Week VII · 13 plates
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Capital, Labor, and Why Pure Capitalism Is Not Stable

The win-lose cycle of mutual exploitation

The big idea

Adam Smith's invisible hand assumed enlightened self-interest. What the last half-century produced instead is a repeated game in which capital and labor each extract from the other — a Prisoner's Dilemma neither side is winning.

By the end of this week you can
  • Describe the feedback loop between wage suppression and demand.
  • Explain capital's mobility advantage over labor.
  • State the diagnosis the Ownership Society is proposed to cure.
Lecture hall · Week VII

Capital, Labor, and Why Pure Capitalism Is Not Stable

Plate 01 · leading message · use ← → keys

Plate 01
1776

Smith assumed enlightened self-interest.

The butcher, brewer and baker serve us by serving themselves — under competition, and with a horizon long enough to care about tomorrow's customer. Remove either condition and the hand stops being benign.

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Slides
Reading notes · Week VII

What you took from the pages

Write your own notes once you have finished The Wealth of Nations (selections), then revisit them before class. Notes are private to your account and never seen by anyone else.