ECLECTICISM IS NO SUBSTITUTE FOR CLEAR THINKING

Atul Singh teaches Political Economy at the University of Berekely, California, graduated PPE (Oxford) amd MBA at Wharton (a distinguished education by any measure). He posts in Fair Observer (27 December) HERE

“The World This Week: Tornadoes, Flooding and Climate Change”

“The global economic system of today might be reaching an inflection point similar to that faced by the Soviet Union. At the root of the current system is a simple premise: People are better off if they can consume more. Many argue that this is a fundamental human trait, which enables us to grow crops, settle cities and build rockets. They claim that greater consumption makes people happier. They also assert that the price of progress is inequality. People want bigger homes, fancier cars, lusher lawns and so on and so forth. The only way this can be achieved is through a Darwinian system of competition where the miracle of markets through Adam Smith’s “invisible hand” leads to a bountiful world. The butcher, the brewer and the baker can produce more through specialization of labor and benefit more by trading with each other.

Smith’s world sounds excellent in theory but starts falling apart when there are slave owners and slaves, masters and serfs, and the superrich and slum dwellers. Trade is now no longer possible. The only thing that a purportedly free underclass can trade is its labor. The rich are far too few to require the services of all of the poor anyway. After all, there is a limit to the number of chauffeurs, butlers and nannies the rich can hire. Besides, endemic poverty dehumanizes the poor. African American neighborhoods in Detroit, favelas in São Paulo and shanty towns in South Africa are trapped in a vicious cycle of deprivation, poor education and gang violence. Smith’s blind devotees could do well to remember that he was a product of the Scottish Enlightenment in an egalitarian Presbyterian society. He also advocated public education, a fact conveniently ignored by American Republicans and Englishmen who study at Eton.

Smith’s world of butchers, brewers and bakers plying their trade no longer exists. Their work is now carried out by poorly paid workers for low wages. Giant supermarkets and big brand names now dominate. Concentration of capital has killed the independent trader and the small businessman, particularly in countries like the US and UK. Most American towns look the same with McDonald’s, Staples and Walmart beckoning those driving by. Capital chases ever higher returns and the name of the game is scaling up. People consume like gluttons, looking for ever cheaper deals. Hence, it is perfectly reasonable to cut down all trees for furniture and clever to pay people minimally to do so.

In this Darwinian system, the quest for ever-higher returns forces business to cut costs to the bone. To boost shareholder returns, it makes sense to discharge industrial effluents straight into the river instead of investing to make effluents less toxic. Strip mining for gold or drilling in the Arctic for oil is rational action regardless of the risks. Those who complain are woolly headed romantics, lacking the toughness and single-mindedness to succeed. Economists, the high priests of this global system, call everything that cannot be captured by the market “externalities.” This word supposedly captures collapse of public institutions, the death of rivers, the damage to people’s health and anything else. To use an oft-used phrase, we live in a world where we know the price of everything and the value of nothing.”

COMMENT

It is often said that a “little knowledge is dangerous” and the truth of those words is demonstrated by the above paragraphs by Atul Singh. He appears to have an eclectic grasp of many things but is short of an understanding of their contexts. To these defects he adds an almost total lack of historical perspective, as if somehow the human species recently left the innocence of an Eden Garden and entered a world flowing with bread and honey amidst a a truly humane paradise of mutual equlity and heavenly relationships between empathetic rulers and the ruled. 

His image of a “Darwinian competition” and Adam Smith’s markets driven by the so-called “invisible-hand” is a rhetorical absurdity that is wrong on many levels, not least that the myth of “an invisible hand” is a modern invention only tenuously linked to anything written by Adam Smith (see my regular posts on Lost Legacy since 2005).

Atul Singh appears to think that people would be better-off is they consumed less - incidently a fine way to define poverty (of which humanity has countless millennia of experience). From that premiss to argue that “inequality” today is a growing problem driven by “capitalism” is ahistorical. 

Smith’s so-called “world of butchers, brewers and bakers” that “no longer exists” is to miss the point he was making, specifically that people received the goods and services they required by exchanging some of what they had available for some of the things they did not have, in this case, meat, alcoholic drink and bread. In previous generations each had to hunt for their meat (protein), drew their water from streams, and simply did without bread. That economic regime lasted for tens of millennia and human lives were short, uncertain, hard and people were ignorant.

But with exchange human societies began to change. The exchange phenomenon began long before markets emerged. Populations grew and migrated from where they had speciated from their origins. The metaphoric long road to “butchers, brewers, and bakers” began. It was not a road resplendent in democracy, equality, and abundance for all. Politically it was decidedly unequal; violent rulers ruled and the ruled laboured. Capitalism did not invent the misery that was widespread. Rulers did not build the pyramids, the gardens of Babylon, the canals of India or China, or the glories of the Classical world. That labour was carried out by the oppressed majority and who kept in line by violent overseers. For millennia these were everyday occurrences for the vast majority.

Adam Smith discussed these and other issues in his Wealth of Nations, Lectures on Jurisprudence, Moral Sentiments, the History of Astronomy and his Lectures on Rhetoric and Belles Lettres. He was no apologist for the mighty who cornered what were the better products of growing economies. He viewed their behaviour within the production-consumption relations of his times and human exchange behaviours that were rooted in human history.

Atul Singh might benefit from reading Smith’s Works in full rather that the extracts given out in Oxford’s PPE. Our consumption has moved on from mere “butchers, brewers and bakers” - tap water is now safer to drink than it was in 18th-century Scotland where beer from brewers was preferred because beer was safer than city water. The same is not yet true for the experiences of much of the world’s still poverty-striken communities.

I am not a "woolly headed romantic” at all, nor am I a “high priest” of the global system”. I take Smith’s historical perspective seriously. It is a place to start our analysis, not a place to end it.