Saturday, July 18, 2009

Adam Smith's Last Testament

Martin Wolf writes (16 July) in The Financial Times’ “Economists' Forum”: HERE:

If the government of the UK wishes to find a suitable motto, it should adopt the advice of a great Scot. “Great Britain should,” wrote Adam Smith in The Wealth of Nations, “…endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.” Smith offers wise counsel. The country’s circumstances are more mediocre than imagined two years ago. The question is how to respond.”

This quotation, from the very last paragraph of Wealth Of Nations, is quoted regularly on Lost Legacy and I am pleased that it has appeared on another Blog (I hope many more will follow too).

However, bear in mind that the paragraph was first published in 1776 and the long history of Britain since that year has been one of studiously and steadfastly ignoring Adam Smith’s 'last testament'.

Wealth Of Nations came out just after the Declaration of Independence by British colonists in North America, 4 July 1776. The British government, wise in their conceit (as Smith called it on another occasion in Moral Sentiments), advised the King to pursue a contest of arms with the distant rebels, some of whom had been trained in arms by his own army, and their leaders had been nourished on British philosophy, which they took seriously.

The seven years war against France had cost £125 million, no mean sum, as had other wars since the late 17th century. The rebellion was likely to cost a great deal too and the stakes were higher – the loss of the British colonies. Smith, typically, saw this prospective loss as an opportunity – to end dreams of empire and its contingent expenses, and its state-sponsored private mercantile monopolies and their protectionist strategies that curbed progress towards opulence by diverting capital away from its natural evolution (the gist of Book IV of Wealth Of Nations).

Well, King George III, flattered into anger with the colonists by the interested factions of monopolistic-minded mercantile privilege, chose ‘no surrender’ to the impertinence of colonial upstarts; offered nothing, and lost everything.

Out of gross folly, great prospects for progress to opulence were possible, but sadly events conspired to cause those who never learn to repeat their follies on a wider stage. Canada, a prize of war, joined other Caribbean islands, the shoddy spoils of mercantile adventurism in India, and the penal colony of New South Wales to presage the new, and greater British Empire.

Even the combined loss and abdication of that empire in mid-20th century, now a Commonwealth, which provided the opportunity for the narrative of adjusting to the “mediocrity of her circumstances”, was fumbled, missed and messed up.

Inheriting a prominent position at the top table – the UN Security Council – by force of arms against the Nazi-Japanese aggression, bolstered by close ties with the 50-odd Commonwealth countries, and playing beautifully the assumed role as a world leader (albeit in the shadow of the USA), though little of substance lies below the surface, has not (yet) forcedd the truth down the throats of those who manage (using the term loosely) the British state.

They won’t let go! That’s the problem: spare us from those imbued with a mission! Adam Smith advised their predecessors of the truth: divert considerable resources of labour and capital into unproductive ends and you hold back those productive ends that promote progress to opulence (metaphorically paid for by those at the lower end of the distribution of the annual produce of the necessities and convenience of life). Bankrupts can't help the poor; but a richer Britain could, both at home and abroad.

But they didn’t listen in the past, and neither are their descendants, yet.

So, let’s repeat Adam Smith’s last testament: Britain should “…endeavour to accommodate her future views and designs to the real mediocrity of her circumstances.”



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