Monday, November 30, 2009

An Economist Speaks Up for Adam Smith's Legacy

David Smith writes in Economics HERE: and adds a most interesting postscript to an article:

Don’t expect too much blood from Darling’s Axe”

“Sometimes I feel obliged to defend the family name. On the Today programme, my former colleague John Cassidy, interviewed about his book How Markets Fail (Penguin, £25), blamed the free-market economics of Adam Smith, adopted uncritically by Alan Greenspan.

You might have thought, listening, that Smith’s ideas had been discredited by the credit crunch. That, however, is far from the case. Were Smith alive today, he would have been as critical as the bankers, and the failure to regulate them properly, as anybody.

In fact, as Cassidy makes clear in the book, Smith was even more sceptical of the motives of bankers as of most businessmen. He thought banks should not issue notes to speculative lenders and regulating them was as necessary as building party walls to prevent fires spreading. So don’t blame Smith. Blame those who misinterpreted him

I wouldn’t put it differently myself.



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