Thursday, December 05, 2013

Once More on Laissez-faire Historically was Never About Natural Liberty

I am somewhat perplexed by regular debates with ultra-free market advocates, who react to my criticism of those who refer to Adam Smith as an advocate of “laissez-faire”. As my opposition to linking Adam Smith to “laissez-faire”, which opposition is solely based on my reading of Smith’s actual writings on Natural Liberty, which give a quite different and richer account of Smith’s views on liberty in markets than the lazy acceptance of the misleading repetition in the 19th century, and since to the 21st century, of Smith’s so-called credentials as an early advocate of “laissez-faire”.  This continues to perplex me.

Worse, some commentators go on to accuse me of therefore necessarily preferring government intervention to free markets!  I do not prefer states to markets, nor do I prefer vice versa. It depends, as it should do, on the issue and its circumstances.  As usual in policies for actual societies that exist, and did in history, once you step outside the assumed pristine niceties of the imaginary world of mathematical abstractions or angelic theologies and their models of how economies supposedly work, at least in a mathematical universe that does not exist, or in the universe of theology, life in all its complexities butts in. There are no easy choices as represented in the sloganising of the two opposing sides.  There are no perfectly well-behaved markets, either among the supposedly well-behaved individuals in them, nor well-behaved governments brim full of well-behaved politicians running them.  So hoping to replace one system totally with better well-behaved people from the other system is pure fantasy. Reality ain’t like that.  Wake up and smell the odour!

The sins of omission and commission common to individuals in societies since our ancestors left the forests are not something new.  The history of the human acquisition of morality is one of long-standing imperfections in practice and, realistically, humans en mass have never been perfect, and are likely to remain so. I read a philosophical book long ago on the 'perfectibility of man', and concluded man may be perfectible, one at a time, but never everybody simultaneously! 

Some political theories (anarchism, primitive communism) look nostalgically to an imagined distant past of small bands “at one” with nature in the forest and plains, as if those distant times enabled small groups to live in peace and enjoy their near-perfectly moral codes in circumstances where they operated in a long-lost communist-type harmony, summed as “from each according to his ability, to each according to his needs” (example, David Graeber in ‘5000 Years of Debt’).  These ideas have a “fall of man” in an “Eden Garden” allegory about them.
Ideologues on both sides of today’s divide between “collectivist”, no markets, in large states (of course managed by a large-class of collectivists), versus “laissez-faire” giant corporations competing (and colluding!) in global markets across the planet (of course managed by a large-class of managers for their owners). Both are congenitally totalitarian in their outlook and practises. Collectivists thrive on class struggle politics, which always create “ideologically sound” apparatchiks, who in time turn on each other. Laissez-faire corporations thrive on ensuring their bit of the laissez-faire action dominates competitors (even while colluding with rivals on occasion), often tempted into illegality.

Collectivist political theory and practice is hypersensitive to doctrinal dissent (read their biographies of their bitter political struggles!). Laissez-faire political theory and practice is hypersensitive to signs of rival advances and retreats in market shares (read their biographies of their market competitions, described in one such as “balls-braking competitiveness"!).

Hence, when I mention the history of laissez-faire economics, which has always been about how one-sided it has been since the words were first expressed by M. Le Gendre in 1680, a lowly merchant, complaining about the French government inspectors who tightly regulated town markets and from whom he wanted to be left alone (“laissez-nous- faire” – leave us alone). He spoke on behalf of fellow merchants, - remember Smith’s words on their social conversations turning to how to raise prices. But who spoke on behalf of his customers? 

When corn-merchants were threatened in the 1840s by politicians with the repeal of the Corn Laws, they clamoured for “laissez-faire” (or rather, their political representatives did, while representing industrialists keen to lower money wages). They did not seek “laissez-faire” for workers who were destined to have their wages cut.  Neither did Mill and Mine owners who fought hard to hold onto their 12-hour days and their employment of very young children and adult women on low wages for dangerous work, all summed in the cry for “laissez-faire” for themselves, but not for their labourers, who did not have a vote anyway or rights to organise to join unions.

Into these debates of long ago, I am often criticised for my disassociating “laissez-faire” from Adam Smith.  He never used the words, nor endorse its usual one-sided meaning.  Sometimes, Smith's endorsement of “Natural Liberty” is cast against me as if laissez-faire” and “Natural Liberty” have the same meaning for Smith.  They didn’t. Smith endorsed Natural Liberty philosophy, which was Natural Liberty for all, not a pick and choose one-sided option for a few.  Smith, of course, did not advocate nor expect, the full implementation of Natural Liberty as a pre-condition for economic reforms or changes; in fact Smith specifically rejected such thinking as “utopian” in the extreme.
In Wealth Of Nations Smith mildly chastises Dr Quesnay, the French Physiocrat, and some of his followers who took an extreme stance on the establishment of the full physiocrat programme that nicely illustrated the folly of the extreme collectivists and extreme “laissez-faire” believers, whom I keep bumping into today:
Mr. Quesnai, who was himself a physician, and a very speculative physician, seems to have entertained a notion of the same kind concerning the political body, and to have imagined that it would thrive and prosper only under a certain precise regimen, the exact regimen of perfect liberty and perfect justice. He seems not to have considered that in the political body, the natural effort which every man is continually making to better his own condition, is a principle of preservation capable of preventing and correcting, in many respects, the bad effects of a political economy, in some degree, both partial and oppressive. Such a political economy, though it no doubt retards more or less, is not always capable of stopping altogether the natural progress of a nation towards wealth and prosperity, and still less of making it go backwards. If a nation could not prosper without the enjoyment of perfect liberty and perfect justice, there is not in the world a nation which could ever have prospered. In the political body, however, the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man; in the same manner as it has done in the natural body, for remedying those of his sloth and intemperance” (WN IV.ix.28. 674).
I suggest both sets of ideologues should, though most probably will not, which I confess was my own temperament until I learned better, take Smith’s message on board and act accordingly.
Let’s not see everything in ideological terms. The debate is not about totally free markets versus total government control.  A step towards one side or the other should be judged on its merits in the existing circumstances and not against a metaphorical scale of one-sided weighting. 
That is why I suggest that our guiding principle should always be: “markets where possible, state where necessary”.

If that guiding principle offends either set of ideologues, I am sorry for them in their present moods. In time, perhaps they may learn to accept the realities to which Smith alluded in his chastisement of his friend, Dr. Quesnay, in 1776, and my efforts on Lost Legacy to set Smith’s record straight.


Blogger zoniedude said...

I've always laughed at Laissez Faire advocates. The term came from the French nobility attempting to keep their sinecures after the revolution. But the simple fact is that capitalism requires the establishment of property rights and that can only be done by government. Thus capitalism, ipso facto, is a creation of government and its definitions and enforcement provisions such as courts.

3:48 pm  
Blogger zoniedude said...

I've always laughed at Laissez Faire advocates. The term came from the French nobility attempting to keep their sinecures after the revolution. But the simple fact is that capitalism requires the establishment of property rights and that can only be done by government. Thus capitalism, ipso facto, is a creation of government and its definitions and enforcement provisions such as courts.

3:48 pm  
Blogger zoniedude said...

Laissez-faire refers to ideas promulgated by the French nobility seeking to keep their power after the French revolution. In reality, capitalism requires the establishment of property rights, something that can only be done by government. Thus capitalism must be a creation of government subject to its definitions and enforcements.

3:52 pm  

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