"RECLAIMING ADAM SMITH FROM WHAT?

Stuart Jeanne Bramhill reviews “The Wealth of Nations by Adam Smith Abridged Version” by Laurence Dickey, Professor of History, University of Wisconsin-Madison (Hackett Publishing 1993) and adds many controversial comments on Adam Smith’s Wealth Of Nations HERE and “The Most Revolutionary Act” in Diverse Ramblings of an American American Refugee HERE 

“Reclaiming Adam Smith”:  

“Smith’s writing tends to be quite repetitive, as large sections of the later books predate the earlier ones. In his abridged version, Dickey merely summarizes material Smith has introduced in earlier sections. There is also a generous preface, as well as appendices, that position Smith among the various writers of the 18^th century Scottish Enlightenment. In this way Dickey shows that, to a large extent, the Wealth of Nations is a consolidation of widely held views on basic economic principles.

“Contrary to conservative claims, Adam Smith was a liberal who argued for government intervention to ensure economic growth and “general prosperity.” I find it intriguing that he attributes Britain’s global economic dominance to “division of labor” and a superior agricultural system. Despite an entire chapter in Book I on the origin of money, he makes no mention of the role of English banks in creating money (which started in 1666), which kick started the industrial revolution.” 

Comment: 

The above abstract excited my interest.  But before I proceed to look at Stuart Jeanne Bramhill’s Review, I wonder why the much earlier banks founded in today’s Netherlands and in Italy centuries earlier than 1666 did not ‘kick start the industrial revolution’ too?  The phenomenon known today, but not in Smith’s time, and for a long time afterwards, as the ‘industrial revolution’ was not an event worthy of the title “revolution’ but a long sequence of local events that aggregated to a significant transformation of the productive powers of nascent market economies, initially in the United Kingdom, melding technological and trading relationships between countries, which gradually spread to other Europan countries, largely held back by the dynastic feudal political systems that ruled their economies, and had caused two centuries of European and colonial wars. 

Singular explanations for the ‘industrial revolution’, itself a process lasting more than a century or two, are often suspect.  For a detailed scholarly examination of the process by which per capita incomes rose from the historical norm of less than $1 a day towards $150 a day in feudal and nascent commercial societies, I suggest preliminary reading should include Deidre McCloskey’s volumes: “Bougeois Virtues’ (2007) and ‘Bourgeois Dignity: why economics can’t explain the modern world’ (2010) - plus the couple of volumes to come, published by Chicago University Press.

Stuart Jeanne Bramhill’s review includes several assertions about Adam Smith’s structure of his arguments that I would dispute, particularly her characterisation of Smith’s writing “as quite repetitive, as large sections of the later books predate the earlier ones”.  Has Stuart Jeanne ever written a major treatise that summarises her life’s work from dispersed sources (not available on a desk-top), with much of the material labouriously asssembled by surface correspondence with the help of distant authorities, not very prompt at responding?

I have selected five of her summary comments below, though I shall ignore Stuart’s ideological disputes with ideologicaly minded  “neo-liberals and neo-conservatives” and her appeals to “liberals, progressives and left libertarians” to “reclaim Adam Smith as one of our own”.  These are like a cacophonous side-tracking of no relevance to accurate statements about Adam Smith’s Works, long before these labels meant anything (which is not much in my view).

Stuart Jeanne Bramhill wrties: “Book I lays out Smith’s belief that “division of labor” … in which individual farmers stopped making their own plows, dwellings, shoes, clothes, etc. and organized into specialized trades to provide these services – was the fundamental socio-economic change that made modern economic development and western-style democracy possible.”  

Comment: The “division of labour” recognised by scholars since classical times (and present in the earliest of human groups many thosands of millennia before written history began) was indeed the significant human phenomenon in nature.  Long before farmers appeared, recently around the tenth millennia, it was practised in human groups of hunter-gatherers, if only because of the inevitable variations in abilities to perform the various tasks that grew more complex with humans as they gained and retained knowledge. 

But the reviewer, makes no mention of the most significant aspects of Smith’s Book I, much of it written and taught by him in the 1750-60s at Glasgow University, long before he incorporated his extant writings from his “Lectures on Jurisprudence”, “Early Draft”, and two “Fragments of the Division of Labour” into what became his manuscript of WN written as his new text from 1764 to 1776.   

I refer to Chapter II, particularly on the role of bargaining and self-interested exchange from the “propensity to “truck, barter and exchange”, the “necessary consequence of the faculties of reason and speech”. Stuart considers it more significant that Smith did not open WN with a discussion of ‘banking’ and the creation of ‘money’! Writing other author’s books is not a non-serious act of self-indulgence.   Authors write books their way and not the way that a scholar might write her own book three hundred years later, with the singular advantage of hindsight and the world’s literature available on her desktop.

