Thursday, January 10, 2008

Adam Smith Opposed the Policies of British Governments', Not Their Duties

Richard C. Cook provides a 'Guide to the 2008 Presidential Electio' at Global Researcher – ‘centre for research on Globalisation’ (here)(10 January)

The new capitalist economics, by contrast, was transnational in scope, since money as an abstract concept knew no boundaries. This epochal change was reflected in what came to be called “classical,” “liberal,” or “laissez-faire” economics. This set of ideas originated with the British writers Adam Smith (1723-1790) and David Ricardo (1772-1823), who saw the private sector and government as mutually antagonistic. Their theories became the umbrella under which capitalism began to flourish. In the U.S., this attitude was also in part a legacy of the American Revolution, whose leaders had deeply resented interference by the British government with colonial economic activity.”

Not quite. Adam Smith did not see ‘the private sector and the government as mutually antagonistic.’ That is to erect a policy to suit then current circumstances into a general principle.

The problem that Adam Smith addressed in Wealth Of Nations was that the British government, through its legislators and those who influenced them, was closely aligned with certain merchants and manufacturers’ interests to foster monopolies at home and abroad (the chartered trading companies and trade with the American colonies), and to enforce protective tariffs domestically which reduced the number of suppliers and raised prices. Consumers lost out to producers.

The government also engaged in aggressive trading policies based on ‘jealousy of trade’, such that trading partners were seen as the enemy rather than the remedy for low living standards. Again these policies were pursued in the interests of certain domestic merchants and manufacturers. In consequence, various wars were fought at great expense in blood and treasure (over £114 million in the seven-years war) and Britain was at war with someone for 60 years during 1688-1816.

Smith favoured a less aggressive international policy, a friendly relationship with trading partners, an end to the obsession with the so-called balance of trade, an end to protective tariffs and an end to the chartered trading monopolies operating under Royal Charters.

He didn’t see the private sector and government as mutually antagonistic. He did see that the then government's policies were detrimental to the interests of consumers and the spread of general opulence.

He did not favour laissez-faire (words he never used) because he was suspicious of the behaviours of merchants and manufactures in their predilection for forming monopolies, if given the chance.

He favoured competition. He favoured public expenditure on public works and public institutions, on defence (the first duty of government), on the justice system (without which society would crumble), on education of all children to make them literate and numerate, on health measures against ‘loathsome diseases’, and on the ‘dignity of the sovereign’.

Whatever made capitalism flourish, it was not of Adam Smith’s making. Indeed, if it flourished, Richard C. Cook’s long, long article of complaints about the state of the US economy and its manifest deficiencies, as he sees them, suggest that it hasn’t quite flourished in the way he wants it to do.

[I have not commented upon the article’s political guide, as I do not comment on any country’s politics except those in the country I live and vote in – Scotland.]


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