years of development. So yes, government could play a role in markets. Not a fatal heresy.

Nevertheless Smith was very clear about government role:

  1. Provide national defense.
  2. Manage justice through a court system.
  3. Maintain public institutions and resources such roads, canals, bridges, educational systems, and the dignity of the sovereign.

Smith argued that government interference in economy is general harmful and the public interest is best served by competition among private buyers. He recognized that businessmen love to use politics in order to help themselves.

Adam Smith did not invent the market; nor did he invent economics, but taught economics and market to the world for around 75 years, and even more.

Understanding morals as the way how people should act to keep society working, Smith started being a moralist. He searched for the origin of moral approval or disapproval in his first big book: The Theory of Moral Sentiments.

The Presbytery prosecuted him for spreading the following ”false and dangerous” doctrines:

  1. The standard of moral good is promotion of happiness to others.
  2. It is impossible to know good and evil without knowing God.

Against the question How can man who is interested chiefly in himself make moral judgements that satisfy other people? He answered: When people confront moral choices, they imagine an ”impartial spectator” who carefully considers and advises them. Instead of simply following their self-interest, they take the imaginary observer’s advice. So, people decide on the basis of sympathy, not selfishness. It seams that is not just selfishness that rule human life, but maybe a noble side. We are assuming that noble side does not come from selfishness.

Instead of measure wealth on the basis of coin and precious metals, Smith believed that real wealth should be gauged by the standard of living of households. So wealth must be measured from the viewpoint of a nation’s consumers. This surely comes from his french friends, the Physiocrats that argued:

  1. Wealth arose from production, not from gold and silver as mercantilist thought.
  2. Only the agricultural enterprise produced wealth.

In his An Inquiry into the Nature and Causes of the Wealth of Nations Smith focuses in one goal: to uncover causal laws that explain how to achieve wealth. Why? because he was bothered and started to write a book to pass the time in Europe, mainly France. So, he was very good describing his life in those days.

It is a completely change from moral. He saw men as they were, not as they should be. Is that a real difference? or is just that behavior as become too complicated to connect with basic rules?

Some of the remarkable hypothesis were:

  • ”desire of bettering our condition, a desire which though generally calm and dispassionate, comes with us from the womb, and never leaves us till we go to the grave”.
  • ”there is scarce perhaps a single instant in which his situation, as to be without any which of alteration or improvement of any kind”.
  • ”a certain propensity in human nature… to truck, barge, and exchange one thing for another… it is common to all men” .

Smith suggested that society should exploit these natural drivers: Government should not repress self-interested people, for self-interest is a rich natural resource. People would be fools and nations would be impoverished if they depended on charity and altruism.

Man almost constantly need help from others, but it is hoping in vain to expect their benevolence only. He will be more likely to prevail if he can shew them that it is for their own advantage. So here it comes the famous phrase ”It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”.

Smith never suggest that people motivated only by-self interest; he simply states that self-interest motivates more powerfully and consistently than kindness, altruism, or martyrdom. Put succinctly: Society cannot rest its future on the noblest motives, but must use the stronger motives in the best possible way.

Can a community survive without a central planning authority do decide who produces and what produced?. Yes he argued. Not only will it survive, but the community will thrive more than any community with central planning. 

In The Wealth of Nations, Smith saw labor as the chief engine of economic growth, accelerating when:

1. Labor supply increased
2. labor subdivided
3. labor quality rose through new machines.

As long as new ideas for profitable investment and inventions continued to spring from imaginations and free exchange was permitted, economic growth would go forward. That means, the general public could enjoy a higher standard of living. Which is very similar to findings by Nobel Prize-winning economist, Paul Samuelson: «inventions keep recurring…profit rates and real wage rates average out above their subsistence level” .

So that was Smith: Wealth as function of land, labor, and capital. Free will and trade.

As weird as it may sound, I feel close to Adam Smith. That is because he started to write The Wealth of Nations just because he found himself getting bored in Europe, just as I did when I started to read about economics. In words of the old Smith, ”I Have begun to write a book in order to pass away the time”.