Stuart Jeanne Bramhill: “Book II also emphasizes what Smith calls “frugality” or the “mediocrity-of-money” as being essential to this capitalization. He also calls for limited government intervention (which Book V elaborates on) to ensure “doux-commerce.” This he defines as an economy based on “frugality,” in which rich people invest their profits in increasing productive labor, rather than luxuries, corruption and vice, which contribute nothing to a society’s economic well being”.

Comment

Rich people do not necessarily act productively by accumulating productive capital.  Many are rentiers today spend on extravagant consumption, as their predecessors did in Smith’s time. This was characteristic of declining feudal estates as promogentiture laws and entails accelerated the decline in the productive potentials of the aristocracy.  

Smith considered it distinctive that those who spent their incomes on prodigal consumption (wine, drinking, fashionable clothes, gambling and such like) were unproductive, instead of spending it frugally by investing in productive industry.  Smith characterised them as spendthrifts, who in the extreme “impoverish” their country.  This recognises the importance of economic growth because productive investment applies new amounts of capital to the employment of previously unemployed economic resources that from each round draws more people into employment and more sources of capital into productive circulation.  Smith believed a growing economy was ‘better’ that a stagnant or declining economy, where it was the poorest who suffered most.

Stuart Jeanne Bramhill: “Book III elaborates on Smith’s ideas about the accumulation of capital and “frugality,” as well as describing the rise of cities and mercantilism, which in Smith’s view negatively impacts investment in agriculture. Using numerous historical examples, he argues that the inability of a country or empire to produce their own food (and subsequent reliance on food imports) always results in their downfall.” 

Comment

The historical approach to the history of the accumulation of capital is typical of Smith’s writing in the mid-18th century based on the sources available to him.  It introduces Book IV, which consisted of what Smith called a “very violent attack” on the mercantile state with its close alliance with business ventures, both domestic and foreign, from which politicians received a cut.  In Smith’s mind the market economy was skewed to government-promoted monopolies, promoted continental wars and violent clashes in separate European-controlled colonies.  

He also noted that the skewed relationship interrupted the development of commercial agriculture to its full extent before the necessary development of a full market economy. The consequence was the distorted changes in legal status of feudal agricultral ownership reduced investment.

“Book V – elaborates on specific interventions Smith would allow government to make “in relations between the rich and poor.” He argues for a government role in ensuring that educational institutions provide moral up-lift (i.e. a “culture of frugality”) to ensure the continuing investment necessary to create jobs.

Here he also delves at length into the effect of military spending on economic wealth. He argues that military spending must be strictly limited and never paid for by borrowing. He predicts that indebtedness for military spending will eventually cause the economic ruin of all European countries.”

Comment

Smith did not “allow” specific interventions.  He described the role of government common the purposes of government across history and in his times.  He was not an evangelist for a policy; he suggested what the history of government showed to be common practice (defence, justice, publicly-funded works, education of youth, and education of adults, including the reform of religion, prefering instruction in science to state religions cultivating “fanaticisms”, and finally the “expense on the dignity of the Sovereign” (government).  His last section is lagely about taxation to supply public funds.  

He also tagged on the end a summary discourse outlining the case for the government choosing to “free herself from the expense of defending” its colonial possessions and “endeavour to accommodate her future views and designs to the real mediocrity of her circumstances”, i.e., abandon its attempts to subdue the American colonies.

Stuart Jeanne Bramhill’s claims to review of Laurence Dickey, Professor of History, University of Wisconsin-Madison (Hackett Publishing 1993) and adds many controversial comments on Adam Smith’s Wealth Of Nations”.   

Comment

I am not convinced I should read Lawrence Dickey’s abridgment of Wealth Of Nations, nor am I impressed by Bramhill’s comments on it.  Just because Smith is “cited extensively by neoliberals and neoconservatives as justification for ending government regulation of corporations” (which itself misreads Smith’s quite trenchant criticisms of “merchants and manufacturers” and their allies in 17th and18th-century governments), is no justification for her unimpressive grasp of what Smith wrote about in WN. He was a pragmatist not an evangelist.  

I remember attending a conference in New York entitled “Reclaiming Adam Smith” some years back and being unimpressed, with some distinguished exceptions, of the calibre of some of those who spoke at it.  I wonder if Stuart Jeanne Bramhill also attended it or spoke at it?