--- John Medaille wrote: > Clark believed that the forces of free > competition would force prices to equal the cost > of production,(16)driving the rate of profit to > zero, so that the entrepreneur would earn little > more than the worker.(111-12) This overlooks the producer surplus, which is mostly land rent, and indeed (as Ricardo wrote) does not enter into the cost of production, hence is a social surplus. The ethics of equity has to confront who should receive this surplus. And this has nothing to do with equilibrium, as the surplus exists also in disequlibrium and in economic dynamics. > Of course, Clark's real target was Henry George's > moral account of economics. Agreed. > Without > profit, there could be no economic rents and > hence no possibility of exploitation. But of course if a supply curve slopes up, there is a "producer surplus" which (as Marshall recognized) is really mostly land rent, and since land is not a produced good, the suruplus is really a "non-producer" surplus. > The flip answer would be to ask if you think > human systems should rest on an immoral > rationale. No. I believe that there is a moral imperative for humanity, along the lines of Locke's Second Treatise. > But I suspect you may regard economics > as an amoral system, No. In my judgment, the very concept of a market implies an ethic by which we can judge what is voluntary, hence within the market, and involuntary, hence outside the market, as theft is. The "market" is defined by this universal ethic, which also prescribes equity. The market, properly understood, is thus inherently ethical (not evil), since it is determined in the first place by the ethic. > ... since the specifics of justice vary from > culture to culture, we should just do away with the > whole idea? > John C. Medaille No, but we should recognize that besides cultural values there is a rational universal ethic (or natural moral law) that can be derived using reason. As John Locke wrote in the Second Treatise: "The state of Nature has a law of Nature to govern it, which obliges every one, and reason, which is that law, teaches all mankind who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty or possessions." Fred Foldvary