Thursday, April 05, 2012

Adam Smith on "Capitalism"

Tom Cole, a partner in a Casa Grande law firm, New Mexico, writes in Maricopa Monitor HERE:

We need to get back to the regulated capitalism envisioned by Adam Smith. He was explicit that banks and other major institutions must be regulated. The tired argument that government should “get out of the way” and let Smith’s invisible hand take care of the economy is a common yet gross misreading of him. Unregulated capitalism worried Adam Smith; it is structurally faulty and results in the gross economic disparities outlined above. The tea party folks are looking at the same set of problems but mistakenly blame government when the fault lies with massive corporations that now control and run government. Capitalism helped destroy communism, now it has democracy on the ropes.”

Tom Cole is partly right, but he has only shifted attention from the common – and inexcusable - error of the modern myth of the use of the IH metaphor – to his own error in identifying Smith with views on “capitalism”, a word, never mind a phenomena, of which he knew nothing and didn’t write about.

The word did not appear in English until 1854, roughly around the time that the phenomena appeared in public, including novelists, consciousness, often with negative connotations, which it has never really shaken off, judging today at least by Hollywood scripts writers (e.g., “greed is good”; the baddies are always big corporations; profits are always evil; and woe betide a film that doesn’t gross big money and so on).



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