Grégoire Canlorbe

   Holding a PhD in economics from Monash University, Australia, GZ SUN now teaches economics at the University of Macau, Macao Special Administrative Region, China. His research interests are mainly microeconomics and the history of economic thought.

  His joint work with collaborators helped establish the theoretical foundation of a literature on endogenous labor specialization. He has also published at times on topics in axiomatization, public choice, theory of the firm, evolutionary economics, etc., and on less-dismal-than-normal topics such as general equilibrium analysis of how large-scale societies of ants self-organize. Among the services he has provided to the scientific community of economists, the commitment he currently takes most seriously is his editorial job at a new journal, Man and the Economy, founded by the late Mr. Ronald H Coase.

  His book The Division of Labor in Economics: A History provides, for the first time, a systematic and comprehensive narrative of the history of one central idea in economics, namely the division of labour, over the past two and a half millennia, with special focus on that having occurred in the most recent two and a half centuries. Quite contrary to the widely held belief, the idea has a fascinating biography, much richer than that exemplified by the pin-making story that was popularized by Adam Smith’s classical work published in 1776.

  Grégoire Canlorbe: Adam Smith’s treatment of the division of labor in his magnum opus has given rise to much debate and controversy over his priority.

  It has been sometimes alleged that his views were essentially plagiarism of the opening chapters of Anne Robert Jacques Turgot’s Reflections on the Formation and the Distribution of Riches, published a few years earlier. The two books show indeed remarkable similarities in content.

  Other analyses consider that Smith’s thought had been anticipated in broad outline by the treatises of ancient Greek or Chinese philosophers. Kuan Chung, Hsün Tzu and Ssu-ma Ch’ien, as well as Xenophon, Plato and Aristotle among their Greek counterparts of the “Axial Period” of human civilization, had indeed already carried out sophisticated developments on increasing returns to specialization and the relation of specialization to the market mechanism.

  What would you retort to these recurring claims in defense of Smith’s profound originality in the history of ideas?

  Guang-Zhen Sun: Doubtless, Smith’s greatest achievement in classical economics is simply founding it, laying down a novel and powerful superstructure for what would come to be referred to as the classical political economy, into which many previously existing but otherwise scattered ideas are well weaved into a coherent body of thought and analysis. On top of that, Smith’s main priority in the intellectual history of the division of labor rests on two separable but closely related pillars of his economics: his historical jurisprudence, and his integrative analysis of the market and the division of labor. These two facets, in my view, constitute much of the core of his scholarship in economic science. This statement needs a great deal of elaboration, a task we can hardly expect to undertake in an interview, of course. But let’s take it as a good excuse to discuss a difficult topic in a conversational manner.

  About the first point, so much has been done in the past four decades in the study of the history of ideas, and of political thought in particular, especially by Donald Winch, Knud Haakonssen and Istvan Hont among others, that there is perhaps no need for further discussion. My small book draws upon their brilliant work to appreciate Smith’s definitive contribution to historical jurisprudence, which indeed took shape mainly in the hands of Smith himself and a few other Scots. Nonetheless, it may be worth stressing that it is in accounting for the historical origin and the nature of the commercial society – the last developed stage of the four-staged conjectural human history – that Smith organizes the exposition of his historical jurisprudence in his magnum opus The Wealth of Nations (WN). In elaborating the historical dimension of the division of labor, Smith develops his main thesis of the origin and evolution of property rights and the function of the government, and thereby made his fundamental contribution to this branch of the study of human society. Some otherwise paradoxical ideas or statements in that great work, if and when seen from this perspective, can well be resolved and even become natural.

  As far as economics is concerned, his study of the market and the division of labor is certainly far more important. As is perhaps not uncommon in the history of social thought, a high price Smith may have had to pay for the comprehensiveness and richness of his scholarship on this subject is that his theory is from time to time unduly narrowly interpreted, or misunderstood. Due to constraints of space, we may focus on two points only.