Moreover he started being a moralist, ended being an economist. Is there a real difference?.

The Communist Manifesto

These are some notes that summarize the book, and a little bit more.

It starts defining the main actors of society: «Our epoch, the epoch of the bourgeoisie, possesses, however, this distinctive feature: it has simplified the class antagonisms. Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each others: Bourgeoisie and Proletariat«.

For the Bourgeoisie,

  • It started to raise with America discovery, which boosted the economy with new markets. To keep up with the demand, Industrial Revolution was an effect of growing demand. It states «bourgeoisie is itself the product of a long course of development, of a series of revolutions in the modes of production and of exchange«.
  • But the importance of this class is not just that, but political influences: «The executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie.» A concept that is particularly strong today, with researchers of Princeton stating that: «Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism«} (Gilens and Page 2014).
  • The great power of that little class bourgeoisie, is not just a political problem, but the pain that comes with that: «The bourgeoisie has stripped of its hale every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.«
  • If lack of honor doesn’t touch your heart, «the bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation to a mere money relation«, should.
  • But if you’re not easily impressed by drama, the economic idea: «the bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society«, should definitely take your attention.
  • Now, quite a certain prediction from 164 years ago: «The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, establish connexions everywhere…. in place of the old wants, satisfied by the productions of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations«. Globalization doesn’t sound that new now.
  • If you are worried about exceptions, known as economical crises, well, «It is enough to mention the commercial crises that by their periodical return put on its trial, each time more threateningly, the existence of entire bourgeois society«. So maybe, economical crises are the rule rather than exceptions. History might by a help to that affirmation too.
  • And the problem get bigger and bigger: «It compels all nations, on pain of extinction, to adopt the bourgeois mode of production, it compel them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image«. And the problem is that «It has concentrated property in a few hands. The necessary consequence of this was political centralization«. So, every time you believe that politics and economics are way too different things, remember that the guy who studied around 20 years of economics said a totally different thing.
  • But crises ends, how?, the Manifesto states that: «…how does the bourgeoisie get over these crises? On the one hand informed destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones.«. But «that is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented«. So crises do not really ends, they just take breaks. Meanwhile bourgeoisie still exists, therefore to really end crises bourgeoisie should end too.
  • When you’re sick and tired of too much bourgeois, Marx makes you smile: «It (bourgeoisie) is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state, that it has to feed him, instead of being fed by him. Society can no longer live under this bourgeoisie, in other words, its existence is no longer compatible with society«.
  • If you don’t trust in capitalism to commit suicide, we have one more thing to help: «the weapons which the bourgeoisie felled feudalism to the ground are now turned against the bourgeoisie itself … not only the bourgeoisie forged the weapons that bring death to itself; it has also called into existence the men who are to wield those weapons- the modern working class- the proletarians«.

For the Proletariat,

  • They are «labourers, who live only so long as they find work, and who find wok only so long as their labour increases capital. These labourers, who must sell themselves piece-meal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market«. As a commodity «the cost of production of a workman is restricted, almost entirely, to the means of subsistence that he requires for his maintenance«.
  • You probably don’t identify yourself with the proletariat, but with the middle class (probably you believe you came from). But that’s just for now; «The lower strata of the middle class – the small tradespeople, shopkeepers, retired tradesmen generally, the handicraftsmen and peasants- all these sink gradually into the proletariat, partly because their diminutive capital does not suffice for the scale on which Modern Industry is carried on, and is swamped in the competition with the large capitalists, partly because their specialized skill is rendered worthless by the new methods of production. Thus the proletariat is recruited from all classes of the population«. So proletariat seems only to grow in a capitalist society.
  • Proletariat not only grow, but concentrate: «..with the development of industry the proletariat not only increases in number; it becomes concentrated in greater masses, its strength grows, and it feels that strength more».
  • Proletariat also develop in a very curious way: admitting part of the bourgeoisie in itself; «The bourgeoisie finds itself involved in a constant battle. At first with the aristocracy; later on, with those portions of the bourgeoisie itself, whose interests have become antagonistic to the progress of industry; at all times, with the bourgeoisie of foreign countries. In all these battles it sees itself compelled to appeal to the proletariat, to ask for its help, and thus, to drag it into the political arena. The bourgeoisie itself, therefore, supplies the proletariat with its own instruments of political and general education, in other words, it furnishes the proletariat with weapons for fighting the bourgeoisie… These also supply the proletariat with fresh elements of enlightenment and progress«.
  • Indisputably, proletariat is indispensable; «Of all the classes that stand face to face with the bourgeoisie today, the proletariat alone is a really revolutionary class. The other classes decay and finally disappear in the face of Modern Industry; the proletariat is it special and essential product».
  • But, why the lower classes could have an option to stand against the ruling classes? why now? The Manifesto speaks: «All previous historical movements were movements of minorities, or in the interests of minorities. The proletarian movement is the self-conscious, independent movement of the immense majority, in the interests of the immense majority«.

