The Money Changers And The Wealth Of Nations

By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

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James Joseph Jacques Tissot (1836–1902), The Merchants Chased From The Temple, Brooklyn Museum, Source: Wikipedia

Then Jesus entered the temple and drove out all who were selling and buying in the temple, and he overturned the tables of the money changers and the seats of those who sold doves. He said to them, “It is written, ‘My house shall be called a house of prayer’; but you are making it a den of robbers.”

NRVSA Bible
Matthew 21:12-13

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 self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Book I, Chapter II, Para 82
Of the Principle which gives Occasion to the Division of Labour
Adam Smith, An Inquiry Into the Nature And Causes of the Wealth of Nations

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

Book IV, Chapter II, Para 9
Of Restraints upon the Importation from Foreign Countries of such Goods as can be Produced at Home
Adam Smith, An Inquiry Into the Nature And Causes of the Wealth of Nations

Creating value out of something hitherto perceived as having no value is to create a market. For example, wheels out of stones. The supply of that which is perceived to have value creates its consumers who demand it (Say’s Law), whether that be the sheep for sacrifice outside the Temple in Jerusalem or the very act of their domestication long before there was a Temple.

Virtue, opines Adam Smith the moral philosopher, is in self-love and honesty in commerce and not in benevolence as Jesus had preached. The greed and dishonesty of the markets which Jesus had decried in favor of kindness, love of neighbor as one loves oneself, is overcome by Smith in The Wealth of Nations because he sees honesty in commerce as a form of self-love, an incentive and bulwark against failure, in a governance structure of self-regulation, to raise social welfare (the invisible hand metaphor, or God as self-love). However, the world does not quite work like that, entirely predicated on self-governance alone, without a system of checks and balances or government supervision and regulation.

Jesus was just as naive as Smith because we are all too human, ecce homo. It is in the interest of government, in its American form, to ensure that self-regulation works in a manner that averts market failure. A larger critique of both Jesus and Smith, therefore, is that faith in love or faith in the ability of the markets alone are not sufficient to raise either social welfare or individual welfare. Moreover, it is unclear from reading Smith if he is locating common humanity in self-love as Jesus had clearly done: how can one’s love of the self, in Smith’s universe, know the self-love of another to able to appeal to it? That all human beings crave honesty, rectitude and virtuous commerce is insufficient to know the self-interest of each. Happiness is, thus, to each his own, including individual preferences for cultural attributes that can span across cultures – the reality of the human condition: liberty and pursuit of happiness in the Declaration of Independence of the United States of America in 1776.

Post-Keynesian neuro-economics and profiling individual utility maximization over time, for example, the work of Matthew Rabin of University of California at Berkeley, to appeal to the self-love of every individual in a technocratic society bears the serious risk of compromising individual liberty.

John Maynard Keynes’ end of Adam Smith’s classical economics, as if to save Smith from Marx, under the guise of neo-classical economics of rational utility maximizing agents in a general equilibrium framework, makes Adam Smith a self-fulfilling prophecy to normatively find ways to appeal to the self-love of others to not only influence and shape the tastes of societies by the producers but control them. Therefore, neoclassical economics is the cause of the failure of the American economic model.

A broader understanding of human nature, meaning, not only by the intelligentsia or the social elites, helps both the governments and the markets to grasp the welfare-raising possibilities of enlightened self-interest that arise because of an understanding of the intrinsic interconnectedness of and, therefore, interdependences in the world we live in (systems thinking, Bionomics-The Economy As Ecosystem, Michael Rotschild; the motion picture “The Lion King”). This view of economics, a complex systems perspective of economic science which I employ in my analyses on a routine basis, in contrast to the more simplistic-blackbox-naturalist-classical notion of the ebbs and flows of the business cycle, is neither practised nor taught.

The edification of a broad cross-section of any society in enlightened self-interest through liberal education is in the interest of the security of any society, as well as that of its elites, unless the elites are corrupt as in the Temple then or on Wall Street and in Washington today, to safeguard civil liberties.

The web browser NCSA (National Center for Supercomputing Applications) Mosaic was released using tax payer funded research by the University of Illinois at Urbana Champagne in 1992, invented by its wunderkid Marc Andressen. The price of NCSA Mosaic is the taxes. It was not free.

Marc Andressen and Tim Berners-Lee (of the European tax payer funded Organization for Nuclear Research) who had invented the hypertext transfer protocol (HTTP) and the hypertext markup language (HTML) on taxpayer time and dime, in addition to his regular duties as a support staff person for the physicists, spawned a market and transformed the structure of the information technology industry forever.

Most tax payers, typically unaware of their returns on taxes, feel that any government product of research is theirs to use without paying anything for it. That it is free. Little do people realize that what they use as a de facto public good is also available to anyone for commercialization. So was the case with NCSA Mosaic when it became Netscape in Silicon Valley, giving Microsoft the run for its money until today. Microsoft has not yet recovered from the Mosaic shock. Apple Corporation, followed by Google, has succeeded where Netscape could not, in executing a business model which is a hybrid of the Microsoft cathedral and the bazaar of the open-source movement.

Whether an inventor of a product or a service has done so as a government worker or as a private person, democratic societies protect intellectual property to attribute that innovation to the innovator. Employees, not their government agencies, of the National Institute of Standards and Technology (NIST) and the National Aeronautics and Space Administration (NASA) won Nobels in Physics as government workers. Even the Soviets (Andrei Sakharov) and the Chinese could not strip their citizens of their individual contributions.

There is no free product or service and this is a fact of basic economics just as there is no free lunch as attributed to the Late Nobel economist Milton Friedman.

To see how pro bono work, in the context of elementary economic theory cannot supply free goods and/or services ad infinitum without the consumers violating the law if they voluntarily choose not to pay for any number of reasons, the supplier being self-motivated being one of them, zero price implies equilibrium supply and demand at all times. This is Economics 101.

The violation of the law costs the consumers when it is enforced, and so will, at some point during consumption, the loss of utility due the unavailability or diminished availability of the free service because of the lack of revenue to the provider of the service or product brings to relief the losses from the inability to continue to consume at no cost to them. Meaning, at some point, all products and services with demand but zero price will recover their cost of production and turn a profit by selling at a price higher than zero because the markets see the intrinsic value in the product and/or the service. Until this occurs, free goods and services depress potential economic output and, hence, growth.

As every MBA student learns about markets, pro bono work either before, during or after, is a strategic choice to either enter markets or expand the scope of business operations. Sometimes, these activities, such as mine, similar to that of Netscape and of Tim Berners-Lee of the World Wide Web (the “www” in front of every web address) Consortium at the Massachusetts Institute of Technology (MIT), create markets. MIT is not new to these kind of entrepreneurial activities nor is Stanford (which produced Google). Netscape economics is sound market strategy.

Christianity, since Jesus, is the wealthiest enterprise in the history of civilization, controlling over half the world’s wealth and all the power, either directly or indirectly, its purpose, however, as preached in the Sermon on the Mount has gone gravely astray.

Carl Bloch, Sermon On The Mount, Source: Wikipedia

The role of law is to ensure that the costs of such market entry or market expansion are recovered by the innovators and not others because of abuses through rent-seeking either in the government, markets, or both, especially when the innovator has a viable business model.

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About Chandrashekar (Chandra) Tamirisa

http://www.thecommonera.com/Common_Era/Me.html
This entry was posted in Economics, Theology, Transformations LLC and tagged , . Bookmark the permalink.

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