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Brooks Wilson's Economics Blog: Gray's "Samuel Johnson and the Virtue of Capitalism"

Friday, September 11, 2009

Gray's "Samuel Johnson and the Virtue of Capitalism"

Principle 5 of Mankiw's ten principles of economics states that "trade can make everyone better off."  It is an old claim in economics going back to Adam Smith, supported by empirical evidence and widely accepted within the economics profession.  Economists believe that trade leads to specialization and specialization to the creation of wealth.  Eliza Gray wrote a short article for the Wall Street Journal titled "Samuel Johnson and the Virtue of Capitalism," in which she demonstrates that Johnson, the author of the first authoritative dictionary in English, had a firm grasp of the economics of trade.  She writes,
Johnson also understood that what Smith would later call the division of labor was instrumental for human happiness and progress. "The Adventurer 67," which he wrote in 1753 at the height of a commercial boom (and 23 years before Smith published "The Wealth of Nations"), delights in the sheer number of occupations available in a commercial capital like London. The insatiable demand for the most specialized goods and services means employment for anyone who wants to make a living: ". . . myriads [are] raised to dignity, by no other merit than . . . contributing to supply their neighbors with the means of sucking smoke through a tube of clay."

"[E]ach of us singly can do little for himself," he wrote insightfully, "and there is scarce any one amongst us . . . who does not enjoy the labor of a thousand artists." He also saw the market as the only mechanism by which the diversity of human desires could be satisfied: "In the endless variety of tastes and circumstances that diversify mankind, nothing is so superfluous, but that some one desires it . . ."

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