Tuesday, January 03, 2006

What the WSJ Often Forgets About Adam Smith


· Editors of the Wall Street Journal editorial page:

"Take another look at “The Wealth of Nations,” where your hero Adam Smith shared the kind of insights that you often scorn. “It was not by gold or by silver, but by labor, that all the wealth of the world was originally purchased,” he wrote.

And consider what Smith observed about manufacturers and merchants, the kind of special interests your editorials routinely tout as synonymous with the public interest:

“men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

From Media Monitors Network (‘…where truth prevails’), Tuesday 3 January (http://usa.mediamonitors.net/content/view/full/24790)

Comment: Two points.

The key message of the first quote is: “all the wealth of the world was originally purchased”. This is part of the misattribution of the labour theory of value to Smith. Recently, I commented on this aspect of Smith’s political economy for a response to a review of ‘Lost Legacy’:

Crediting to Smith a labour theory of value misreads Lectures and Wealth of Nations and transposes simplistically (he was ignorant of the evolution of the ‘Brutes’) his analysis of his hunter first stage to its successors, and ignores property rights, the division of labour, natural and market prices and returns to rent, wages and profits."

The second quote is a theme often represented here on Lost Legacy, the need to carefully examine the case for absolute freedom for ‘merchants and manufacturers’. Which is why Smith did not subscribe to awarding unfettered freedom for ‘merchants and manufacturers’ (otherwise known as laissez faire).

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