  Very few economists would doubt Smith’s depth in understanding of the nature of the market. How much his scholarship on this has been influential, not only among economists but among the public as well, might be measured by the popularity of the very term “the invisible hand.” Probably because the term invisible hand may well invoke some divine providence, the market mechanism – as well as the extent of the market for that matter – is also so conceived as to claim a standing as a sort of “first mover” (proton kinoun) in Smith’s “inquiry into the nature and causes of the wealth of nations,” and particularly in his theory of how the market relates to the division of labor that sits at the heart of his whole theory. A case in point is what is named “the Smith theorem” by George Stigler in his well-known 1951 paper in Journal of Political Economy: that the division of labor is limited by the extent of the market. Nothing goes wrong with the statement per se, and indeed Smith himself uses this statement as the title of one important chapter in his masterpiece; it nonetheless fails to depict a complete picture. For the power of purchasing, in turn, largely depends upon the division of labor, and it is therefore no less meaningful to reverse the causality. Let’s quote a paragraph from Smith’s opening chapter in WN that follows immediately after articulation of the productivity advantages of the division of labor.

  “It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the ranks of the society.”

  The observation by Smith upon the interdependence of the extent of the market and the division of labor was then fruitfully extended, especially by Edward Gibbon Wakefield, Alfred Marshall and Allyn Young. One section (Section 4.2) of my small book critically examines the development of this Smithian thesis by these men. It is to be noted in passing that Wakefield illustrates Smith’s two-sided theory of the market and division of labor by analogy with the roles of two legs in walking.

  What makes his scholarship of the market all the more remarkable is the comprehensiveness and profundity of his understanding of the nature of the market. It is, as far as I can see, much broader than what is demonstrated by the standard price theory in modern textbooks of economics. But we shall come to this point below when talking of another matter and make more detailed discussion then.

  Grégoire Canlorbe: In his 1981 international bestseller Wealth and Poverty, George Gilder is highly critical of Adam Smith for arguing that the extent of the market determines the possible range for the division of labor. In Gilder’s view, the progress of economies can indeed be measured by the extent of the system of exchange; but it is the process of increasing specialization that expands the market, not the other way around.

  As “the anthropology of the potlatch” suggests, gifts and counter-gifts are the essence of economic life. “The gift evokes the desire to reciprocate and thus induces exchange.” In this regard, “it is not the market that expands the division of labor” but “it is the process of invention and specialization—the production of new goods—that expands the market.” The gift comes first.

  What is your opinion on this influential criticism?

  Guang-Zhen Sun: Honestly, I don’t see much inconsistency between Mr. Gilder’s supply-side argument and Adam Smith’s theory of the interdependence of the market and the division of labor. Smith assigns a central role to the power of the division of labor in production, and the criticism of the demand-oriented doctrines by the supply-side economics can be well aligned with Smith’s theory, at least as far as the parts played by the system of exchange and specialization in economic progress are concerned. We have addressed this issue above.

  Grégoire Canlorbe: A crucial point advanced by Adam Smith is that the gains from the division of labor are realized most effectively and efficiently when competition is guided and constrained by a soundly functioning system of politic and economic institutions. Would you say this condition is met in contemporary China?

  Guang-Zhen Sun: My short answer is: Yes and no.

  Let me start with a few words on the positive side of the story. China’s economic performance in the past three and a half decades, its economic growth in particular, is dazzling. It is doubtless a significant event in human history, not least for having fundamentally changed and improved the lives of hundreds of millions of Chinese people and placed made-in-China products all over the world. Equally impressive is the vitality, vastness and complexity of its domestic market. The biggest puzzle about mainland China’s market economy is perhaps the coexistence of its highly centralized political system and the very decentralized and efficient economic system. Paradoxically, it is its unique political system that has thus far enabled China to achieve such impressive economic growth, which has largely centered on industrialization and urbanization.

[Read more…] about A conversation with Guang Zhen Sun, for Man and the Economy

  Hicks is the author of Explaining Postmodernism: Skepticism and Socialism from Rousseau to Foucault, which argues that postmodernism is best understood as a rhetorical strategy of intellectuals and academics on the far-Left of the political spectrum in response to the failure of socialism and communism.

  His documentary and book Nietzsche and the Nazis is an examination of the ideological roots of National Socialism, particularly how Friedrich Nietzsche’s ideas were used, and in some cases misused, by Adolf Hitler and the Nazis to justify their beliefs and practices.

