ADAM SMITH'S IDEAS WERE NOT FOLLOWED BY POLITICIANS

Donald Boudreaux posts (22 April) on FEE (Foundation for Economic Education) HERE

(Republished from Cafe Hayek.}

“Mises on The Importance of Adam Smith”

Ludwig von Mises, in his introduction to the 1953 Henry Regnery Co. edition of Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations, gave us this commentary on the importance of Adam Smith's intellectual contributions:

“Smith’s books did not lay the foundation stone, but the keystone, of a marvelous system of ideas.  Their eminence is to be seen precisely in the fact that they integrated the main body of these ideas into a systematic whole.  They presented the essence of the ideology of freedom, individualism, and prosperity, with admirable clarity and in an impeccable literary form.

It was this ideology that blew up institutional barriers to the display of the individual citizen’s initiative and thereby to economic improvement.  It paved the way for the unprecedented achievements of laissez faire capitalism.  The practical application of liberal principles multiplied population figures and, in the countries committed to the policies of economic freedom, secured even to less capable and less industrious people a standard of living higher than that of the well-to-do of the “good old” days.  The average American wage-earner would not like to dwell in the dirty, badly lighted, and poorly heated palatial houses, in which the members of the privileged English and French aristocracy lived 200 years ago, or to do without those products of capitalist big business that render his life comfortable.

The ideas that found their classical expression in the two books of Adam Smith demolished the traditional philosophy of Mercantilism and opened the way for capitalist mass production for the needs of the masses.  Under capitalism the common man is the much-talked-about customer who “is always right.”

COMMENT

Donald Boudreaux is a tireless and articulate exponent of market economics whose literate posts I have read for a number of years. Readers of Lost Legacy will recognise points in Donald’s thesis above where I would be critical of some of the presentations of his ideas about Adam Smith’s actual influence on policies pursued by Briish and other governments from the 19th century onwards. “Laissez-faiire capitalism” is a political slogan not an idea of Adam Smith's, as I posted about yesterday. Smith favoured “natural liberty” for all, not just moneyed interests, who fought hard to enjoy freedoms they denied to their workforces and to foreign competitors. It was well into the 20th century before politics - not unbridled capitalism - legislated for the elements of the Welfare State. That debate cintinues on both sides of the Atlantic.

Of course, Boudreaux is right about the real shift in the comparative living tsandards of all classes in the 18th century compared to the 21st century. This was a point made by Adam Smith too in comparing the difference betweeen living standards of the 18th-century labourer with the richer property owner, which were self-evident, to the near destitution of the ordinary indigenous “savage” and their “chiefs”.  In that comparison, Smith showed that the working labourer was incomparably welll-off than those at the bottom of the scale in the territories of Africa, Asia and the Amderica’s.

And that gap would continue - and did - well into the 21st century, though narrowing as economic government spreads, despite the awesome struggles at the tops of those societies in corruption, civil and tribal warfare,which  spreads and engulfs many of these countries and stalls market economic growth. The market economics of the 19th and 20th centuries were dominated  by international racial and political tensions, and hot and cold wars too.

In sum, I am sceptical of claims thatt Smith “demolished” many ideas prevaling in the wider political spheres, putting it another way, the link between a book and the practical choices made by politicians and governments is far more tenuous than credited by Donald Boudreaux.