Thursday, January 11, 2007

Aimless Discontent is Not an Argument

People are never satisfied and some of their dissatisfaction spills over into dissent about the way things are working out, which is fine in a democratic and secular country like the USA (risky in dictatorships and faith run countries of which there are plenty of example around the world). I came across a posting today from a very angry man and while I accept he has a right to an opinion and to express it as forcefully as he can, I am not pleased that he drags into his argument the person and thoughts of Adam Smith and does it while displaying an alarming ignorance of Smith’s ideas and recommendations.

In a e-newslatter called ‘AC’ (associated content) (‘the people’s media company’), Timothy Sexton (by his name someone descended from British stock, whose predecessors probably migrated to North America, seeking a better life). He writes:

“Adam Smith Lied About the American Dream
It Was Just Another Misleading Marketing Campaign
Is the American dream that Adam Smith wrote of dead or alive? For most of America's history, the myth has persisted throughout the world that all you needed to make it in America was hard work, some pluck and just the tiniest bit of good timing.

Adam Smith wrote about the American Colonies and the ‘recent disturbances’ associated with the rebellion of the American colonists (towards whom he was broadly sympathetic, at least as far as he could be bearing in mind the British government was unforgiving of anti-King public dissent). Smith did not have an ‘American dream’. He did consider, and wrote so in Wealth of Nations that it would be the richer country compared to Britain by the 1880s.

Adam Smith's vision of the perfection of the capitalist system used the analogy of the butcher who was provided a clearly necessary service from which the benefits of the system spread out in all directions: the consumer is left with a full stomach and the butcher has money in his pocket to visit the baker and the whole process starts up all over again. But it is quite obvious that today's market is not driven by the same butcher analogy. Where the consumer may have gotten a full stomach as a result of the butcher's self-interest, what does the buyer of wheel spinners get out of the self-interest of those who sell them? Status? Status doesn't keep your stomach full.”


Smith did not write about the ‘capitalist system’; the word was no invented until 1854 (Smith died in 1790), nor was he aware of ‘capitalism’ as an economic system (a phenomenon of the 19th century).

His exposition of the negotiated transaction of the ‘butcher, the brewer, and the baker’ was related to the bargaining process in simple household markets. His exposition had nothing particular to do with ‘capitalism’ (see above).

Self-interest is not a ‘polite term for greed’. Smith specifically, and explicitly, denounced greed, which was a cynical philosophy associated with the writings of Bernard Mandeville (1724).

Greed did not, and could not, ‘create an invisible hand’ and he certainly did not have a view that the metaphor of an invisible hand ‘would eventually benefit everyone’ (see numerous earlier posts on this subject). He did assert that opulence would come from growing economies, which also meant changing economies, and that this was the best chance for poor people (of whom he was most certainly conscious of and sympathetic to) to rise from poverty. Since his time, this aspect of his ‘optimism’ has proven to be true, and not just in the United States. Markets in India, China, and Vietnam, to mention a few countries, are lifting tens of millions out of poverty ($1 a day) on a scale unimaginable to the poorest people in the USA.

“While Ronald Reagan's devotion to trickle down economics carried the promise of an invisible hand lifting the poor out of poverty and the middle class up to the next rung of success, the actual result proved far less promising and much closer to George H.W. Bush's characterization of it as "voodoo economics."

Whatever the problems there are with ‘Reagonomics’ and George Bush’s ‘voodo economics’ (of which I have nothing to say, not voting in that country), Smith prognosis about growth as the route to opulence by wealth creation is beyond contradiction. That the author believes people have ‘too many nice things’, etc., is an age old belief, prevalent when Smith was alive – there were laws in force making it illegal of ‘common labourers’ and their wives to dress in ‘fancy clothes’.

It is interesting, and telling, that there is no mass migration of the ‘poor’ in America into neighbouring Mexico to escape their dreadful lack of opulence north of the border. Traffic seems to be the other way, suggesting some qualification might be necessary about just how bad it is in the USA.

Read Sexton's post at:


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