Wednesday, December 10, 2008

The Long History of Markets and Exchange

Peter Foster writes in National Post (here):

“Where anti-capitalists hang themselves”

A few lines quoted from a debate arranged by the John Templeton Foundation on markets and whether they morally corrode participants:

All-too-typically, he attempts to recruit Adam Smith to the left, noting Smith's concern with the "subversive dynamism of the market." But that was nowhere near the Sage of Kirkcaldy's concern about the "folly and presumption" of the likes of Mr. Gray. Mr. Gray does eventually admit the greater moral corrosion of centrally-planned economies but makes the astonishing claim that "actual life in Soviet societies was more like an extreme caricature of laissez-faire capitalism."

It is the corruption of markets that attracted Adam Smith’s ire, and not markets as such. Adam Smith did not write a textbook of doctrine about markets; he wrote about what he observed, not what philosophers, both contemporary (example, J. J. Rousseau’s condemnation of improved society and its failings, of which he was hardly a shining moral example) and long-past luminaries of the ancient world (example, Plato), made of the quite enormous possibilities of wealth, the ‘annual output of the ‘necessaries, convenience, and amusements of life’, for the real lives of really poor people.

Smith’s historical, ‘looking backwards’, perspective, showed all too clearly the moral corruption of ‘the rulers of mankind’ as individuals in all societies, those with nothing, those with next to nothing, and those with a few artifacts, trinkets, and ‘baubles’ that made them ‘great’ compared to societies still running ‘free’ in the forest.

He wasn’t too impressed with the purveyors of superstition, the misleaders of men and their pusillanimity, the posers who pandered to their pathetic tastes for undeserved praise from their ‘inferiors’, and legislators and those who influenced them with patently false doctrines of political economy, civil government and ‘divine’ rule.

But about commerce, he had few doubts. He debated Rousseau’s ideas, those of Bernard Mandeville, and those of mercantile political economists like Sir James Steuart and, instead, he saw commercial markets and exchange relationships in all areas of his Works, including in the origins of language, the progress of natural philosophy, the evolution of civil justice and the process by which moral sentiments were exchanged and agreed within society (and not through the senses), as being the cause and the consequence of the unintended, uncontrollable, and unforeseen actions, not plans, of human individuals relating through exchanges with each other since they finally began to secure themselves in their societies from the primitive, near animal, horizons of their earliest modes of subsistence.

Smith knew from his friend, the geologist James Hutton, how the world had evolved over ‘unimaginable’ long time periods (and not from 4004 BC!), and he achieved much a hundred years before Darwin discovered natural selection and before political economy began the long march away from how and why markets worked, and towards abstractions upon which there is still no agreement as to how they correspond to the real world of human societies.

Mr Gray, a lovely man no doubt, is forgiven because he does not know what he is writing about in respect of Adam Smith.

Labels: ,


Post a Comment

<< Home