ADAM SMITH
 

 

THE INVISIBLE HAND and THE THIRD MAN

As Princess Diana memorably remarked: "there has always been someone besides Charles and me."
Naively, I wondered if she would say, "the Landowner".


Adam Smith

Economists too easily accept the idea that markets need millions of buyers and sellers and minimal regulation. Thus Italian chairs and sofas are produced as seamlessly as a match.

Happy mums, dads and 1.75 children choose a suite from Selfridges and sit down to watch BBC news on their 50" Korean TV. Economists' acceptance of this superficial model is akin to a physics student not penetrating an atomic model beyond the idea of a nucleus orbited by electrons.

A shop may be the final market place for a box of matches or pencils. However this final market place is just the final destination arising from cooperation of thousands of workers in other markets who need not even know each other. These primary markets may be in countries as separate as India, Brazil or Australia.
"The candle's light is its own" by Ii Saburou Katsumori (see below "Candle") and in the voice of the "Lead pencil - (the ordinary wooden pencil familiar to all boys and girls and adults who can read and write"),
we can say "not a single person ... knows how to make me."
(See Fables "The Pencil")

Most markets require a well protected physical market place. It may be a trading floor, an exchange, a back staircase, a car boot, a field, a store, or a retail store. Every respectable hooker needs a clean bed even if she rents the room.

                Even in its virtual universe, the Second Life "estate" collects sizeable land rents from each virtual
                island based trader which reflects the footprint size and popularity of its use of this virtual space.

                For the present, the insatiable 4th party at the feast - big government - is wonderfully absent.
                It will be fascinating to follow progress and see if government (from the real world) tries to intrude.
                For the present, Second Life owners and users evolve and decide on use zoning, security and
                regulation and there is no conventional taxation.
Back on earth who takes the biggest cut at a car
                boot sale?


Very few boot owners will take even £ 100 and taking £ 500 to £ 1000 will be unusual.
But the owner of the field who hosts the 300 cars with their boot contents will gross 300 x £ 10 i.e. £ 3000 (some in pound notes), every Saturday. Under threats of heavy fines or imprisonment, he will have to share this eventually with the 4th party, the town bully, local government.
This is possibly fair enough but the bully also wants a cut from every trader, unheard of in Second Life.

We have argued with economists who were uninterested in how niche apple varieties and orchards have evolved over centuries in very specific locations. They were born in towns, educated in city universities, have romantic notions about the countryside, but as they trudge concreted pavements or navigate asphalt covered, car-crowded roads, they cannot recall any time in their lives when their bare feet felt the soil. To them, the mere presence of fields implies a surplus of car boot sales locations, potential pig farms, organic dairying parlours, pig-shed complexes or the next best thing, "dense affordable housing". These Bad-Economists ignore the specificity of prime, secondary, reasonable, tertiary and dismal (or unproductive) locations for business or agriculture.

BAD-ECONOMISTS are so conditioned by derived city orientations that they are unable to imagine the third man. However, every field, every plot under a property (whether house or knackers yard) reflects a use or potential use that reflects its own and neighbouring valuations, bids, rents, appraisals, loans, second mortgages, third mortgages, without limitation. Economists long ago lost sight of location, its importance and value.

Predictably for most of the 20th C economists also lost track of the vast space confiscated by government (for example, of roads over land) which has a reflected utility price, each yard of which inspires calculations hundreds of times daily by drivers, parkers and pedestrians, who use it or avoid it during any given minute.


Unfortunately Adam Smith did not deeply penetrate Diana's perception of someone else besides the invisible hand being vital to the "firm". Doubtless if Smith were alive today he would be horrified at how wealth is sucked out of the UK's minuscule productive economy by rentiers, fee earners and government. He would not recognize any of the names of trading companies. On the other (not invisible) hand, he would be appalled to recognize half the land-owning cabal including the Queen, Charles, Duke of Westminster and other Dukes and Church Commissioners on behalf of Church of England (see Cahill, Who Owns Britain?). The same UK nobs sapping the energy and independence of the doers and makers of Great Britain 220 years after he wrote his book and despite the Napoleonic Wars, 2 world wars and giant experiments in confiscation and redistribution.

Not this
Adam Smith

But this
Adam Smith_2

Typically Bad-Economists are so unsure of their point of view that they create chain letters. Each adds his signature so that when wrong, like fish-wives in an opera chorus, they bellow in unison and drown out criticism.


See poem "Song of the Land" written in reply to an FT LETERS signed by the living names pillored in the poem.

 

 

 

 

 

 

 

_______________________
Source:
[1]

A single candle
Illuminates the whole room
filled up with mirrors.
Who knows where the match came from--
The candle's light is its own.

(February 26, 2005 from Ii Saburou Katsumori)

[2] Friedman, M and Freidman, R. (1979), Free To Choose, Secker & Warburg, Lon
don