  Additionally, Hicks has published articles on a range of subjects, including free speech in academia, the development of modern art, Ayn Rand’s Objectivism, business ethics, and the philosophy of education, including a series of YouTube lectures. He is also the co-editor, with David Kelley, of a critical thinking textbook, The Art of Reasoning: Readings for Logical Analysis.

  Grégoire Canlorbe: According to a popular opinion, left to its own devices, capitalism inevitably tends to a monopoly economy. An economy in which there is no competition. In a monopoly environment, the dominant companies can freeze competition and entrepreneurial initiative. In this regard, any monopoly is problematic, even the monopoly of the local baker or shoemaker. Without competition, the quality of service slips. And innovation becomes an expensive nuisance unless it wildly jacks up profits.

  As a fine connoisseur and renowned debunker of anti-capitalist arguments, how would you assess this widespread analysis?

  Stephen Hicks: Free-market capitalism is the most anti-monopolistic system there is, as entrepreneurs are creative in developing new products and improving old ones. The profit motive of course incentivizes that creativity, as does the natural creativity that individuals exhibit when they are free to pursue their own lives.

  Think of the music and electronic industries, for example, in the last one hundred years—how endlessly innovative they have been and how prices have gone down, precisely because they’ve been mostly free markets.

  Problematic monopolies have only existed when governments made them—either by granting exclusive charters or other special favors.

  Under feudalism, the king as head of government has the power to make monopolies and forbid competition. The same is true to a lesser degree under mercantilism. And of course for socialism the economy is one giant government monopoly.

  Only market liberalism gives people the freedom to start new businesses without permission, to experiment as much as they want, to trade or not trade with whomever they choose, and to compete along multiple dimensions—price, quantity, quality, innovation.

  In the United States, for example, the Postal Service has a government-granted monopoly on first-class mail. It has been stagnant, a huge money-loser, and its agents regularly shut down any individual who tries to start a competitive mail-delivery service.

  Sometimes I test the seriousness of those who worry about monopolies by asking them: Do you agree that government postal monopolies are bad and should be eliminated? If they say No, then that tells me they’re not serious about real monopolies. If they say Yes, then we can start a productive discussion.

  Grégoire Canlorbe: The law of supply and demand asserts that any free market price for a singular good is instantaneously fixed at an equilibrium level in response to supply and demand dynamics.

  According to a common criticism on the part of postmodern intellectuals, following Marxian economics, this proposition at the core of “free market ideology” is grossly unrealistic and merely ideological. It is refuted by the existence of a permanent disproportion between supply and demand in capitalist economies. Owing to inflation, unemployment, and limited effective monetary demand on the part of working people, supply really exceeds demand. This disproportion results in cyclical economic crises of overproduction.

  What would you retort to these recurring claims?

  Stephen Hicks: Remember that the “law” of supply and demand is an aggregate of many individuals’ judgments and actions. It’s important not to reify it into some sort of Platonic or Hegelian abstract force that operates of generic necessity.

  So I agree with those who criticize the methodology of some versions of free-market economics that utilize only idealized and abstract models of markets in which everyone is perfectly rational and has instant access to all information.

  But I disagree with the standard postmodernist move of taking the failure of such idealized models to mean that only messy chaos and crisis rules the world. In philosopher’s labels, Nietzsche is not the only alternative to Plato.

  The best way to model free markets is from the bottom-up, by starting with real human beings, each of whom has individualized values, knowledge, and options. Such individuals make their economic decisions about production, trade, and consumption, and so go on to form business organizations—firms, networks, and formal markets—of increasing complexity.

  Grégoire Canlorbe: The young business magnate Christian Grey affirmed in a recent interview: “Business is all about people, Miss Steele, and I’m very good at judging people. I know how they tick, what makes them flourish, what doesn’t, what inspires them, and how to incentivize them. I employ an exceptional team, and I reward them well.

  My belief is to achieve success in any scheme one has to make oneself master of that scheme, know it inside and out, know every detail. I work hard, very hard to do that. I make decisions based on logic and facts. I have a natural gut instinct that can spot and nurture a good solid idea and good people. The bottom line is, it’s always down to good people.

