Many on the left have as reflexive a reaction to Adam Smith and capitalism as many on the right have when they hear Karl Marx or socialism. But communism is as far from what Marx discussed as modern capitalism (sometimes called crony capitalism or globalism) is from Adam Smith.
This article by Dennis Ramussen in the Atlantic, The Problem With Inequality, According to Adam Smith is useful to read as a primer. Ramussen writes:
Smith states, explicitly and repeatedly, that the true measure of a nation’s wealth is not the size of its king’s treasury or the holdings of an affluent few but rather the wages of “the laboring poor.” In a passage that Obama quoted in his speech, Smith declares that it is a matter of simple “equity” that “they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”
Immediately this should cue the reader into how far removed the conventional wisdom of economics, as reflected in media reports and politicians’ advocacy, is especially for those on the right. Often, we see the ticker tape of the stock market scrolled across the screen. We hear about the percentages on the TSE or the Dow Jones average or the Nasdaq. But this metric was completely the opposite of what Adam Smith envisaged in his famous work, The Wealth of Nations. Instead, the focus should be on the purchasing and spending power of the lower or middle classes. Although Smith places markets at the centre, this is misleading. What contextualizes the market is morality, values, norms, and social conventions. His Theory of Moral Sentiments preceded The Wealth of Nations where his market theory is expounded. The podcast below makes that point and it is an important one. Economics is an aspect of ethics and morality it is not simply a mathematical model superimposed amorally and abstractly on real groupings of people. Instead, economics grows out of, and is connected to the human community which itself is comprised of norms, values, and ethics.
For Smith, in terms of our collective meaning in life, it would be better for people if their attention was towards more spiritual or other pursuits than in trying to emulate and admire those with wealth (including Hollywood celebrities, Fortune 500 folks, etc.). He wrote his Theory of Moral Sentiments in line with thinking about questions of happiness and what brings happiness. On that point, Ramussen writes, Smith goes so far as to proclaim that the “disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition” is “the great and most universal cause of the corruption of our moral sentiments.”
Clearly, economics is an important marker and our politics should have a role in facilitating equity in society. In fact, Smith argued that a society cannot progress if there is a large gap between the haves and have nots. The right and the anarchic left are wrong on seeing the government as necessarily the enemy of the people - although it does need to be limited and circumscribed. History shows that government invariably becomes tyrannical. But that is different than saying it is not a co-created good. In another article, Lauren Brubaker writes that Smith’s solution to the problem of globalism and neoliberal ideology (aka crony capitalism).
(1) by limiting government to a few essential powers (defense, administration of impartial justice, and certain limited public works and institutions), and (2) by educating the public concerning the “folly” of attempts to direct the economy by legislators who, even if well intentioned, inevitably lack sufficient knowledge of local conditions and thus are incompetent to direct the economy to the ends they propose. These approaches offer the best chance to limit crony capitalism, its corruption of natural liberty, and its consequent undermining of benefits of free markets.
This tracks with Sam Vankin’s thesis that the marriage of the state with capitalism has led to the very major problem we are facing today with Neo-liberalism (that is the new aspect of liberalism - the marriage between the state and capitalism). The anarchists are correct that big, regulatory government is the problem as most citizens do not consent to the spending of government that does not, in turn, benefit them and instead benefits the classes that are aligned with the government that massively spends (this includes military manufacturers - military industrial complex -, health care technologies - big Pharma). All of this at the expense of the local economy and people. The right, although claiming to limit government, only means by limiting government - cutting spending to the vulnerable – rarely do they support redistribution in the form of infrastructure or stimulus or guaranteed income.
Brubaker continues, saying that Smith saw a definite role of government.
Smith, (in The Wealth of Nations) outlines his view of the duties of government with admirable clarity:
According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance indeed, but plain and intelligible to common understandings: first the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and public institutions.
She continues “It should be clear from this discussion that Smith is not a doctrinaire advocate of laissez-faire if that is understood to mean that “anything goes”—that the government has no responsibility to ensure justice or protect the least advantaged.”
What I take from this is that we need to change our system for sure! And it needs to be built from below! In so doing, we should take the best ideas from different thinkers. I do not agree with all of Smith nor all of Marx but as I write and think through these issues, I hope we can co-construct a community with a newer paradigm that will be more just and fair to more people. Adam Smith might have something to contribute to that conversation.
