Friday, May 19, 2006

Growl If You Dare

The Wall Street Journal tells us today that ‘Adam Smith Growls’ because:

“Stocks continued their weeklong plunge yesterday, selling off again at the end of the day on more inflationary fears. The way to understand this washout -- knocking 4.4% off the Dow -- is that Adam Smith is giving the U.S. financial establishment a warning.

We're using our favorite moral philosopher here as a proxy for the ruthless discipline of financial markets. They can be brutal in punishing economic mismanagement, and for several days Mr. Smith has been growling that the Federal Reserve and its easy-money cheerleaders on Wall Street and in Washington need to sober up.”


Well, that’s journalism for you. If you can annoint an article with a reference to Adam Smith (‘spinning in his grave’ is a common one) you gain credibility of some kind. But it is a nonsense, of course. Modern financial markets are beyond anything that Smith imagined or could have imagined in the 18th century.

He had much to say about profligacy and the fate of those who spent revenue rather than invested it in capital stock to support productive labour to produce real output for local or distant sale. But I cannot imagine him ‘growling’ as a ‘warning’ to individuals about what they choose to do with their own money. He was not an evangilist nor an interferer in people’s behaviour!

Smith observed – the true role of a philosopher – he was not an activist, a capaigner for everybody to do what he felt was the ‘right’ thing to do. Actions had consequences; he pointed some of them out in his ‘Inquiry’, but whether others took note was entirely up to them.

Please read Adam Smith before you quote him in pursuit of your agendas. Otherwise, I’ll growl at you.


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