  I don’t subscribe to luck or chance, Miss Steele. The harder I work the more luck I seem to have. It really is all about having the right people on your team and directing their energies accordingly. I think it was Harvey Firestone who said the growth and development of people is the highest calling of leadership.”

  What is your opinion on these statements? Do they shed light on a universal feature of the entrepreneurial spirit?

  Stephen Hicks: I’m charmed that a character in an erotic novel can be such an articulate spokesman for entrepreneurism.

[Read more…] about A conversation with Stephen Hicks, for Foundation for Economic Education

    There are only a handful of authors alive today whose ideas about geopolitics have won respect in both the world of Islam and in the West. One of those authors is Howard Bloom.

  His first book, 1995’s The Lucifer Principle, predicted a nuclear Iran. And his 2000 book Global Brain, warned about a man named Osama bin Laden and a group called the Taliban. His new book The Muhammad Code: How a Desert Prophet Brought you ISIS, al Qaeda, and Boko Haram—or How Muhammad invented Jihad, is the story of how a desert prophet set us up for a nuclear Iran and an atomic successor to Osama.

  Howard Bloom has debated one-one-one with senior officials from Egypt’s Muslim Brotherhood and Gaza’s Hamas on Iran’s global Arab-language Alalam TV News Network. And Sheikh Muhammad bin Rashid Al Maktoum, Dubai’s ruler, who doubles as the Prime Minister of the United Arab Emirates, has named a racehorse after one of Bloom’s books.

  Bloom’s second book Global Brain was the subject of an Office of the Secretary of Defense symposium in 2010, with participants from the State Department, the Energy Department, DARPA, IBM, and MIT. And the Department of Defense’s SENSIAC Military Sensing Symposium relied on Bloom to explain how to see the world through the eyes of Osama bin Laden.

  Bloom’s 199 appearances on North America’s highest rated overnight talk radio show, Coast to Coast AM, a show that airs on 500 of the continent’s leading radio stations, have covered everything from the Gulf War and 9/11 to the Fort Hood shootings, the Arab Spring, and the Syrian civil war. In addition, Bloom has dissected headline issues over 40 times on Saudi Arabia’s KSA2-TV, Saudi Arabi’s Ekhbariya TV, and on Iran’s global English language PressTV.

  Grégoire Canlorbe: In a market overwhelmed with books on Islam, what is unique about The Muhammad Code?

  Howard Bloom: The Muhammad Code tells a story quite unknown in the West, namely the story of the only founder of a major religion ever to call himself “the Prophet of War”^[i] and to command 65 military campaigns. It tells the story of how that prophet set our ancestors in the West up for over 1,300 years of attack and enslavement, the story of how he laid the groundwork for the destruction of superpowers far more potent than the United States, and the story of how he started the longest-running world war in history. And most important, The Muhammad Code tells the story of how that prophet demands that his never-ending war be turned today against the ideals we hold dear in the West—human rights, gender equality, freedom of speech, freedom of religion, freedom of trade, entrepreneurship, pluralism, and democracy.

Millions of Muslims envision Islam as a religion of tolerance, pluralism, and peace. But there’s a blunt fact staring us in the face. What ISIS is doing is merely one attack in the world’s longest running world war—the war of “Mohammed the Conqueror” and the “knights” of Islam, as Bin Laden used to say, against every other civilization on the face of the planet. For Allah and His Messenger demand that Muslims be on top. They demand that Muslims allow others to live only if they take a role as second-class citizens in a purely Muslim state and pay the jizya, a tax designed to shame and humiliate. And they demand that Islam rule every inch of land on God’s own speck of dust—the planet Earth. So Muslims in the West can never be happy. At least not according to the standards of the Hadith and the Qur’an. Not according to the standards of al Qaeda, Boko Haram, the Iranian Islamic Revolution, and the Islamic State. That is, good Muslims cannot be happy until Shariah rules every land. And that includes your land and mine.

