Monday, October 03, 2016

A Labour MP on Adam Smith

Alison McGovern, Labour MP for Wirral South, posts (3 October, 2016) in New Statesman HERE
But Fox’s speech yesterday missed the point from beginning to end. Take his opening, citing Kirkcaldy’s Adam Smith, hailed as the author of the free trade maxim that we are all economically better off if we act in our own self-interest.  
However, like much British history, Smith’s writings are more complex than they are made out to be. Right-wingers quoting Smith often gloss over the anti-colonialism of his work, and ignore his other great work, The Theory of Moral Sentiments, which opens with the words:
"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”
McGovern is broadly right and congratulations for that small mercy. Smith’s reference to individuals acting in their self-interest was not a ‘free trade’ maxim that made us ‘all economically better off”. It was more qualified than that.
Why? Because individuals could act in their self-interest which on occasion is detrimental to the public interest - pollution methods, poisonous waste, improperly made products, slave labour, and such like. In short, it depends on what is done and Smith was aware of people acting in their self-interest did not always make us all better off.
In Wealth of Nations he comments several times on ‘merchants and manufacturers’ - and politicians in government! - acting against the public interest. 

So we are not necessarly ‘all better off’ if we act in “our own interest” and Adam Smith never said we would be. The example he gave was completed with his specific example of when it would be true ( risk-averse merchant investing locally because he did not trust foreign merchants. In intenionally investing locally he unintentionally added to the domestic economy, thus adding employment affects that benefitted others .


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