This article by Dennis Ramussen in the Atlantic, The Problem With Inequality, According to Adam Smith is useful to read as a primer. Ramussen writes:
Smith states, explicitly and repeatedly, that the true measure of a nation’s wealth is not the size of its king’s treasury or the holdings of an affluent few but rather the wages of “the laboring poor.” In a passage that Obama quoted in his speech, Smith declares that it is a matter of simple “equity” that “they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”
Immediately this should cue the reader into how far removed the conventional wisdom of economics, as reflected in media reports and politicians’ advocacy, is especially for those on the right. Often, we see the ticker tape of the stock market scrolled across the screen. We hear about the percentages on the TSE or the Dow Jones average or the Nasdaq. But this metric was completely the opposite of what Adam Smith envisaged in his famous work, The Wealth of Nations. Instead, the focus should be on the purchasing and spending power of the lower or middle classes. Although Smith places markets at the centre, this is misleading. What contextualizes the market is morality, values, norms, and social conventions. His Theory of Moral Sentiments preceded The Wealth of Nations where his market theory is expounded. The podcast below makes that point and it is an important one. Economics is an aspect of ethics and morality it is not simply a mathematical model superimposed amorally and abstractly on real groupings of people. Instead, economics grows out of, and is connected to the human community which itself is comprised of norms, values, and ethics.
For Smith, in terms of our collective meaning in life, it would be better for people if their attention was towards more spiritual or other pursuits than in trying to emulate and admire those with wealth (including Hollywood celebrities, Fortune 500 folks, etc.). He wrote his Theory of Moral Sentiments in line with thinking about questions of happiness and what brings happiness. On that point, Ramussen writes, Smith goes so far as to proclaim that the “disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition” is “the great and most universal cause of the corruption of our moral sentiments.”
Clearly, economics is an important marker and our politics should have a role in facilitating equity in society. In fact, Smith argued that a society cannot progress if there is a large gap between the haves and have nots. The right and the anarchic left are wrong on seeing the government as necessarily the enemy of the people - although it does need to be limited and circumscribed. History shows that government invariably becomes tyrannical. But that is different than saying it is not a co-created good. In another article, Lauren Brubaker writes that Smith’s solution to the problem of globalism and neoliberal ideology (aka crony capitalism).
(1) by limiting government to a few essential powers (defense, administration of impartial justice, and certain limited public works and institutions), and (2) by educating the public concerning the “folly” of attempts to direct the economy by legislators who, even if well intentioned, inevitably lack sufficient knowledge of local conditions and thus are incompetent to direct the economy to the ends they propose. These approaches offer the best chance to limit crony capitalism, its corruption of natural liberty, and its consequent undermining of benefits of free markets.
This tracks with Sam Vankin’s thesis that the marriage of the state with capitalism has led to the very major problem we are facing today with Neo-liberalism (that is the new aspect of liberalism - the marriage between the state and capitalism). The anarchists are correct that big, regulatory government is the problem as most citizens do not consent to the spending of government that does not, in turn, benefit them and instead benefits the classes that are aligned with the government that massively spends (this includes military manufacturers - military industrial complex -, health care technologies - big Pharma). All of this at the expense of the local economy and people. The right, although claiming to limit government, only means by limiting government - cutting spending to the vulnerable – rarely do they support redistribution in the form of infrastructure or stimulus or guaranteed income.
Brubaker continues, saying that Smith saw a definite role of government.
Smith, (in The Wealth of Nations) outlines his view of the duties of government with admirable clarity:
According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance indeed, but plain and intelligible to common understandings: first the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and public institutions.
She continues “It should be clear from this discussion that Smith is not a doctrinaire advocate of laissez-faire if that is understood to mean that “anything goes”—that the government has no responsibility to ensure justice or protect the least advantaged.”
What I take from this is that we need to change our system for sure! And it needs to be built from below! In so doing, we should take the best ideas from different thinkers. I do not agree with all of Smith nor all of Marx but as I write and think through these issues, I hope we can co-construct a community with a newer paradigm that will be more just and fair to more people. Adam Smith might have something to contribute to that conversation.
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