Saturday, June 18, 2011

A Message From the Man Who Shot Liberty Valance

In Economists View (HERE):

'An Economic Legend (Paul Krugman in June of 2004)': Commentary, NY Times, June 2004:

In the movie "The Man Who Shot Liberty Valance," a reporter defends prettifying history: "This is the West, sir. When the legend becomes fact, print the legend."

We find the same approach in economics. The legend of Adam Smith is treated by the likes of Paul Krugman – and most of those who disagree with him too – as fact, so they repeat the legend. Worse, they all believe it too.

Now the legend of who shot Lee Marvin (Liberty Valence) - Jimmy Stewart (Senator Stoddard) or John Wayne (Tom Doniphon) – is an enduring Hollywood ‘Western’, attracting even the serious attention of such High Brow periodicals as The Times Literary Supplement and the London Review of Books this past twelve month.

If only similar retrospection had attracted the attention of modern economists on the legends of Adam Smith, such as that he unconditionally favoured ‘laissez-faire’ (he never used the words), the ‘night watchman state’ (he never used the words – try Lasselle, a firebrand socialist, instead), or that he discovered the ‘theory’, ‘concept’, ‘paradigm’, or idea of ‘an invisible hand’ that operated in markets, supply and demand, or the price mechanism and ‘magically’ transformed selfish actions into public benefits, when in fact Smith used the words in Book IV as a metaphor consistent with its object on only two occasions in his major works, and on both occasions he identified their objects, which had nothing to do with markets or prices already fully discussed in Wealth Of Nations (Books I and II) without mentioning the IH metaphor. And neither did he praise selfishness nor endorse it. That is a myth by people mixing up Adam Smith with Bernard Mandeville (1724).

None of this would matter, or be entertaining like the film of 'Who Shot Liberty Valance', except for the fact that since the myths of Adam Smith took hold of economists as a whole from the 1950s, so much has been invested in persuading themselves that there is a (benign!) invisible hand is at work, that ‘state’ activities are always all bad and should be replaced with laissez-faire (for the corporations that dominate the modern mercantile economy), that far from liberating the mass of people from protective monopolies, distorted trade tariffs, jealousies of trade, insecure military postures, and political elites, they have secured their almost total domination.

No wonder the communists who have discovered it in their handy state capitalism and have adopted the myths over-sold by the so-called exponents of an Adam Smith unrelated to the moral philosopher born in Kirkcaldy, Scotland in 1723. The Left want to extend the state and hope someone else pays for it, a dream that reality is shattering as I write, and the exponents of the Corporate Right provoke resistance from organised mainly state-labour from even modest reforms to state-spending using borrowed money.

The brute course of events have the habit of showing scant respect for all illusions of those that get in the way.



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