Thursday, March 06, 2008

Markets Are At the Core of All Human Relationships

Martin L. Johnston writes about books in CITYPAPERONLINE which via Kermit Frosch reports on a 'Symposium on Giovanni Arrighi's Adam Smith in Beijing: Lineages of the 21st Century.

Giovanni Arrighi Finds Adam Smith's Capitalism in China's Emerging Economic Might (here)

"ADAM SMITH--A SCOTTISH ECONOMIST whose most famous treatise, The Wealth of Nations, was published in 1776--has long been the patron saint of capitalism. So it's more than a little surprising that Giovanni Arrighi, a sociology professor at the Johns Hopkins University, argues that the country that is fulfilling Smith's vision today is not the United States but China. In his 2007 book, Adam Smith in Beijing: Lineages of the Twenty-first Century, Arrighi makes a case for Smith as a thinker more concerned with well-functioning markets than unbridled capitalism.
precisely because he found that the country successfully used markets to get things done. "Contrary to widespread opinions, markets are quite crucial as instruments of government, but particularly in countries the size of China," Arrighi says. "This is a crucial insight of Adam Smith

What starts of wishfully thinking (“the patron saint of capitalism”), which is a post-Smithian reconstruction of Wealth Of Nations, written and published long before there was what today we call ‘capitalism’, a word never used by Smith because it was unknown to him, both as a phenomenon and word, that was invented in English in mid-19th-century literature – to be precise, William Makepeace Thackery’sThe Newcomes', published in 1854 and popularized by Karl Marx – is finally rescued by his ‘case for Smith as a thinker more concerned with well-functioning markets than unbridled capitalism’.

The fact is that markets long preceded capitalism, a point completely missed by Karl Polanyi (‘The Great Transformation', 1944), who considered markets to be part of the title of his book and occurring only in mid-19th century, is well established by Adam Smith (among many others, contemporaries and those who preceded him) and by modern research (see Morris Silver, Economic Structures of Antiquity, Greenwood Press, 1995, ‘Markets in antiquity: the challenge of the evidence’ pp 95-177).

That several respectable modern authors have followed Karl Polanyi’s theory is regrettable.

Adam Smith recognised markets as being an ancient institution, indeed, he was for some reason more accurate than he realised (or than Polanyi gave him credit) when he introduced in Wealth Of Nations that most prescient of ideas, that describes his iconic statement of ‘the propensity to truck, barter, and exchange’:

Whether this propensity be one of those original principles in human nature, of which no further account can be given; or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to enquire’ (WN I.ii.2. p 25).

Exchange, individual, bilateral, and social goes back into pre-hitory and covers markets in language development, ideas, and knowledge, law and justice, customs, modes of living and subsistence, moral sentiments, international relations and, in fatc, all aspects of human relations.


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