Wednesday, September 27, 2006

Out of Context but Still a Good Quote

Not for the first time, nor I suspect for the last time, I refer to John Stossel, a punchy free market US columnist and radio host. On this occasion he is reviewing Timothy Carney’s recent Cato Policy Report, "The Big Ripoff: How Big Business and Big Government Steal Your Money" in Town Hall TalkRadio: ‘Big business loves government’ (27 September 27)

Included is this paragraph:

Another friend of the free market hated the business-government alliance: Adam Smith. In "The Wealth of Nations" Smith wrote, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick. . . . But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."

Yes, that’s a fair quotation from Wealth of Nations (WN I.x.c.27 p 145). To be clear, Smith was talking about small tradesmen combing in Guilds to create monopoly privileges in small 18th-century Towns and generally conspiring to raise prices by keeping supplies limited to their own products.

It was one of these Corporate bodies that refused James Watt leave to practise as a mechanic because he had not served the obligatory seven years apprenticeship in 1756. Smith and his fellow professors gave him a post as University instrument mechanic and space in the university to conduct his work. Fortunately for history, Glasgow University grounds were ‘outside’ the city boundaries and the Guild Corporations writ did not cover them.

Today’s big business enterprises had nothing in common with the type of ‘trades’ Smith talked about, but the point is well taken as made in the context Stossel refers to.

Read his article at:


Blogger mus said...

James Watt himself apparently devoted a lot of his life to using his patents (and appeals to parliament) to try and block competing engines and give himself a virtual monopoly over steam engines in general. The lure of economic rent is a powerful one.

10:15 pm  
Blogger Gavin Kennedy said...

Well put. Patents and copyright are an awkward area upon which I have not finaly worked out a rationale or stance.

They played a role in the early development of basic industries way back in Elizabethan times and thereafter. They still operate widely today.

James Watt's case is significant, as you mention. He beat the corporate bar with the help of Glasgow University's proximity to the city boundary; he pursued his patent's claim vigorously. Smith, in the case of Wedgewood's patent claims seems have taken an unsympathetic stance against Wedgewood.
For Wealth of Nations, 12 years in the writing and 18-plus years research prior to the writing, he sold his copyright for cash to his printer/publisher.
Any views on this subject?

9:39 am  

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