What is the relation between proletariat and bourgeoisie? Enemies; «The real fruit of their battles lies, not in the immediate result, but in the ever-expanding union of the workers. This union is helped on by the improved means of communication that are created by modern industry and that place the workers of different locates in contact with one another. It was just this contact that was needed to centralize the numerous local struggles, all of the same character, into one national struggle between classes….thanks to railways, achieve in a few years«. Internet, this is your opportunity to be helpful.

What is the future of proletariat? «.. proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeoisie, to centralize all instruments of production in the hands of the State, i.e., of the total proletariat organized as the ruling class; and to increase the total of productive force as rapidly as possible}. In other words, proletariat should get power; \emph{Political power, properly so called, is merely the organized power of one class oppressing another«.

So, how the proletariat get to actual power (to rule)? The Manifesto gives you the recipe:

  1. Abolition of property in land and application of all rents of land to public purposes. Not all property; «The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property«. It even add: «Communism deprives no man of the power to appropriate the products of society; all that it does is to deprive him of the power to subjugate the labour of the others by means of such appropriation».
  2. A heavy progressive or graduated income tax.
  3. Abolition of all right of inheritance.
  4. Confiscation of the property of all emigrants and rebels.
  5. Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
  6. Centralization of the means of communication and transport in the hands of the State.
  7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
  8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
  9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equable distribution of the population over the country.
  10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production.»

There you go with another Ten Commandments.

Is it all about power and who gets it? No, there is a light at the end: «..if, by means of revolution, it (proletariat) makes itself the ruling class, and, as such, sweeps away by force the old conditions of production, then it will, along with these conditions, have swept away the conditions for the existence of class antagonisms and of classes generally, and will thereby have abolished its own supremacy as a class.
In place of the old bourgeois society, with its classes and class antagonisms, we shall have an association, in which the free development of each is the condition for the free development of all». It is sad that Marx and Engels did not dedicate much effort in the Manifesto to explain more about this objective, why would we go to a place that poorly defined?.

For the Communists,

  • First, defining Communism should be helpful. The Manifesto summarize the theory of Communists in four words: «Abolition of private property»}. But «Communism deprives no man of the power to appropriate the products of society; all that it does is to deprive him of the power to subjugate the labour of the others by means of such appropriation«.
  • I prefer to define Communists by their objectives: «The immediate aim of the Communist is the same as that of all the other proletarian parties: formation of the proletariat into a class, overthrow of the bourgeois supremacy, conquest of political power by the proletariat«.
  • Have you notice the particular power of women in communism? In Chile, post Allende, the main communism figures were (and are) women. The Manifesto could have warm word for them: «The bourgeois sees in his wife a mere instrument of production. He hears that the instruments of production are to be exploited in common, and, naturally, can come to no other conclusion than the lot of being common to all will likewise fall to the women… The Communists have no need to introduce community of women; it has existed almost from time immemorial«.

