Friday, March 24, 2006

No Alibi for Selfish Greed

Michael Kinsley asks: Why Be a Billionaire? (Washington Post.com (24 March)

Trivial op-ed piece of no particular serious significance, but it purveys the usual nonsense about Adam Smith in the guise of smart familiarity with things smart people pretend to know:

There are many whose accumulation of vast wealth, however gumptious, does not fit the Adam Smith model of individual drive and greed being channeled into activities that benefit all.”

Comment
This was not a prediction by Adam Smith; only a possibility in ‘many cases’. He did not portray ‘economic’ man blithely going about his greedy business and, unbeknown to him, the joke was on him: no matter what he did it benefited society. What a rationalisation that would be for all the selfish behaviours a selfish man was capable of!

Adam Smith explained how our individual efforts serve the common good. We work to produce things that can be traded for things we want. That's an improvement on making everything that we consume ourselves.”

Comment
Not quite. Our individual efforts ‘may serve the common good’, but they need not. Monopolists, gullible legislators and separate men may do anything for themselves, but which may not always be for the ‘common good’ – it may note even be for their own good (drug and alcohol addiction).

In the case that Smith refers to (in that most famously misquoted passage in Wealth of Nations: WN IV.ii.9: p 456), he was speaking about the motives of those who preferred to keep their scarce capital stock close to their neighbourhood because of fears for its security. He was not, most decidedly not, talking about how markets operate, nor did this constitute a theory of markets, and nor was their anything mysterious about how markets worked.

Sure, the division of labour was an advance on doing everything for ourselves. Our propensity to ‘truck, barter and trade’ led to every wider and deeper division of labour which took stone-age humans from the absolute poverty of nature to what Smith called opulence.

But on the way there were a lot of behaviours that were less than qualifying as ‘for the common good’. Still are, in fact. But these facts do not seem to percolate very far into the writings of journalists. Worse, sloppy attribution to Adam Smith of half-understood and totally misunderstood ideas he had, gives them an authority they do not deserve.

The first exchange of one caveman's dinosaur meat for another's rather attractive decorative rock started a process that, after millions of years, leads to DVD players at Wal-Mart that cost less than DVDs. Or something like that.”

Comment
Yes, this is about the clearest example of a complete confusion of the history of the human species. The dinosaurs and associated species died out 60 million years before the speciation of the Common Ancestor into what became ‘Hominids’ and Chimpanzees (4 to 6 million years ago). Humans evolved as a separate hominid species about 200,000 years ago.

Stone-age hominids (Habilus, Erectus) made the first stone tools about 1 million years ago. Hominids used stone tools to cut through carcasses they scavenged while fending off rival predators. It was that time to this that we arrived at DVDs, not 65 million years. An even better achievement that mythically chasing dinosaurs for dinner.

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