Sunday, May 14, 2006

Eamonn Butler, James Buchan and Adam Smith

Eamonn Butler of the Adam Smith Institute (13 May) writes:

“Chancellor leads second kidnap attempt on Adam Smith”

“An unseemly battle is being fought over the soul of Adam Smith. Britain's Chancellor of the Exchequer, Gordon Brown, wants to paint his fellow Kirkcaldy resident as a
Scottish socialist, rather than the champion of non-intervention, and has prompted economists and historians to make this case. His enthusiasm has infected James Buchan's new book on Smith; and in a month or two the title of Iain McLean's new volume ('Adam Smith: Radical and Egalitarian') will say it all.There are three arguments. The first is that Smith was no defender of merchants and manufacturers, and in fact distrusted them. Quite right. But then he distrusted governments and regulation too. He thought that people should be able to trade freely, without ministers, officials, or indeed would-be monopolists trying to stop them. It a view that I share: I hate all coercion, either from monopolists or governments. But it hardly makes me a socialist.Second, it is said that Adam Smith did not really say much about the 'invisible hand' and even then it is not an argument for laissez-faire. Quite true. But what Smith actually advocated, as I do, was not laissez-faire but a free, competitive, market economy. Markets need general rules to prevent coercion and preserve competition: while socialist intervention is coercive and destroys competition.The third criticism is that Smith wrote at length on the virtue of human sympathy, which cannot be reconciled with the self-interested nature of capitalism. This reveals the fault in the Brownian thesis: it has not got Smith entirely wrong, but it has got capitalism entirely wrong. If businesspeople really were as amoral as that, our leading industries would be people trafficking and gun running. But most people who run businesses and invest in businesses are ordinary, moral people who might well want to turn a buck – but an honest buck.Smith's famous remark that when businesspeople meet up they invariably start conspiring against the rest of us, is followed by an explanation of what prompts such cartels. In a word, it is regulation. Smith was no critic of fair commerce: but he was a staunch critic of the power of our rulers to pervert it.”

Comment
I have taken the unusual liberty of reproducing Eamonn Butler’s lucid review in full from the Adam Institute Blog (© Adam Smith Institute – All Rights Reserved - apologies for the impertinence without permission, but forgiveness is a higher moral norm than legal writs) – the most widely read in Europe – because this will be one of several comments among writers in the next few months following what appear to be like a spate of new studies on Adam Smith due in 2006-7, and I believe that the authoritative views of the ASI will feature strongly among them.

I have no standing with the ASI – a campaigning organisation for competitive markets in place of government sponsored attempts to intervene from the top – though we have parallel concerns in this area and I am broadly sympathetic with much of what ASI stands for. That said, I recognise the significance of ASI’s intervention in the burgeoning dispute between those who misuse Adam Smith for ends he never advanced on both sides of the political spectrum and those whose concerns are broadly to present the facts about Smith, his life and work, in the best traditions of scholarship.

One problem with politically motivated interpretations of Adam Smith’s legacy is that they selectively extract from his life’s writings – more that one and a quarter million words – and apply them to circumstances over two hundred years after they were written and which are so far from the world he knew of as to be almost meaningless.

Gordon Brown is not the first by a long way to have engaged in such antics. People of a more conservative disposition have been doing this to Smith’s legacy since early in the 19th century and the habit is almost rampant in the United States in both political commentary and, sadly, in academe. Smith is presented, laughably, as the ‘High Priest of Capitalism’, a pioneer of ‘laissez faire’, a theorist of the ‘invisible hand’, and advocate of the ‘night watchman state’ and ‘free trade’. Worse, it is asserted, by a ‘Nobel prize winner’, that ‘Wealth of Nations’ is founded on the granite of ‘self-interest’. None of these assertions (Gordon Brown’s included) about Adam Smith are true.

Jacob Viner, a long time ago, expressed it judiciously in his admirable 1928 essay: ‘Traces of every conceivable sort of doctrine are to be found in that most catholic book, and an economist must have peculiar theories indeed who cannot quote from the Wealth of Nations to support his special purposes.’

In this Eamonn is absolutely right: ‘what Smith actually advocated, as I do, was not laissez-faire but a free, competitive, market economy.’ Spot on!

Apologists for government excesses, spinner of lies about the malfeasance of corporate executives caught in nefarious scheme to cheat consumers and investors, and all those who rely on jaded quotations from Wealth of Nations and Theory of Moral Sentiments for their tired (lazy is not too strong a word) attempts to hijack Adam Smith behind their misuse of his legacy for unworthy ends deserve their uncomfortable shelters exposure to the truth.

James Buchan’s new book is an admirable and refreshing account of Adam Smith, his ideas and life. I have not yet seen Ian Mclean’s new book (it’s on order) and pre-publicity suggests, unpromisingly, it will attempt to establish the hypothesis that Smith would support New Labour. I will judge it on its merits. Meanwhile, this blog: (www.lostlegacy.co.uk) shows with what I deal almost daily from a Smithian point of view in respect of the issues Eamonn raises.

[Read Eamon Butler’s blog at: http://www.adamsmith.org/blog/Order James Buchan’s: Adam Smith and the pursuit of Natural Liberty’ from Profile Books, May 2006 – try Amazon]

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