Friday, July 29, 2016


Deev Murphy posts (27 July) on Mumbles from a Radical Centrist HERE 
"Adam Smith's capitalism married money with morality."
"NEWS  FLASH!    Adam Smith saw capitalism as drawing together economics & morality.  He did not see it as an bare-knuckled, no-holds-barred approach to accumulating masses of money while leaving masses of victims in our wake.  In his world-shaking The Wealth of Nations, he laid out his theory that rational self-interest & free market competition are the best path to a nation's economic prosperity.  While his book laid the foundation of modern economics, he would have been horrified at the idea of making money for the sake of wealth alone.  
Smith wasn't a dewey-eyed idealist.  He realized that for every wealthy person, there were hundreds of poor ones, but saw the wealthy therefore had a natural obligation to help lift up the lives upon which their fortunes were based:
“It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”   
For a start, the opening sentence jars on anybody who knows anything about Adam Smith. ‘Capitalism’ did not exist either as word or as a social phenomenon while Smith was alive (1723-90). It was first used in English in 1854 by Thackeray in his novel, The Newcomes (Oxford English Dictionary).
Adam Smith saw capitalism as drawing together economics & morality.”
Smith’s Wealth of Nations (1776, in eight editions to 1789) he did not have theory of “rational self-interest & free market competition”.
He described the emergence of commmercial society in north-west Europe over many centuries. Self-interest, yes, but attaching ‘rational’ to it came much later in the 19th century, along with such inventions as ‘homo economicus’ and adorning it with increasingly complex mathematics is a post- late 19th-century and major 20th-21st century, diversion from the real world as described by Adam Smith to a fantasy world lauded by modern economists and the awarders of Nobel Prizes. Smith, incidently, was competent at mathematics and pursued his interests in maths with several profesorial colleagues. 
While his book laid the foundation of modern economics, he would have been horrified at the idea of making money for the sake of wealth alone.”  
Others, beside Adam Smith, laid the ‘foundation[s] of modern economics’ all the way through to Alfred Marshall. Smith wrote about the history of human economies, not their future. He reported on several current and past developments but did not make predictions. Overall he was aware of many deficiences in political economy and was suspicious of the conduct of ‘merchants and manufacturers’ in such matters as their favoring (clamouring!) for domestic tariffs and prohibitions on imports, and government policies of hostility towards European colonial policies which competed with British colonial ventures (hence the Navigation Acts introduced in Cromwell’s times and the cause of warfare in the 18th century).
Lastly, ‘wealth’ was not regarded as money or gold. Smith regarded the output of produced goods as wealth and not mere gold or silver.

Smith never said anything about ‘business people’ being ‘led by an invisible hand’. Has Deev Murphy actually read ‘Wealth of Nations’, or perish the thought, Smith's Theory of Moral Sentiments (1759)?


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