ETHICS OF COMMERCE AND PRACTICAL MATHEMATICS PART I

Is the practice of commerce moral, or at least ethically neutral? There are convincing indications that there is nothing wrong with the practice as such, even though the underlying principle of trading: buy cheap, sell high, presupposes a certain amount of trickery and systemic dishonesty, unless the trade is conducted between two equally shrewd and expert parties under reasonably equitable conditions, with neither party under undue duress.

…I have already touched upon several illustrations of the Biblical general non-opposition to trading, except when it is conducted in inappropriate places such as the Temple of God. My overall benign stance toward commerce is further borne out by my general acceptance of this classic observation of Benjamin Franklin: “No nation was ever ruined by trade, even seemingly the most disadvantageous.”
This Franklin’s statement is by no means a platitude, but, on the contrary, it seems completely at odds with the basic postulate of theoretical mercantilism, specifically, with the ‘balance of trade’ concept, that asserts that in order for a trading nation to prosper it has to have a positive balance between its exports and imports, or otherwise it will eventually go broke, trade and all. This last argument looks entirely straightforward, and it is convincingly supported by elementary bookkeeping mathematics. So what if those old mercantilist theories have long been judged as outdated? Their simple math is still quite compelling, and rather hard to beat. The concept of a zero-sum, win-lose game is still the most comprehensible criterion applied to human activity, inasmuch as life, from the standpoint of business, is customarily treated as a game.
Franklin’s point is supported however by the much more complicated and inevitably ambiguous theories of economic self-regulation, developed by Hume and Smith, and then, of course, by Ricardo, in his own mathematical fashion proving the fact that the only way to wreck the mutually-advantageous character of any kind of international trade deal is by either party lacking any business sense whatsoever. That is, presuming that the deal in question is being made in good faith, by equal parties, and under no duress on either side.
Once again, the preceding observation was about fair trade, without any infusion of ruthless practices, such as political and military muscle, into the equation, which may include exploitation, extortion, and such. In this respect only, will R. W. Emerson be right, when he states that “trade is a plant which grows wherever there is peace, as soon as there is peace, and as long as there is peace.” And, as to Franklin’s concluding qualification “even seemingly the most disadvantageous” in the above-quoted passage, a brief journey into the world of practical mathematics, starting with David Ricardo’s quasi-mathematical formulae, is supposed to clarify this point.
However, in so far as Ricardo’s mathematical acrobatics are concerned, or, even worse, a host of more recent technical mathematical economic models, they are not very helpful, as most, if not all of them, starting with Ricardo, down to the very latest, contain more self-important fancy, and, above all, a desire to intimidate the reader with difficult numbers and language, than any breakthrough solution to the Franklin conundrum.
In my estimation, many of these “mathematical formulae,” at their most comprehensible, are attempting to sell us the solvency of a pyramid scheme, or else, I have no idea of what they are talking about, especially, since I know something about mathematics, having studied it professionally.
Incidentally, it has given me great comfort to discover that my aversion to this quasi-mathematical abomination is further supported by the unimpeachable authority of Noam Chomsky who, of all people, can never be accused of an aversion to mathematical modeling. And yet he is saying, with a characteristic modesty, that he does not understand them either (!), suspecting that, perhaps, most of them amount to nothing but gibberish… Here, here!!!

(This is the end of Part I. Part II will be posted tomorrow.)