Wednesday, October 09, 2013

Adam Smith on Legitimate State Interventions and Non-Benign Self-interests that Harms Others

I am regularly by correspondents, and sometimes by readers of the Lost Legacy Blog, for details of a) Instances of where Smith advocated State interventions into market transactions, and b) where Smith identifies individuals acting in their own self-interests that imposes harm on other individuals.
These selected examples tend to conflict with some commentators who insist of just casually announce that Smith opposed State interventions, or that he advocated leaving individuals alone to act in their self interests as this would work out for others because even "selfish" actions by individuals are 'corrected' by the "miracle" of markets to produce 'public benefits'.
These views are based on a non-reading of Adam Smith's Works and simple ideological errors, or where they have read Smith's Works and are free from ideological influences they did not read carefully, or have short memories of what they read.
Herewith are two short-lists of instances of Smith's recommended State interventions and his observations of malign self-interests in Wealth Of Nations, Books 1, 2, 3 (there are many more in Books IV and V): 

State interventions in WN:
Here is a list extracted from Wealth Of Nations:
• the Navigation Acts, blessed by Smith under the assertion that ‘defence, however, is of much more importance than opulence’ (WN464);
• Sterling marks on plate and stamps on linen and woollen cloth (WN138–9);
• enforcement of contracts by a system of justice (WN720);
• wages to be paid in money, not goods;
• regulations of paper money in banking (WN437);
• obligations to build party walls to prevent the spread of fire (WN324);
• rights of farmers to send farm produce to the best market (except ‘only in the most urgent necessity’) (WN539);
• ‘Premiums and other encouragements to advance the linen and woollen industries’ (TMS185);
• ‘Police’, or preservation of the ‘cleanliness of roads, streets, and to prevent the bad effects of corruption and putrifying substances’;
• ensuring the ‘cheapness or plenty [of provisions]’ (LJ6; 331);
• patrols by town guards and fire fighters to watch for hazardous accidents (LJ331–2);
• erecting and maintaining certain public works and public institutions intended to facilitate commerce (roads, bridges, canals and harbours) (WN723);
• coinage and the mint (WN478; 1724);
• post office (WN724);
• regulation of institutions, such as company structures (joint- stock companies, co-partneries, regulated companies and so on) (WN731–58);
• temporary monopolies, including copyright and patents, of fixed duration (WN754);
• education of youth (‘village schools’, curriculum design and so on) (WN758–89);
• education of people of all ages (tythes or land tax) (WN788);
• encouragement of ‘the frequency and gaiety of publick diversions’(WN796);
• the prevention of ‘leprosy or any other loathsome and offensive disease’ from spreading among the population (WN787–88);
• encouragement of martial exercises (WN786);
• registration of mortgages for land, houses and boats over two tons (WN861, 863);
• government restrictions on interest for borrowing (usury laws) to overcome investor ‘stupidity’ (WN356–7);
• laws against banks issuing low-denomination promissory notes (WN324);
• natural liberty may be breached if individuals ‘endanger the security of the whole society’ (WN324);
• limiting ‘free exportation of corn’ only ‘in cases of the most urgent necessity’ (‘dearth’ turning into ‘famine’) (WN539); and
• moderate export taxes on wool exports for government revenue (WN879).
Smith on exceptions of Non-Benign self-interests in Wealth Of Nations that Harm Others (sometimes grievously):
Vol. 1, Books 1, 2, 3:
36, 40, 43, 52, 61, 71, 77, 78, 79, 79, 83, 84, 90, 91, 96, 101, 112, 114, 115, 116, 124, 125, 126, 135, 136, 137, 139, 140, 141, 142, 144, 145, 146, 152, 153, 154, 156, 157, 158, 160,171, 174, 301, 302, 303, 308, 310, 312, 315, 316, 324, 339, 341, 342, 344, 346, 345, 350, 357, 377, 378, 380, 387, 393, 396, 397, 398, 402, 406, 418, 419,424, 427,


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