My favorite part of the Manifesto is:
«The essential condition for the existence, and for the sway of the bourgeois class, is the formation and augmentation of capital; the condition for capital is wage-labour. Wage-labour rests exclusively on competition between the laborers. The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the laborer, due to competition, by their revolutionary combination, due association. The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie, therefor, produces, above all, it own grave diggers. It fall and the victory of the proletariat are equally inevitable«. Lovely.

«The communists disdain to reconcile their views and aims… They openly declare that their ends can be attained only by the forcible overthrow of all existing social relations. Let the ruling classes tremble at a Communist revolution. The proletarians have nothing to lose but their chains. They have a world to win«, are the last sentences in the Manifesto. The ruling classes did tremble, and they saw the threat of communism everywhere.

One of the things you realize in the Manifesto is that technology development works only for the bourgeoisie. That is what kills me; most of the scientists and engineers work goes in favor the bourgeoisie and not to make a better life for the majority of people. In Manifesto words: «The unceasing improvement of machinery, ever more rapidly developing, makes their (proletariat) livelihood more and more precarious; the collisions between individual workmen and individual bourgeois take more and more the character of collisions between two classes«.

This document is so powerful, even when it lacks of numbers, was the bible for social changes that affected the life of quite a quantity of societies.

John Stuart Mill

You will have a hard time classifying Mill in political or economic dimension, but surely not in brilliance: he was a genius. But that’s not that special, almost all of the greatest economist were extremely brilliant, but few started to learn greek at the age of three. At seven he read most of Plato dialogues. At thirteen he made a complete survey of all there was to be known in political economy. So, undoubtedly, such a nerd! A nerd that went deep enough to discuss the philosophical conflicts underlying classical economics. The ethical foundations of economics and capitalism were discussed.

Usually considered as a genius, probably owns that to his father, James Mill, close friend of Ricardo and Jeremy Bentham (father of utilitarianism). James was the one that pushed John to a seven days a week study plan (so yes, no friends for the little Mill). The miracle was not that John Stuart Mill wrote masterpieces; the miracle was that he survived childhood!

Utopian socialists are usually dismissed by considering them dreamers, but the thoroughness of Mill thoughts are not questioned.

«A person choose to do x, just if he believes that doing it, he will gain profit «. That was I learned in my first class of economy. That is the base of utilitarianism immortalized by Jeremy Bentham. You could see Bentham as the Newton of the moral universe, a moral scientist. Bentham’s model is based on seeing the «mankind under the governance of two masters, pain and pleasure….Since all human beings like pleasure and hate pain (masochists notwithstanding, although they prefer pain only because it gives them pleasure), they choose to do that which gives them pleasure». So profit in this case, is pleasure minus pain. So when is time to choose, choose the alternative that maximizes profit (given the restrictions).

 «Greatest happiness for the greatest number» is the cry of the utilitarian movement. Under that, relies the assumption that all people count equally when determining happiness, which sounds fair enough. Bentham even devised a method of quantifying pleasure and pain; it’s called felicific calculus (that really sounds like a lot of free time). Does anything from here gives us something useful? Of course!

  • In politics, Bentam’s Radicals (Bentham groupies) argued for democracy and free speech. From free speech comes truth, they declared.
  • They fought for reducing taxes on periodicals and assembly restrictions.
  • They attacked the Corn Laws (entrance barrier to foreign seeds to U.K).
  • They argued against punishment in prisons. After all, «a criminal is a person who believes that crime pays». The problem is that they missed the long term pain (costs).

 To utilitarians, god was utility. The invisible hand wasn’t, even if their god usually worked through the invisible hand.

