Tuesday, April 26, 2011

It is Sometimes Necessary to Quibble

In The American (Journal of the American Enterprise Institute)

“Recently, Premier Wen Jiabao has taken to mentioning his admiration for Adam Smith, capitalism’s most prominent theorist. But if Premier Wen wants China to remain a dictatorship, then Smith’s teaching should scare him. Smith never used the word capitalism in his writing—he spoke of “a system of natural liberty.” This system, today called capitalism, has been a successful training camp for self-government precisely because it has permitted citizens the liberty to pursue self-betterment and self-reliance tempered by virtues such as restraint and sympathy. Capitalists have thus played leading roles in democratic transitions. They have been powerful forces for change, making ever greater claims against state injustice and rapaciousness. But in China, entrepreneurs are dependent upon or given special privileges by the state. The incentive or even opportunity to form a distinct “class” of burgeoning democrats does not yet exist. Absent the existence of such a class whose interests sometimes clash with the state, the formation of democracy is very unlikely.”

I agree that Adam Smith did not use (or know) the word capitalism (often reported on Lost Legacy because the word wasn’t invented until 1854 (Thackeray’s Newcomes) but the concept of ‘natural liberty, under natural rights theory – Grotius, Pufendorf was taught by them in the late 17th century, and by Adam Smith in the mid-18th century, and is not synonymous with ‘capitalism’. It is not even synonymous with natural liberty. It is a jurisprudential idea about natural rights applicable to humans derived from the first age of man (the forest).

Smith applied natural law theory to ‘the age of commerce’ and associated it with progress towards ‘opulence’ from commercial activity, though he did not regard it as a necessary condition for such progress (as he told Dr. Quesnay and the Physiocrats in Wealth Of Nations long before the primitive accumulation of capital had passed over to large capitals (and Smith had passed away in 1790) and into what became known as capitalism from the mid-19th century.

But in China, entrepreneurs are dependent upon or given special privileges by the state.’

Super-large capitals in the US system of semi-state capitalism (a.k.a mercantile political economy) are also largely ‘dependent upon or given special privileges by the state’. Tariffs, prohibitions, regulations, state-contracts at local state and national state level, to mention a few causes of dependency of large capitals in the USA.

Enterprise in securing US government contracts may be ‘enterprise’, interpreted loosely, but that is not much different from the mercantile Royal Charters, and state contracts, fought for by 18th –century standards familiar to Adam Smith and a target of his criticism.

Natural liberty is a misused term in these contexts.



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