Thursday, June 02, 2005

Spreading the Word

Working Wounded Blog: Earnings vs. Environment, Part II
Readers Weigh In on GE's Decision to Reduce Greenhouse Gas Emissions
(ABC News)

"June 1, 2005 — News Flash: Eighty percent of readers support the position taken by GE to voluntarily cut greenhouse gas emissions"

Bob Rosner’s column this week contains a quotation from my message of support to him in his critical comments on the Wall Street Journal’s use of Adam Smith’s name to assert that corporations have no moral responsibilities other than making a profit, a wholly misleading assertion that I also criticized:

"This is a complete misreading of Adam Smith and his legacy. The 'invisible hand' metaphor is not evidence that Smith advocated laissez-faire and a hands-off policy toward 'merchants and manufacturers.' Given he wrote in the 18th century in Scotland, he never knew capitalism (a word not invented until the mid-1850s), nor the modern corporations of today. His 'manufacturers' were lowly tradesmen (blacksmiths, locksmiths, coach builders, saddle makers, candle makers, iron mongers and such like; individuals who sometimes hired help, often worked alone). His 'merchants' were market stall holders, not the likes of Wal-Mart.

'Wealth of Nations' itself is a polemic against leaving 'merchants and manufacturers' to their own devices, and Smith provides many examples of the wholly negative consequences of doing so."

One of the other quotations Bob Rosner reported worries me. The contributor wrote:

"Perhaps it is time for higher education to 'rethink' introductory business concepts, and relegate Adam Smith to a historical footnote."

Higher education certainly should rethink the contents of its courses but relegating Adam Smith to a ‘historical footnote” would be most unfortunate. We call this “throwing the baby out with the bathwater”.

It is Adam Smith’s lost legacy that should be thrown out, not attempts to remind new students (and a lot of older ones!) of what Smith actually wrote about. He was opposed to leaving the ‘merchants and manufacturers’ of his day to do whatever they wanted, and it is not in the slightest an exaggeration to assert that his strictures on the cavalier abandonment of any notion of moral and social responsibility on behalf of modern corporations would likewise have been fiercely resisted by Smith.


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