KNOWLEDGE OF ADAM SMITH'S WORLD IS ALARMINGLY UNKNOWN
Gillian Tett posts HERE on Huffington Post
“Gillian Tett’s Actions to Achieve Inclusive Capitalism”
“Ask a financier today in the City of London or Wall Street to name the founding father of modern capitalism, and they will probably invoke the words “Adam Smith.” After all, three long centuries ago, Smith laid out a vision of the political economy where the ‘invisible hand’ of supply and demand drove economic growth - and where free enterprise was the driving force for vibrant capitalism.”
Oh, dear! Another, no doubt, well-meaning idealist who knows less than she thinks she knows about Adam Smith. For a start Adam Smith did not know of the word ‘capitalism’. It was first used in English in 1854 by Thackery, a novellist, to describe a financier (in The Newcomes). The economics of business in Smith’s day (he died in 1790) was well short of the capital involved in what came to be known as ‘capitalism’.
Nor did Adam Smith have a “vision of the political economy where the ‘invisible hand’ of supply and demand drove economic growth.”. Smith never referred to ‘an invisible hand’ of ‘supply and demand’. Has Gillian Tett actually read Smith’s Wealth of Nations? I doubt it.
Gillian Tett: “But these days, a certain irony hangs over Smith. In the places where free market capitalism is most frequently venerated - namely Wall Street and the City - many of the core ideas behind Smith’s vision are frequently ignored. And unless these are restored, it will be hard for bankers (or anyone else) to create an effective capitalist system, let alone one that is ‘inclusive’.”
More meaningless verbiage, posing as an authority, Gillian Tett claims to be talking about.
Markets “work best when prices are transparent to a wide circle of buyers and sellers, be that 18th century butchers or 21st century bankers. They are not 'created' by fiat.
Butchers, brewers and bakers in Smith’s day were street vendors and customers crowded around market places. Prices were visible (or hearable) as customers bargained with stall holders. Where Smith lived in Edinburgh (1778-90) the entire street up which he walked every work day to where he workd as a Customs Official, was populated by stall holders. Similarly in the Kirkcaldy Street where Smith lived with his mother, he was familiar with street vendors. He also lived by Kirkcaldy harbour, where local fishermen sold their catches to house-wives and small traders, and local estates. Edinburgh, just across the Firth, handled large government loans and finance, as today, usually on a confidential basis. Incidently on his visits to London to see his publisher or ministers of the crown (including the Prime MinIster) he stayed close the Suffolk Street area, which was also full of street vendors. Not so different then? Except in scale.