  Since the beginning of history, we have been blinded by evil’s ability to don a selfless disguise. We have failed to see that our finest qualities are often the generators of the actions we most abhor—murder, torture, genocide and war. From our urge to pull together comes our tendency to tear each other apart. From our devotion to a higher good comes our propensity to the foulest atrocities. And from our commitment to ideals come our excuses to hate. Righteousness in Islam consists in following Muhammad’s footsteps. And those footsteps are violent, imperialist, colonialist, sadistic, and genocidal. But those who want to “annihilate” or to convert their fellow men in the West are not madmen. They’re rational and they’re something more—they’re idealists. They want to free us. They want to save you and me.

  As they see it, you and I were made from a clot of blood by Allah, by God. We were given everything we have by Him. Since we are His creations, we will experience true justice and peace only if we live by His laws and are enlightened by His truths. What are those laws and truths? The ones that God himself gave to Mohammed in the seventh century. Islam is out to save you and me in an even more profound way. If we are tricked into following false laws, believing in false gods, and sticking to what Osama bin Laden used to call false “opinions, orders [and] theories”^[ii], we will go to an unspeakably painful hell. Our earthly life is but a brief interlude, a brief gift, a brief test to see if we can follow God’s path. But hell and heaven are forever.

  Islamic militants want to save you so you can spend the time that really matters, the time that lasts the longest, the time from your death to the Day Of Judgement, in the luxurious upper rooms of paradise. Only if your eyes are opened to the legacy of Mohammed, only if you are persuaded to drop all other “opinions, orders, theories and religions” can Islam save you. What happens if you stubbornly refuse Islam? What happens if you cannot be won over to the light? You must be wiped out. You must be kept from corrupting the minds of others and dragging them down to hell with you.

  When former Iranian President Mahmoud Ahmadinejad threw a press conference in September 2006 to report on his visit to Senegal, Cuba, Venezuela and the United Nations, he said, “And God willing, with the force of God behind it, we shall soon experience a world without the United States and Zionism.”^[iii] He’d also made the same word-for-word statement the previous year.^[iv] It is very unlikely that Ahmadinejad was proposing a thought experiment. He was proposing a reality that Iran and its fellow Muslim states would be able to achieve with their coming weaponry. And with the existing 120 Islamic nuclear bombs of Pakistan.^[v] Bombs that could easily fall into the hands of ISIS.

  Islam has called for the annihilation of the Jews for close to 1,400 years. But why eradicate those of us who live in America? My suspicion is this. Mahmoud Ahmadinejad, Abu Bakr al-Baghdadi, Abubakar Shekau, and Islamic militants from Iran to Indonesia and from Trinidad to Dearborn, Michigan, feel that Europe is eager to appease the Muslim world, eager to bow to Islam’s will. Europe can be saved. Europe can be brought into the fold of Islam. But America stubbornly insists on promoting its Satanic culture, a culture that will drag millions down to the pit of fire. Hit America with a few nuclear weapons, take out New York, Washington, and a handful of other American coastal cities, and those left in America will embrace Islam. What’s more, the weak-willed Europeans will finally see the truth and will accept second-rate status in something god promised Mohammed long ago—Islam’s global empire.

  Grégoire Canlorbe: Besides your concern for the survival of the modern Western civilization, how did you come to have a properly scientific interest in Islam? Does it have anything to do with your personal history?

  Howard Bloom: My introduction to Islamic culture came in 1962. My parents and grandparents were Zionists—people who wished ardently for the right of Jews to return to a homeland that appears in a flood of Hebrew prayers, the Promised Land, the Hebrew territory from which Jews were expelled over and over again and which the Jews stubbornly rebelled to retake in 66 AD, 133 AD, 351 AD, 438 AD, and 614 AD.^[vi] Those Jews, my ancestors, battled the biggest imperialists of the day, the Romans. Rome periodically got fed up with Jewish freedom fighters and removed most of the Hebrews from the land Jews had inhabited since 1,200 BC.^[vii] Rome scattered this remnant across the face of the Old World. Yet Jews insistently trickled back into what they considered their native land again, and by 636 AD,^[viii] Arab historians say these Hebrew returnees and the Jews still on the land of Judea had built 41 cities^[ix] in what is today called Palestine and Israel.

[Read more…] about A conversation with Howard Bloom, for Gatestone Institute