Thursday, April 07, 2011

On Misreading Adam Smith

Jonathan Pearce, a principal contributor, writes ‘Inquiring into Adam Smith” in Samizdat Bog (HERE):

"Smith did believe free markets could better the world. He once said, in a paper delivered to a learned society, that progress required "little else...but peace, easy taxes, and tolerable administration of justice." But those three things were then - and are now - the three hardest things in the world to find. Smith preached against the gravitational load of power and privilege that always will, if it can, fall upon our livelihood. The Wealth of Nations is a sturdy bulwark of a homily on liberty and honest enterprise. It does go on and on. But sermons must last a long time for the same reason that walls must. The wall isn't trying to change the roof's mind about crushing us."

P.J. O'Rourke, On the Wealth of Nations … is a terrifically well-written, concise look at Smith, who wrote not just WoN but also on moral philosophy, jurisprudence and many other things. What O'Rourke does is tease out some of the contradictions as well as the great insights of Scotland's most famous thinker apart from David Hume (the men were both great friends). What is particularly good is that although Smith was considered - not always accurately - to be the great-grandaddy of laissez-faire economics (he did not invent that term), he was much more than that. He was no ardent minimal statist although he would certainly have been horrified by the extent of state power in our own time. He supported state-backed funding of education for the poor, for example. He was not particularly fond of businessmen and some of his comments on the latter's tendencies to collude smacked almost of that fear of big business that later spawned the madness known as anti-trust legislation in the US and elsewhere. He supported a version of the labour theory of value that was ultimately taken to its absurd conclusion by Marx; but Smith being Smith, he was the sort of man who also kind of understood that the value of something is what people will pay for it, nothing else. ...

James Buchan (Adam Smith: and the Pursuit of Perfect Liberty) has done more to write about Smith the man, and his book is pretty good, overall. Buchan paints a highly sympathetic portrait of Smith. It is marred slightly by Buchan's strenuous effort to play down the extent to which Smith can be seen as a great advocate of capitalism. True, as I have said above, Smith was no rigid minimal statist, let alone an anarcho-capitalist like Murray Rothbard, but it would frankly be a bit disingenuous to claim that Smith was anything other than a champion of the open market, limited, small, government, low taxes and free trade.

It is in fact interesting that some on the left feel the need to try and claim Smith for their side (I write this with the obvious admission that the word "left" is problematical). Socialists can only try to claim Smith by picking on his occasional jibes at businessmen, building up his support for some kinds of public works and so forth; but they then have to skim over his large criticisms of the dangers of overweening state power and his admiration for the wonders of the open marketplace and the division of labour. But was Smith a "radical" and an "egalitarian"? He was radical, true, in the sense of trying to get to the root of things in explaining how an economy worked but he was not a narrow system-builder in the manner of the French Physiocrats. …

I do not recognize P. J. O’Rourke as a reliable exponent of Adam Smith’s works, though I consider James Buchan is one of the ablest popularisers of Adam Smith’s life and work. Jonathan tries to strike a balance between the extreme Libertarian interpretation of Adam Smith as an exponent of laissez-faire capitalism (all three words which he never used) and the ‘left wing’ interpretation of him as some sort of social democratic egalitarian, hence comfortable bed-side reading for exponents of what used to be called ‘New Labour’ in the UK, such as Tony Blair and Gordon Brown.

I am glad we agree he was never a forerunner of Ayn Rand and that Murray Rothbard (Mises Institute) was a loose canon in his indictment of Adam Smith.

I am not convinced the Jonathan Pearce is correct on his understanding of Smith’s position on the ‘larger’/‘smaller’ state confusion in modern discourse. Much about Smith’s attitude to the size of the debate about ‘how big’ it should be is buried in his critique of the mercantile state from pre-Elizabethan times to the late 18th century (and we could apply it further into the ‘imperialist’ mercantile state post-the American rebellion through the second British Empire).

Son sharp is Smith’s critique, including to the follies of state sponsorship of such corrupt chartered trading companies (bribes all round to King and parliament) that his quotable lines on merchants and manufacturers are ready ammunition for ‘minimal state’ advocates and today’s socialists. For obvious reasons, 18th-century sedition laws and extra-legal practices acted as a brake on Smith’s veracity in such matters, leading to modern misreading of his texts.

Smith regarded the function of government historically as a positive force for protecting property in all societies that inadvertently and unintentionally promoted the possibility of unequal opulence, which he saw as a positive improvement to the alternative of staying in the first ‘hunting’ age of man, with lower living standards (taken in their whole meaning) than the lowest levels of equal ‘savagery’ (which prevailed in newly explored nations in the Americas, Africa and parts of south Asia and awaited in their ‘innocence’ in Australasia ).



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