Monday, May 07, 2007

Sarkozy Should Take a 'Second Look' at Adam Smith - He Was a Pragmatist Not an Ideologue

The French Presidential elections were concluded this week-end with victory for Sarkozy and while I live part of the year in south-west France, I do not vote there, hence my self-denying ordinance of not commenting on the internal politics of anywhere except the country (Scotland) in which I vote, remains in place.

If asked about the politics of the region in which I live for several months each year (I am going there on 15 May) I can report that the region as a whole is fairly ‘socialist’, but the village where I live is fairly Gaullist and I saw poster signs around last time of support for Le Pen, the rightist candidate. You should also know that in terms of economic policy there is widespread consensus among socialists and Gaullists in favour of high degrees of intervention in the economy by the state and adherence to something called ‘social capitalism’. That is the limit of my description of local French politics.

However, I am free to talk about references to Adam Smith, and one such reference is reported by Jason Soon in his blog ‘Catalaxyhere.

Jason quotes from a profile of Sarkozy in Time:

I’m conservative, liberal-inclined and I believe in market economics,” Sarkozy says. “But when an issue lands on my desk, I don’t spend time wondering what [David] Ricardo, Adam Smith or [Friedrich] Hayek would have done. Ideologies have been replaced by principles of realism and pragmatism, and I don’t rule out the possibility to intervene when intervention is called for.”

It all depends on what Sarkozy was taught at the upper levels of the French university system, which would not be sympathetic to thinkers like Adam Smith and Friedrich Hayek, or David Ricardo, or to much of neoclassical Chicago economics.
Smith did not teach an ideology. His writings in Moral Sentiments and Wealth Of Nations abound in the ‘principles of realism and pragmatism’ to a degree that Sarkozy would revel in. He did not write a ‘principles of political economy’ and deliberately declined to call his book by such a title. It was his report into what caused the wealth of nations and what history showed worked and what manifestly didn’t.

In pulling no punches in his critique of mercantile political economy (he admitted privately in correspondence that he was ‘confuting’ directly Sir James Steuart’s ‘Principles of Political Economy’, 1767) Smith was careful at all times to remind readers that the Perfect Liberty he identified as the most efficacious way to bring about the progress to opulence that he recommended had to be tempered by realistic adjustments to what people would tolerate, especially where anything he recommended in general would have disruptive affects from particular changes on those effected by them, especially the labouring people who had no means of subsistence beyond what they earned each week.

He supported the Navigation Acts that were a state imposed monopoly in shipping reserved for British ships and crews trading with North America and in British ports. He opposed restrictions on imports, preferring free trade, including with the then French ‘enemy’ (and as had been conducted successfully against the previous Dutch ‘enemy’), but accepted that too swift a transition to free trade would be too foolhardy, because of domestic opposition, and dangerous to social stability.
He pointed out that expectations that ‘freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect Oceana or Utopia should ever be established in it’ (WN IV.ii.43: p 471).

Before we get carried away with pessimism he also reminded readers that if ‘Perfect Liberty’ was a requirement before a country to move towards opulence, then no country in the history of the world would have developed towards opulence at all.
In short, imperfections were a fact of life and the best that could be done was to nudge small steps towards liberality when the opportunities arose, but not to get carried away into despair when there were setbacks. For this reason, Sarkozy’s understanding of Smith as an ‘ideologue’ and his writing as ‘ideological’ is unfortunate.

That Sir Keith Joseph in government handed around reading lists that included Smith’s Wealth of Nations set a bad precedent. I have no reason to believe that Sir Keith really understood Smith’s philosophy.

I think the Adam Smith Institute (London), here, understands it in its useful work to initiate debate, seek out practical steps to move Britain towards freer markets, slowly and gradually, without trumpeting about ‘betrayals’, ‘too little too late’ and other extremist emotionalism, which over the years has had remarkable success in transforming, not without political controversy, Britain from decline towards steady growth, with modicums of freedom that otherwise would have been closed down.

In short: ‘that’s the way to do it’ and Adam Smith I am sure would have agreed.

President-elect Sarkozy may take note. Nobody who knows France expects anything to move any faster than glacier-like, but when they do move they move steadily and with imagination, supported by their gallic verve.


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