Thursday, December 15, 2011

Adam Smith Was Never a Utopian

Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University. writes in Reason.com
HERE

“The Never-Ending Budget Battle”

“The pursuit of budget reform will lead us back to concerns that occupied the classical political economists, such as Adam Smith. As F.A. Hayek wrote in 1948, “Smith’s chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they are now, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid.”


Comment
I do not recognize exactly where F. A. Hayek took this idea from Adam Smith’s Works, but I am inclined to appreciate its sentiments as possibly implied by Adam Smith.

How realistic could anybody get about the reality of human societies. Utopians invent human behaviours that they ought to match, but seldom do. Many economists went further and invented rigorous equilibrium worlds that could do not ever exist in reality. Utopian ultra-libertarians speculate on how society could be arranged, missing out the dangerous transition before it got there, and what might be required to keep it there.

Their anarchist forebears (Prince Kropotkin certainly) imagine how human society could be like the “fellowship” and “solidarity” of flocks of roosting birds in nature (from my distant memories of his book). Socialists believe in trying to construct their workers’ world in electoral success in the world we have, becoming corrupted as they try the levers of power, while communists believe in a period of the “dictatorship of the proletariat” from which a truly communist society will emerge as the state whithers away, without ever spelling-out how their communist utopian would function (as Marx and Engels steadfastly refused to do). The “Occupy Movement” hope that something important is about to happen as they occupy the pavements, but nobody agrees among them what that something is.

Adam Smith was different. He made no predictions about the future. He led no political movement. He avoided utopias, such as Laissez-Faire, perfect competition, the abolition of all tariffs, or the abolition of government and the state. His epigones invented his association with these ideas, all contradicted in his Moral Sentiments and Wealth Of Nations. He never mentioned once the cry of some French Physiocrats for “laissez-faire”, he advocated expenditures by the state on major and some minor headings, including two – education and health -with certain prospects of growing considerably. And, most importantly for modern economists, he never used the invisible hand metaphor as a general expectation that it neutralised “greed” and “selfishness” and led to the bliss of general equilibrium and the public good.

He wrote frankly about the foibles of human beings, mean and women, and gently mocked those who considered “place” or “cutting a figure” at a Ball, or saw ruling as if humans were like wooden pieces on a chess board obeying politicians’ plans.

He identified how mankind arrived at where it was in 18th-century Britain in a corrupted constitutional monarchy and political system, but with the elements of Liberty in place (rule of law, trial by jury, habeas corpus, independence of the judiciary, and parliamentary control of taxation by elections). It was perfect liberty, but it laid the foundations for measured improvements in advance of elsewhere. He suggested reforms to economic measures, and to the false ambitions of empire, and warned of the narrow ambitions of “merchants and manufacturers” and the influence of landlords on the legislature.

I think F. A. Hayek’s summary is pretty well on target. I commend it as a watching brief for libertarians in place of fantasising about utopia.

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