The World Began Before 1776
Joseph Martini writes in Give and Go (‘random musings on authentic happiness’) HERE:
"Economist Adam Smith didn’t contemplate conscious, rationalized idiocy on such a large scale; his “invisible hand” was no match for such a massive, wanton snow job."
I enjoy Tedd's blog and often agree with his observations and conclusions. However, in this case I respectfully disagree.
Actually, Adam Smith anticipated exactly what has happened in this particular boom/bust cycle.
He made it very clear that considerable structure was needed before the invisible hand of the market could work efficiently.
For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohibitions against theft and misrepresentation.
In his time, property rights were only recognized among the aristocracy.
Adam Smith developed his theories in a centralized, heavily planned and dictatorial society where some individuals were above the law and others were effectively without any rights.
He saw the system of his time as corrupt and inefficient--a massive and wanton snowjob that enriched the few at the expense of the many.
He even anticipated the influence of special interests, writing that:
"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices."
Comment
“He made it very clear that considerable structure was needed before the invisible hand of the market could work efficiently.”
No, he didn’t say anything remotely like that. He did not link his singular use of the metaphor of ‘an invisible hand’ to markets, efficient or otherwise. That’s a myth (see my downloadable paper on the Home page of Lost Legacy: 'Adam Smith and the Invisible Hand: from metaphor to myth’.
“For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohibitions against theft and misrepresentation.”
Property rights were invented long, long before commercial markets appeared. Smith shows this in his Lectures on Jurisprudence (1762-3) (published by Liberty Fund in 1982).
The invention of property in the near east between 11,000 and 8,000 years ago was the trigger that set humans on economic development via shepherding and farming, neither of which was viable if flocks could wander and other humans could hunt them at will, and wild animals and other humans could access farmers’ crops for a free lunch.
With property, civil government became necessary to keep the poor (and rich neighbours!) from inflicting their depredations on what belonged to others. The evolution of laws about property over millennia enabled markets in time to grow.
“In his time, property rights were only recognized among the aristocracy.”
That is a gross exaggeration, Joseph Martini, and is probably from rhetoric you heard in junior school around the 4th of July celebrations. Adam Smith, for example, was not an aristocrat – he didn’t even have a vote in the restricted franchise of the time – but he owned property, and his rights were recognised in the Scottish courts.
When he inherited some of his father’s property, lawfully passed to his elder stepbrother, who died young, Adam secured his property rights through the Aberdeen and Fife civil courts. Britain in the 18th century was awash with laws recognising property rights well beyond the restricted aristocratic classes. Where do you think that the British colonies in America got their legal foundations from? (See Ian Ross, The Life of Adam Smith, 1995, Oxford University press).
“He even anticipated the influence of special interests, writing that:
"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices.”
The quotation is from Wealth Of Nations (WN I.x.c.27: p 145; Edwin Canaan, ed. 1937: p 18). It is not evidence of Adam Smith’s ‘anticipation’ of special interests at all! If Joseph Martini were to read the whole chapter he quotes from, he would see that Smith discusses the consequences of' (1563), which legally forbade anyone to enter a trade who had not served an apprenticeship (under the guise of ensuring ‘quality’, and other spurious 'spin'), but which became a monopolistic practice ruthlessly imposed by the ‘tradesmen’ to narrow the market and raise prices.
In short, instead of anticipating ‘special interests’, Adam Smith wrote about the then 200-year experience of them at work against the itnerests of both competition and consumers. And note, he was taking about shopkeepers, artisans, craftsmen and such like, who were legally organised into local Guilds.
If we are to understand Adam Smith it is first necessary to read his books. It is also, perhaps, necessary to be accurate about history - it began long before 1776, important as that date was for civil government.
"Economist Adam Smith didn’t contemplate conscious, rationalized idiocy on such a large scale; his “invisible hand” was no match for such a massive, wanton snow job."
I enjoy Tedd's blog and often agree with his observations and conclusions. However, in this case I respectfully disagree.
Actually, Adam Smith anticipated exactly what has happened in this particular boom/bust cycle.
He made it very clear that considerable structure was needed before the invisible hand of the market could work efficiently.
For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohibitions against theft and misrepresentation.
In his time, property rights were only recognized among the aristocracy.
Adam Smith developed his theories in a centralized, heavily planned and dictatorial society where some individuals were above the law and others were effectively without any rights.
He saw the system of his time as corrupt and inefficient--a massive and wanton snowjob that enriched the few at the expense of the many.
He even anticipated the influence of special interests, writing that:
"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices."
Comment
“He made it very clear that considerable structure was needed before the invisible hand of the market could work efficiently.”
No, he didn’t say anything remotely like that. He did not link his singular use of the metaphor of ‘an invisible hand’ to markets, efficient or otherwise. That’s a myth (see my downloadable paper on the Home page of Lost Legacy: 'Adam Smith and the Invisible Hand: from metaphor to myth’.
“For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohibitions against theft and misrepresentation.”
Property rights were invented long, long before commercial markets appeared. Smith shows this in his Lectures on Jurisprudence (1762-3) (published by Liberty Fund in 1982).
The invention of property in the near east between 11,000 and 8,000 years ago was the trigger that set humans on economic development via shepherding and farming, neither of which was viable if flocks could wander and other humans could hunt them at will, and wild animals and other humans could access farmers’ crops for a free lunch.
With property, civil government became necessary to keep the poor (and rich neighbours!) from inflicting their depredations on what belonged to others. The evolution of laws about property over millennia enabled markets in time to grow.
“In his time, property rights were only recognized among the aristocracy.”
That is a gross exaggeration, Joseph Martini, and is probably from rhetoric you heard in junior school around the 4th of July celebrations. Adam Smith, for example, was not an aristocrat – he didn’t even have a vote in the restricted franchise of the time – but he owned property, and his rights were recognised in the Scottish courts.
When he inherited some of his father’s property, lawfully passed to his elder stepbrother, who died young, Adam secured his property rights through the Aberdeen and Fife civil courts. Britain in the 18th century was awash with laws recognising property rights well beyond the restricted aristocratic classes. Where do you think that the British colonies in America got their legal foundations from? (See Ian Ross, The Life of Adam Smith, 1995, Oxford University press).
“He even anticipated the influence of special interests, writing that:
"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices.”
The quotation is from Wealth Of Nations (WN I.x.c.27: p 145; Edwin Canaan, ed. 1937: p 18). It is not evidence of Adam Smith’s ‘anticipation’ of special interests at all! If Joseph Martini were to read the whole chapter he quotes from, he would see that Smith discusses the consequences of' (1563), which legally forbade anyone to enter a trade who had not served an apprenticeship (under the guise of ensuring ‘quality’, and other spurious 'spin'), but which became a monopolistic practice ruthlessly imposed by the ‘tradesmen’ to narrow the market and raise prices.
In short, instead of anticipating ‘special interests’, Adam Smith wrote about the then 200-year experience of them at work against the itnerests of both competition and consumers. And note, he was taking about shopkeepers, artisans, craftsmen and such like, who were legally organised into local Guilds.
If we are to understand Adam Smith it is first necessary to read his books. It is also, perhaps, necessary to be accurate about history - it began long before 1776, important as that date was for civil government.
Labels: Appropriate Use of Quotations, History of Economics, Invisible Hands
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