Monday, September 18, 2006

A Conservative Case for Adam Smith

Conservatives, and people described as ‘rightwing’, have long claimed propriety ownership of Adam Smith, a claim that has been challenged recently by Gordon Brown, British Chancellor of the Exchequer, and by Professor Iain McLean, Oxford University, whose recent book, ‘Adam Smith, Radical and Egalitarian, an interpretation for the 21st century’ (Edinburgh University Press) will be the subject of my review shortly.

I read an article this morning published by Human Events online: ‘National conservative weekly’ (since 1944), “How to Win the Climate Change Debate by Alex Bozmoski, Sept 18, 2006, which contains some interesting comments on Adam Smith:

“Conservatives are lucky. Despite our recent intra-movement bickering, we have a strong, consistent, and viable philosophical tradition. We are a movement grounded in ideas; liberalism today is more or less just emotion. We, of course, used to be rather artificially divided -- Adam Smith's libertarian disciples vs. Edmund Burke's traditionalist disciples. Thanks to Frank Meyer and other "fusionists," conservatives realized that in fact the ends of traditionalism and libertarianism were shared, and the resulting movement grew into an intellectual and political powerhouse, fueled by the minds of conservatives we all admire like William F. Buckley Jr. and Barry Goldwater, and eventually articulated into practical policy that the average American can understand and relate to by Ronald Reagan.”

“Adam Smith's libertarian disciples vs. Edmund Burke's traditionalist disciples.” I can only guess what is meant by “Adam Smith's libertarian disciples” but I presume this has something to do with Smith’s Chicago reputation as an advocate of laissez-faire, of which there has been plenty of critical comment by me in earlier Blogs on ‘lost legacy’.

The Kirkcaldy Smith does not fit that image of Adam Smith. That does not, of course, mean he fits Gordon Brown’s (or Iain Mclean’s) image as a sort of social democrat, or, in extremis, some version of 18th-century ‘socialist’. It does mean that Smith was a far more complex philosopher than right and left wing commentators sometimes present him to be.

Smith had a friendly relationship with Edmund Burke for much of his life (the latter admired his 'Moral Sentiments' book and said so) but their intellectual compatibility cooled somewhat as Burke distanced himself from Smith (and quite violently in the early 1800s) as the French Revolution displayed its violent passions and the French Terror erupted from 1793. By then Smith was dead. His friends and supporters felt the force of the government and its repressive legislation (various men were hanged and others were transported; a few were ruined) as suspicions fell on some of them (e.g., Dugald Stewart) who were associated with Smith’s political economy, or rather, interpretations made of it by a frightened elite, still smarting from the American defeats and fearsome of imaginary French-like Mobs running amok in Britain.

Alex Bozmoski applies his thought to the “Free Market”:

"I often worry that conservatives confuse favoring the free market with favoring business. Perhaps the distinction would be inconsequential if business actually lobbied for free-market reforms, but that is not always the case. Business today is often a well-endowed driver of protectionist trade-barriers and government hand-outs. (Cotton is surely not grown in Arizona because market pressures.) Conservatives’ embrace of free enterprise isn’t even grounded in the resulting prosperity of a free system. Such reasoning would in fact counter conservatives’ disdain of materialism and the “soulless corporation,” to again borrow from Professor Kirk. Rather, the free market is a venue for individuals to exercise freedom with minimal government interference. That freedom should only be limited when it may impede the freedoms of others, as is the case when the market itself cannot value the negative societal externalities of trade, such as traffic congestion or pollution. Even Milton Friedman acknowledged a proper place for the government in internalizing negative externalities or “neighborhood effects.” The conservative recognizes the societal cost of greenhouse gas emissions, and should focus on the most efficient way to determine and then internalize their price. Command and control regulation is the liberal way, not our way.”

This seems clear enough and I find parallels with Smith’s thinking (though he did not explicitly state the case for 'Pigovian' taxation - see Greg Mankiv's Blog). He did, however, state a clear case in Book V for the users of publicly-funded roads, bridges, harbours and canals, to pay for their benefits of accessing them. From that principle, providing it meets his ability-to-pay canon on taxation, as it does with commercial users who can charge their customers, but not with the children of the very poor whose parent(s) cannot pay for their education, it follows that the polluters should be charged for the disamenities they cause.

On favouring business and not consumers (the ultimate purpose of production said Smith), we have common ground. Pro-business advocates and pro-union advocates have that in common; they both ignore the consumers; Smith didn’t and neither should we.


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