Wednesday, July 23, 2008

Competing Commercial Interpretations of Adam Smith

There are various modern interpretations of Adam Smith’s legacy available. Some authors extolling the virtues of ‘greed is good’ (after Bernard Mandeville, 1724, and Ayn Rand, 1954), though neither author would attract any sympathy from Adam Smith, as indeed Mandeville explicitly did not (see Smith's Moral Sentiments, Book VII), and some other authors adopting Adam Smith’s moral philosophy as appropriate policy for modern businesses, or at least as an argument for readers of their mail shots to buy their books and attend their conferences, presenting their version of Smith’s philosophy.

One such is Lewis Green (‘Inspiring conferences and businesses for 25 years’) at the Bizsolutionsplus Blog (‘Featuring Solutions to Grow Your Business'): (‘lead with your heart: sell happiness and your and your business will flourish’) HERE:

“Succeeding in Business by Living Our Principles” Lewis Green

“While I recognize Gandhi, Hawn identifies Adam Smith as the father of spiritual capitalism. In The Wealth of Nations, Smith writes that “every man, so long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with any other man” is the best way to build wealth.

… Hawn also solidifies his argument using the book Business and the Buddha: Doing Well by Doing Good, written by Lloyd Field. In it Field quotes Smith's moral philosophy: "The average man and woman, along with the society in which they lived, should be the primary beneficiaries of a wealthy nation.”

In my humble work, I write about companies that follow Smith's philosophy, whether or not they know they are doing so. Why do these companies, big and small, follow such a moral philosophy? It's not just because it's the right thing to do, although they recognize that it is. It is also because putting people first (employees, customers and communities) increases productivity, drives employees and consumers to be loyal to the company, and results in excellent profits and revenues…

… Business models that are driven by greed and executives who either don’t know how or don’t want to change create this kind of apathy. According to a recent Gallup poll, 55 percent of employees are doing the bare minimum required of their jobs and 19 percent are actively working to sabotage your business. That leaves just 26 percent of employees who care."

As a response to the exhortations of the Geko school of greed (echoes of Bernard Mandeville school that has inspired Hollywood film-script writers, who probably don’t realize their mentor was not Adam Smith) such commercial pitches by the likes of Lewis Green do no harm (I haven't seen his pitches therefore cannot be sure).

Smith thought that competition was the best antidote to bad business models (the Incorporated Town Guilds, the spirit of monopoly, and the jealousy of trade that harmed consumer interests, including expensive wars and prohibitions).

Smithian competition reverses ‘Gresham's’ Law – the ‘bad’ money drives out ‘good’ money – by ensuring the ‘good’ competitive practices drove out ‘bad’ monopoly practices.


Post a Comment

<< Home