Mill was a Jeremy’s fan. He found the scientific precision that he was looking for, and gave him a sight of society. Not for too long. Around twenty, Mill realized that rational thoughts were just not enough. He missed the ultimate goal; happiness. He arrived at a critical point in his life. In his words:

«Suppose that all your objects in life were realized; that all the changes in institutions and opinions which you are looking forward to, could be completely effected at this very instant: would this be a great joy and happiness to you? And an irrepressible self-consciousness distinctly answered, No! At this my heart sank within me: the whole foundation on which my life was constructed fell down. All my happiness was to have been found in the continual pursuit of this end. The end had ceased to charm, and how could there ever again be any inters in the means? I seemed to have nothing left to live for»

 Hopeless, he found something that kept him alive: poetry. But flesh could not live just reading poetry. After a while he found what he was looking for: love. The nerd fell in love. Harriet Taylor was the girl. As usual, things were not that easy. There was a Mr. Taylor too, but as Disney taught us, love prevails. After twenty years of «non-sex relationship»} (he was such a nerd so, it was very plausible), they got married. Mill always noted the influence of his wife and daughter in his masterpieces. In the age of reason, Mill longed for passion (Amazingly, that is not that crazy. Hume insisted that reason always be the «slave of the passions». Even Bentham introduced reason only as a method of comparing passions, not replace them).

«Whoever, either now or hereafter, may think of me and of the work I have done, must never forget that is the product not of one intellect and conscience, but of three»

After that spring break of feelings Mill would return to Benthamism, not to destroy it, but to improve it. Mill insisted that the greatest happiness depends more than mere pleasure. For example, art is more than pleasure; it lifts the spirit. Mill enhances utilitarianism by invoking Platonic virtues of honor, dignity and self-development. By the way, that’s the reason that Mill became an advocate of public education; to allow people to enjoy more than wordily pleasures, but spirit lifters.

 His first masterpiece were two long volumes titled «Principles of Political Economy». Beside of being a survey of the field, he gave a new perspective that Mill believed of monumental importance:  economy was all about production, not distribution. For distribution, something else was needed (morals?). Scarcity and toughness of nature are real things, and the economic rules of behavior which tell us how to maximize the fruits of our labor are as impersonal and absolute as hard sciences. So economics have nothing to do with distribution.

«Once we have produced wealth as the best we can, we can do with it as we like… The distributions of wealth depends on the laws and customs of society. The rules by which it is determined are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries, and might be still more different, if mankind so chose…  }«.

So as Robert Owen, Mill thinks that society has the power of make itself in different forms. There is not only one natural solution then.

  If society did not like the so-called «natural» results of its activities, it had only to change them. Society could tax and subsidize, it could expropriate and redistribute. It could give all its wealth to a king, or it could run gigantic charity ward; it could give due heed to incentives, or it could, at its own risk, ignore them. But whatever it did, there was no «correct» distribution, at least none that economics had any to reclaim. There was no «laws» to justify how society shared its fruits: there were only men sharing their wealth as they saw fit.

But the thing is that societies arrange their modes of payment as integral parts of their modes of production: for example, feudal societies do not have «wages», anymore than capitalists societies have feudal dues. So production and distribution cannot be neatly separated.

Maybe, what John was trying to say is that societies would try to remedy its «natural» workings by imposing its moral values. Fixing economy with morals. Indeed, the New Deal (hand of John Maynard Keynes), or Germany welfare are kind of Mill’s vision of a society. So the moral nerd really extended his thoughts.

As a great person which we remember (and not a military), Mill didn’t feel good by his surroundings, and thought about that. In his words:

«I am not charmed with an ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that the trampling, crushing, elbowing, and treading on each other’s heels, which form the existing type of social life, are the most desirable lot of human kind, or anything but the disagreeable symptoms of one of the phases of industrial progress»

 So, based on his bad feelings regard surroundings, seeing it as a problem, he proposed a solution (a moral one):

«That the energies of mankind should be kept in employment by the struggle for riches as they were formerly by the struggle for war, until the better minds succeed in educating the others into better things, in undoubtedly better than they should rust and stagnate. While minds are coarse they require stimuli and let them have them»

Note, that as Adam Smith, John Stuart Mill saw capitalism as just a phase of human development, not a steady state nor a final solution.

