Although Smith believed that workers would be able to easily move from one employer to another, he and his followers had to grudgingly acknowledge that this division of labor would mean unemployment for workers who would be laid off. But, as Foley tells us, the moralizing Smith made an abstract trade-off: the evil of unemployment for a few would be compensated by a good -- cheaper products -- for the many.
It is likely that Smith would willingly accept, as does today's American shopper, a similar trade-off: unemployment for those in the US whose jobs have been outsourced in return for cheaper products at Wal-Mart et al. Little regard is given foreign workers who are underpaid and labor under intolerable conditions.
In fact, businesses have found that a pool of unemployed is a plus because competition for jobs keeps wages depressed. Full employment, on the other hand, which rarely happens except in wartime, gives workers the edge.
Right now our unemployment rate has risen to the point where it is also hurting the economy. It is depressing demand for goods and services, resulting in more layoffs. This "downward spiral" is deepening the depression, or causing a "double dip" recession as some economists like to call it.
Smith believed as did the "voodoo economists" of the nineteen eighties that capitalists would reinvest their profits in new businesses, keeping the system well-oiled. (Pun intended.) But it hasn't happened because the wealthy are making money through multiple paper transactions paid for by the rest of us.
Hard as it is to imagine, there is a magnitude of difference between what the people of the world face today and the worldwide depression people suffered through in the thirties. Adam Smith understandably never envisioned our two additional crises, which are outgrowths of the economic system that he endorsed.
Not only are we being confronted with disasters, like Hurricane Irene, brought on by climate-change, but we are also coming to understand the impact of a hundred years of unfettered plundering of the earth's resources for "selfish" purposes.
A New World is not only possible but necessary
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