Tuesday, September 03, 2013

Everything Stays The Same


Andrew Coyne, writes in the Calgary Herald,  HERE http://www.calgaryherald.com/opinion/oped/Coyne
+Interests+producer+take+precedence/8819002/story.html “Coyne: Interests of producer take precedence”
"Consumption is the sole end and purpose of all production," Adam Smith wrote more than two centuries ago, "and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer." He added: "The maxim is so perfectly self evident, that it would be absurd to attempt to prove it." Oh Adam, if only you were alive to see Canada today, where the maxim, far from self-evident, is everywhere turned on its head - where, as you wrote of the mercantilists of your day, "the interest of the consumer is almost constantly sacrificed to that of the producer."
It plainly reflects the sincere belief of much of the Canadian business, media and political elites. The maxim guiding much of Canadian public policy is, quite literally, that the purpose of consumption is production - or at any rate, that it is the consumer's duty to submit to the needs of producers.”
Comment
I am always pleased to see authors quoting from Adam Smith, especially when their quotation is accurate.  Andrew Coyne’s is accurate, though a trite truncated. So, here is Smith’s full quote and reference below:
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self–evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and
commerce (WN IV.viii.49: 660).
Andrew appears to dramatically over-do Smith’s reaction should he be alive today and see the supposed difference with his experience of observing how mercantile merchants behaved regarding the “self-evident maxim”:
the maxim, far from self-evident, is everywhere turned on its head - where, as you wrote of the mercantilists of your day, "the interest of the consumer is almost constantly sacrificed to that of the producer."  Continuing with Coyne’s imagined reaction of Smith, I should think his reaction on observing Canadian business behaviour, would be “plus ça change, plus c'est la même chose, assuming he was familiar with a (now) common phrase popularised since 1848.  (Note: Smith spoke French in a Scottish accent, and he understood French – see his translations of Rousseau).
So nothing has changed!
Moreover, Smith only asserted ”The maxim is so perfectly self–evident, that it would be absurd to attempt to prove it; he did not suggest that the “maxim” was necessarily followed in practice, though in his view it “ought” to be followed.  Maxims are “oughts” and an “ought” is not an “is”!
But thank you Andrew Coyne for introducing, even reminding, your readers of Smith’s wisdom on this occasion.  Every little helps.

2 Comments:

Blogger airth10 said...

I am half with Andrew Coyne and half not.

The dust-up he is referring to is about two opponents in the market place protecting their own turf, which is natural. This back and forth between consumers and producers is how economic policy is often shaped so to be mutually beneficial.

Adam Smith would be pleased with this.

11:43 am  
Blogger Gavin Kennedy said...

airth10
My point was that Smith drew attention to a maxim: something that he agreed with and "ought" to happen, not that it did.
Producers and their friendly legislators in his days, and more so in ours, because there are more producers and they command vastly more funds, and use them to ensure their producer interests. Consumers are dispersed and their friendly legislators are fewer and less well funded.
It was ever thus.
Smith's maxim is a correct perspective of an "ought" but not of an "is".
Gavin

3:52 pm  

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