On The Visible Hands of the State
Occasionally I come across lively pieces questioning received wisdom about Adam Smith and I like to pass them on:
Iain Sharpe is one such. He appears to be of the Liberal persuasion in Britain. He writes a piece about a debate apparently under way in the Liberal Democratic Party: ‘‘Free markets and their discontents (or Adam Smith versus Tim Farron)’ at ‘Eaten By Missionaries’ (‘Ian Sharpe’s musings on politics, history and Spoonerisms’ (here
“This is confirmed by the comments of both Holmes and Farron about that godfather of free markets, Adam Smith. Holmes describes Smith as believing that ‘the market rules unchallenged’. Farron is more forthright still, commenting:
Adam Smith was a great economist and Mrs Thatcher’s hero. His strong belief was in the inbuilt checks and balances within the free market and that any imperfections in the market would always be rectified by the ‘invisible hand’. This is of course a load of old guff.
To which he then adds:
Smith was right to observe that the market needs a hand, but it has to be the highly visible hand of the community or state.
It’s hard to know exactly what to make of this. Some might say that Farron has here cut through Adam Smith’s sophisticated argument with a devastating five-word rebuttal. If only the Sage of Westmoreland and Lonsdale had been around 200 years ago then the Wealth of Nations would have achieved a deserved place in the dustbin of history and the world would be better off for it.
The other is to point out that Adam Smith did acknowledge the existence of market failure and the need for the state to intervene. He argued in favour of state activity for the purposes of national defence, provision of a system of justice and investment in public infrastructure. We should also remember that Smith argued in favour of higher wages for the poor and for universal education. He wrote in what was essentially a pre-capitalist era and that his arguments in favour of free markets were to a great extent directed at tackling monopolies, special privileges and attempts by merchants and employers to keep wages low and prices high.
It is for these reasons that Smith’s legacy is contested and can be an inspiration as much to the liberal centre-left as to the Thatcherite right. One is left wondering whether Farron has actually read anything by Adam Smith or even bothered to consult a standard reference book to find out what he actually wrote. Once again, we are dealing with a caricature of free market arguments, based on a misunderstanding of their origins. And yet Holmes, if not Farron, does acknowledge that the free market does bring benefits to society."
Comment
First Farron makes Adam Smith guilty by association, but not with somebody who had ‘shaken the hand of infamy’ in the 18th century, but with a politician in Britain in the 20th-and 21st century. High standards of debate indeed!
The Farron lumbers Smith with ideas he never had, allegedly believing that “any imperfections in the market would always be rectified by the ‘invisible hand’ ” and then Farron has the cheek to describe his own version of Adam Smith as ‘a load of old guff’.
This is student debating at the its best.
Farron’s remedy?:
‘the highly visible hand of the community or state’.
Oh, dear. I would have thought that a Liberal would be wary of proclaiming the virtues of ‘the highly visible hand of the community or state’, after the experiences of the Soviet Commissars and the Nazi Gaulieters, not to mention that ‘highly visible’ tanks of Tiananmen Square, or the ungentle hands of the Taliban.
I concur with Iain Sharpe’s assessment question:
‘One is left wondering whether Farron has actually read anything by Adam Smith or even bothered to consult a standard reference book to find out what he actually wrote.’
Clearly, Farron hasn’t. And he wants to help to rule Britain?
Iain Sharpe is one such. He appears to be of the Liberal persuasion in Britain. He writes a piece about a debate apparently under way in the Liberal Democratic Party: ‘‘Free markets and their discontents (or Adam Smith versus Tim Farron)’ at ‘Eaten By Missionaries’ (‘Ian Sharpe’s musings on politics, history and Spoonerisms’ (here
“This is confirmed by the comments of both Holmes and Farron about that godfather of free markets, Adam Smith. Holmes describes Smith as believing that ‘the market rules unchallenged’. Farron is more forthright still, commenting:
Adam Smith was a great economist and Mrs Thatcher’s hero. His strong belief was in the inbuilt checks and balances within the free market and that any imperfections in the market would always be rectified by the ‘invisible hand’. This is of course a load of old guff.
To which he then adds:
Smith was right to observe that the market needs a hand, but it has to be the highly visible hand of the community or state.
It’s hard to know exactly what to make of this. Some might say that Farron has here cut through Adam Smith’s sophisticated argument with a devastating five-word rebuttal. If only the Sage of Westmoreland and Lonsdale had been around 200 years ago then the Wealth of Nations would have achieved a deserved place in the dustbin of history and the world would be better off for it.
The other is to point out that Adam Smith did acknowledge the existence of market failure and the need for the state to intervene. He argued in favour of state activity for the purposes of national defence, provision of a system of justice and investment in public infrastructure. We should also remember that Smith argued in favour of higher wages for the poor and for universal education. He wrote in what was essentially a pre-capitalist era and that his arguments in favour of free markets were to a great extent directed at tackling monopolies, special privileges and attempts by merchants and employers to keep wages low and prices high.
It is for these reasons that Smith’s legacy is contested and can be an inspiration as much to the liberal centre-left as to the Thatcherite right. One is left wondering whether Farron has actually read anything by Adam Smith or even bothered to consult a standard reference book to find out what he actually wrote. Once again, we are dealing with a caricature of free market arguments, based on a misunderstanding of their origins. And yet Holmes, if not Farron, does acknowledge that the free market does bring benefits to society."
Comment
First Farron makes Adam Smith guilty by association, but not with somebody who had ‘shaken the hand of infamy’ in the 18th century, but with a politician in Britain in the 20th-and 21st century. High standards of debate indeed!
The Farron lumbers Smith with ideas he never had, allegedly believing that “any imperfections in the market would always be rectified by the ‘invisible hand’ ” and then Farron has the cheek to describe his own version of Adam Smith as ‘a load of old guff’.
This is student debating at the its best.
Farron’s remedy?:
‘the highly visible hand of the community or state’.
Oh, dear. I would have thought that a Liberal would be wary of proclaiming the virtues of ‘the highly visible hand of the community or state’, after the experiences of the Soviet Commissars and the Nazi Gaulieters, not to mention that ‘highly visible’ tanks of Tiananmen Square, or the ungentle hands of the Taliban.
I concur with Iain Sharpe’s assessment question:
‘One is left wondering whether Farron has actually read anything by Adam Smith or even bothered to consult a standard reference book to find out what he actually wrote.’
Clearly, Farron hasn’t. And he wants to help to rule Britain?
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