Wednesday, July 12, 2006

Henry Clay-Ruark Speaks Up for the Kirkcaldy Adam Smith

A most strange (in presentation) article in (Oregon) today by Henry Clay-Ruark: “Adam Smith Dead-Right; but corporate corruption distorts care-filled approach.”

I had to read it several times, literally, before getting its drift. It attacks distortions of Adam Smith on the invisible hand, typified with its opening paragraph:

Famed for his “invisible hand” concept creating “great good out of much greed”, Adam Smith has been the mighty mogul of “free-market” economics ever since 1776.”

But as it does not say so until much later, it could be taken as if this was Smith’s position (he never supported greed or suggested it was part of commercial transactions). The convictions in the Enron case were the antipathy of a Smithian free-market as Henry Clay-Ruark recognises.

Further down the page Henry Clay-Ruark presents his correction to the above misinterpretation of Smith’s actual views:

Shaping trades into sales into solid satisfactions for everyone, while making sure neither seller nor buyer gets badly bruised, is neither simple nor easy.

Smith built in extremely essential operational-steps for profound protections --malignly misinterpreted, denied-and-defied ever since, especially by corporate corruption caused by manager dereliction to pay off personal interests vs rapidly-separated ownership.
Smith’s first work was “The Theory of Moral Sentiments”; he lays out moral and religious-derived assertions which surround and sometimes overwhelm statements made in “The Wealth of Nations

His unmistakable emphasis is on very conscientious care and concern, with a striking cooperative approach to action for the best interests of all concerned -- a fundamental departure from the rough-world cut-throat competition of “Wealth”.

That’s WHY “Wealth” is always the ONLY one ever cited in strong defense always generated for the “free markets” principle; thus distorting and/or perverting what Adam Smith REALLY stated.”

That is absolutely correct, as I have been showing on Lost Legacy for over a year now, and I congratulate Henry-Clay-Ruark for spreading the truth about Adam Smith’s concept of markets and rejecting false attributions to him of views he never held.

There are many instances in Smith’s works showing that self-interest that drives people’s behaviour can have malign outcomes.

Let me quote from my own draft ms for the Great Thinkers in Economics series (2007) for Palgrave Macmillan on this very subject:

As usual, Smith comes at the subject via an historical account to highlight the role of stock in the early accumulation of capital needed for the rapid development of commerce, a process which he finds retarded by the interventions of prejudice, malfeasance and lack of probity among many people who, out of ignorance, acted unintentionally or otherwise against the public benefit.

Not all individual acts of self-interest lead to the promotion of an end that benefits society. The absence of the benign, ‘invisible hand’ is not remarked upon in this case – nor, it should noted, is it mentioned in ‘many other cases’ where malign outcomes are usual – and not noticing this unremarkable fact (except where economists rely only on selected quotations from Smith’s Works and forego the reading of them, has been a source of perennial confusion about Smith’s single use of the metaphor in Wealth of Nations, [WN IV.ii.9: p 456] which some of his successors (e.g., the progenitors of the ‘Chicago’ Adam Smith?) turned into a ‘theory’, a ‘maxim’, even a ‘law’ of markets, completely ignoring the many occasions where Smith noted and expounded upon in Lectures [in Jurisprudence, 1764) and Wealth of Nations, with specific examples that the self-interested actions of individuals had deleterious effects on the growth of markets (which they still do in cases of ‘failing, or at least seriously faltering, and outright ‘failed’ development in Africa, Asia and Central and South America). Smith probably reasoned that the points he made were too obvious to require elaboration.”
[© Gavin Kennedy, 'Adam Smith' ms]

I am pleased that the good readers of are given the opportunity to read about the real Adam Smith from Kirkcaldy in Scotland instead of the fictitious Adam Smith, claimed famously by George Stigler to be ‘alive and well in Chicago’.


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7:35 pm  

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