Sunday, August 07, 2005

Reinventing Adam Smith

In a somewhat rambling piece, “Reinventiung the Party of Jefferson” By David Nichols From: Democrats Table, in TPM Café (‘politics, ideas and lots of caffeine’), taking in gun control (it seems to oppose it in case there is need for popular military resistance to President Bush suspending Congress in 2008 because of a terrorist incident in Los Angeles!), the Civil War (or the ‘War Between the States’) and a dispute between Jefferson and Hamilton in the 18th century, there is this gem about Adam Smith:

“In this new global industrial economy, how do we apply the truths given to us by men like John Locke, Thomas Jefferson, or, for that matter, even the father of modern capitalist thought, Adam Smith? These men all wrote when industrialization was only in its infancy, when almost all economic endeavors were either agricultural or small-scale examples of “cottage” industry. Only the in the state issued monopolies of foreign trade, of companies like the Dutch and English East India Companies or the Hudson Bay Company did they encounter anything remotely similar to awesome economic power of the modern corporation. About these organizations they were either silent, or they objected to them on the basis that they were barriers to “free commerce.” They could not envision the world that would come, where such monstrous companies would come to dominate virtually every corner of the economy.”

Why ‘even’ Adam Smith? And why get his credentials, and therefore his legacy’ so wrong?

Adam Smith was not ‘the father of modern capitalist though’. The paragraph goes on to establish that none of the people David Nichols looks to for the application of their truths were remotely aware of anything called capitalism, a word not invented until 1858 (even the word ‘capitalist’ first appeared in print in 1793, three years after Smith had died). Industrialisation was not just in its infancy, it was virtually unknown in anything like what it turned out to be from 1820 onwards.

All economic endeavours were ‘either agricultural or “cottage” industry’ writes Roberts, so what could Locke or Smith write that was relevant to a capitalist economy with its Joint Stock Companies? Smith expected the United States to become a major economic power by the 1880s, but one based on agriculture – he had no notion of one based on manufacturing in its modern sense. His ‘manufacturers’ were tradesmen with hand assisted tools not power driven machinery arranged in ‘factories’.

Smith’s “Wealth of Nations” was a polemic against monopolies, including Joint Stock Companies with Royal Charters, and his suspicions of the “merchants and manufacturers” were clearly stated in many places.

How this made him the ‘father of capitalist thought’ is not stated by Roberts. Methinks there maybe a lot more than 'lots of caffeine' in what they drink at this cafe...

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