Thursday, June 14, 2007

A World Plan for Catastrophe Called Socialism

Climate change is fast becoming a new ‘religion’ of the doom variety (its sister is of the ‘hope variety’). The ‘fin de siecle’ mood is running early this century with its message of impending doom by its end, mixed with new hope of the socialist left for a revival of their failed ambitions to rule the world.

This crossed my desk this afternoon from ‘Space of Hope: a collective blog for the world in common network’ entitled ‘Ecosocialism or bust?’, which is taken from Ian Angus's “Climate and Capitalism blog”, and in turn taken from Richard A. Smith's piece (extracted from the left-green journal, Capitalism, Nature, Socialism).

Richard A. Smith leads off with:

‘In Adam Smith's view, which is still the operable maxim of modern capitalists and neoliberal economists, we should all just ''Look out for Number 1,'' and the common good will take care of itself. If Smith were right, the common good would have taken care of itself long ago, and we wouldn't be facing catastrophe. After centuries of Smithian economics, the common good needs our immediate and concentrated attention.’

It is tempting to dismiss this nonsense as such. But I find that increasing numbers of otherwise senssible adults are indulging themselves with plans and prescriptions to ‘save’ the planet in the most extreme and dangerous manner, from both Left and Right and Moderate in-betweens. I don’t know which is worse, their naivete or their seriousness.

Here’s an example of their naivete:

Corporations can't make such decisions in the best interests of society or the future, because their legal responsibility is to their private owners. The only way such decisions can be scientifically rational and socially responsible is when everyone who is affected participates in decision-making.”

“And time is running out. We don't have 20 or 30 years to wait for We don't have 20 or 30 years to wait for Ford and GM to figure out how they can make a buck on electric cars. We don't have 60 or 70 years to wait while investors in coal-powered power plants milk the last profits out of those sunk investments before they consider an alternative

The notion of “everyone who is affected participates in decision-making” is surely ridiculous. Just listen to radio and tv phone-in programmes and sample the ideas of ‘everyone who is affected’. But there is no way 6 billion people will ‘participate in decision-making’, and it certainly will not be ‘scientifically rational and socially responsible’, whatever horror that means.

Unable, apparently, to wait ‘20 or 30 years’, let alone ‘60 or 70 years’, the time spans available being much less suggest finding agreement among ‘everybody’ in some centralised system will soon collapse in a struggle for power by groups with even shorter fuses for ‘something must be done’. And these groups need not be of a mind to be Left socialist – they may very well be Right socialist. And then what? Something like Gaza this week – two groups ostensibly of a similar mind, killing each other to command a collapsing economy?

Starting from the false premiss that Adam Smith said ‘we should all just ''Look out for Number 1,'' and the common good will take care of itself’, it seems that Richard A. Smith recipe to deal with the problem we apparently face in less than 70 years, is to return to the failed nostrums of ‘socialist rational planning’, which in one sense may be helpful at reducing production drastically – it is a common feature of all socialist planning that it is so inefficient that it empties the shops of everything anybody wants to buy.

Smith never articulated any such ‘Number 1’ mentality. It’s a fiction of the imagination of Richard Smith and, I must say also, a fiction massaged into silly ideas about laissez-faire corporate capitalism, about as far as one can get from Adam Smith’s political economy.


Blogger Ryan Lanham said...

It is tempting to dismiss your blog post as nonsense or as a glancing apology for a naive libertarianism.

Since no one is advocating state bureaucratic socialism with central planning, so far as I can tell, your tilt at windmills is at least as silly as (Richard) Smith's.

Like Marx, (Adam) Smith has never been implemented as written--that moralism/public good piece always seems to be forgotten! But there aren't even many advocates for an accurate Marx, so far as I can tell.

I think rather than looking backward in your critique to failed nostrums, you would be wise to look forward to impending crises.

How will unintended consequences and externalities get solved by (Adam) Smith's invisible hand? Divine intervention? Efficient government? Corporations? Please...

Ryan Lanham

8:41 pm  
Blogger Gavin Kennedy said...

Hi Ryan

Thank you for your comments. We are coming at Richard Smith’s idealistic contribution from different directions, and thereby talking past each other.

My disagreement with Richard’s post was mainly in regards to his mythical Adam Smith (‘number 1’ mentality, etc.,) and only en passant in regard to his prescriptions for achieving unanimity between millions, billions even, on what should be done about his catastrophe vision of the immediate future.

In so far as ‘socialism’ was an intended component of the future response, I considered him to be naïve, and for added measure, to be utopian and unhistorical, given the experience of ‘socialist’ governments of the 19th century (all versions; none of them pleasant, or even workable).

To Richard’s naïve error of Smith’s mythical ‘number 1’ mentality (see his Theory of Moral Sentiments’), your question: ‘How will unintended consequences and externalities get solved by (Adam) Smith's invisible hand?’ adds a further myth about Adam Smith’s use of the famous metaphor, which was made famous not by his use of it only three times in a million words, or by readers of the first through ten or twelve editions (it was not mentioned at all in the 19th century), but by neoclassical economists, originally based in Chicago University, who re-discovered the metaphor and used it to ‘bless’, or give credibility to their general equilibrium theories in the mid-20th century. From thence it became a universal and obligatory, but not Smithian idea, that had nothing to do with Smith’s use of it.

I have spent many contributions here trying to expose the misuse of the so-called invisible hand among the economics discipline. You may scroll through the Lost Legacy archives for further details.

So the answer to your question of ‘how will unintended consequences and externalities get solved by (Adam) Smith's invisible hand’ quite simply is: the metaphor will not solve anything; it does not have a relevance in the real world; it does not exist, not does it represent anything that does exist.

It is a rhetorical metaphor used by Smith once in ‘Moral Sentiments’ and once in ‘Wealth of Nations’ after he had explained the consequence of feudal warlords having to feed their retainers, serfs and slaves at least to subsistence level, and the response of merchants to their risk aversion to sending their capitals abroad compared to applying them locally where they could watch over them.

His clear explanations of what happened and why on each occasion did not require ‘an invisible hand’ or a ‘black box’ process for the consequence to occur. He had no ‘theory’ or ‘concept’ or need for ‘providence’ to be present to effect the consequences he alluded to.

It would, therefore be in vain for anybody to await ‘an invisible hand’ solution to future problems that arise from ‘climate change’, if such is about to happen outside in the real world and not just in computer modelling. If climate change occurs, as well it might at some time, any time, in the future, as it has in the past (Antarctica was once a hot rain forest; Europe, including Scotland, where I live, was under 2-3 miles of ice, etc.,), humans will have to make pretty severe changes to their modes of subsistence.

In the last ice age, 20,000 years ago, humans either walked south with whatever they could carry from their primitive stone technologies, or perished where they stayed or en route towards the sunnier climes (when competing with 'stay-at-homes' who had not gone further south).

Somehow I believe the changes required this next time would be better responded to by modern economies and highly developed technology than by reverting to nature, undoing knowledge and technology, and expecting universal harmony from well-meaning ideas.

I have no idea if this will be enough – I will not be alive – and from my knowledge of the history of humanity, I am not optimistic of the outcome brought about by the necessities of such changes (consider not just left, right politics, but also religious fundamentalism among Judaeo-Christian sects and Islam's sects (Gaza this week), plus the array of the other ‘isms’, plus whatever lunacies arise at such a time).

Meanwhile, Lost Legacy is about correcting the mythologies about Adam Smith’s life and work. Richard Smith and your good self stated false notions about Adam Smith. I have attempted to correct them.

Thank you for your comments; they made me think over what you said.
As to the future: que sera sera.

8:46 am  

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