If you are fast, and want to draw Mill as a communist, Mill tell you about communism (Not Karl Marx communism. Mill wasn’t aware of his existence then):

The question is wether would be any asylum left for individuality of character; wether public opinion would not be a tyrannical yoke; whether the absolute dependence of each on all, and the surveillance of each by all, would not grind all down into a tame uniformity of thoughts, feelings, and actions… No society in which eccentricity is a matter of reproach can be in a wholesome state.»

Rather than «equality of results», Mill urged for «equal opportunity». If some children inherit huge sums from their parents, they possess an unfair advantage over others. This with silver spoons may rely on their parent’s wealth rather than create more; an inefficiency.

Mill also wondered how society could give relief to the poor without dissuading them from getting jobs. He proposed recipients exchange labors for welfare payments (for the physically fit, handicapped should always receive aid from society). Ignored for decades, in 1988 federal governments in the U.S adopted «workfare» programs in which healthy welfare recipients must accept employment or job training. Mill feared that if welfare was too easily doled out, generations of poor people would be born into families weaned of a work’s ethic. He rejected socialist and romantic proposals for raising relief benefits or wages per se.

Where was Mill in a line ended by laissez-faire and government intervention?. In a good place around the middle. The goal of government supporters is to show that greater society happiness requieres intervention: «every departure from [laissez-faire], unless required by some great good, is a certain evil».

Different from Malthus, a hopeful Mill thought that the working classes could be educated to understand their Malthusian peril, and that they would regulate their number voluntarily. With that pressure removed, Mill’s model took a different turn from Malthus and Ricardo: as before, the tendencies of the accumulation would bid up wages, but as now people is aware of the poverty of having too much children, they wouldn’t have too much. Profits would rise and the accumulation of capital would come to an end, reaching a steady state. Now, rather than seeing the study state as the end for capitalism and economic progress, Mill sees it as the first stage of a benign socialism (that what Smith said too), where mankind would turn its energies to serious matters as justice and liberty, and not economic growth per se.

Within this impending steady state, great changes could me made:

  • The state would prevent landlord from reaping unearned benefits.
  • The state would tax away inheritances.
  • Associations of workmen would displace the organization of enterprises in which men were subordinate to masters.
  • By their sheer competitive advantages, the workers cooperatives would win the day.

Capitalism would gradually disappear as former masters sold out to their workingmen and retired on annuities. More than a hundred years have passed, and the steady state is no in the horizon (not here at least). Patience then.

More than being at english at the core (gradualist, optimistic, realistic, and devoid of radical overtones), he was a moralist. When Herbert Spencer, his great rival in the area of philosophy run out of money to complete his project, Mill offered to finance it: «I beg that you will not consider this proposal in the light of a personal favor…But it is nothing of the kind, it is a simple proposal of cooperation for an important public purpose, for which you give your labor and (I) have given your health».

That was John Stuart Mill, the last «political economist» and «utopian socialist». For me, a super nerd that fell in love and happily apply his geniuses to think in how to enhance the human condition. For that he proposed greater wealth, equality, women rights and education. Only good things can come out of that. Thanks Harriet Taylor and daughter for encourage Mill’s geniuses.

Dedicated to Sebastian P., a nerd that is discovering something else beside reason.


I believe, I could summarize my eight years in mechanical engineering (bachelors and master) in this single post.

Most of our physical world is related with solids and fluids. So, what is a good definition of solids and fluids?

This one:

  • Solids: Is that state of matter which stress \sigma, is function of deformation \epsilon. We represent this as: \sigma = f(\epsilon).
  • Fluids: Is that state of matter which stress \sigma is function deformation rate \dot{\epsilon}. We represent this as \sigma = f(\dot{\epsilon}).

The best of all, is that we could model both behaviors with just one equation. This is the damped motion equation:




Which means:

Stress = rate of  deformation (fluid behavior) + deformation (solid behavior)

So we can model a vast quantity of physical cases solving this single equation. Watch me doing it for underground mining here using Discrete Element Method (DEM). By the way, DEM really rocks.

So, the important things to be noticed are:

  • Stress depends on deformation and rate of deformation.
  • Stress depends on time.
  • Stress is not the most fashion way to start a year :S