Wednesday, October 19, 2011

Right News, Wrong Views on Adam Smith

Ruth King writes (18 October) HERE for Ruthfully Yours (‘the right news, front and Center’):


What these demonstrators invariably say is that Wall Street financiers are greedy. Too bad these occupiers of Zuccotti Park in downtown Manhattan never read Adam Smith who argued that greed in the aggregate can have a healthy effect on the economy.

The venting yields even greater fatuous solutions, if that is possible. “We want to change the system,” say the demonstrators. Which system they decry is not clear, not is there a strategy for making that happen.”

I described it in my post as “mindless activism” to which Ruth King adds more details. Follow the link - it is a good, if flawed read.

The demonstrations in other places reflect this mood. Even the Greek strikers are not, apparently, aware that the alternative, should their protests and strikes bear the fruit of a withdrawal by the government of their austerity measures to curtail their over-borrowing – and the general tax evasion among the whole population (and not just the ultra-rich) – is almost certainly very much worse for all concerned, and for people in other debtor nations.

But Ruth King also has not read Adam Smith. He never said argued about “greed in the aggregate can have a healthy effect on the economy”. I would be interested where he made such an argument in either of two books, Moral Sentiments (1759) or Wealth Of Nations (1776). 'Greed' was never in the mind of Adam Smith. He denounced Bernard Mandeville's satire in praise of greed as 'licentious' and it played no part in Smith's political economy. THat is a myth invented by post-war modern economists (Samuelson, etc).

So Ruth King joins the activists in not knowing about Adam Smith’s writings, which makes it easier for the activists to maintain their mindless stances.

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