Friday, March 17, 2017


Prof. (Dr.) S. N. Misra posts (16 March) on Pragativadi HERE 
“Towards a new language of growth”
“It was Adam Smith who is credited with inking the syntax of capitalism, when he wrote: “Market forces, as if by an invisible hand, will lead to welfare of all”. He was writing in the backdrop of industrial revolution when technology was making a tectonic shift in the wellbeing of European nations. Smith also underlined the importance of division of labour and ‘self-interest’ in bolstering the market forces. He had famously observed: “It is not from the benevolence of the butcher; the brewer or the baker that we expect our dinner, but from their regard to their own interests”.  David Ricardo took the free market theory a step further when he argued that free trade would tap the comparative advantage in production of commodities between nations and increase global wealth significantly. Globalization as a concept owes its origin to this free trade theory of Ricardo. Export of goods and services has contributed to one-third of global wealth. The unbelievable prosperity of many emerging market economies like China, South Korea and Thailand owe their origin to this expert led growth strategy.”
There are multiple problems with Prof. Misra’s statements above.
Who exactly credited Adam Smith with “inking the syntax of capitalism”? The claim is a nonsense anyway. The word ‘capitalism’ was first used in English in 1854. While Smith was alive (1723-90) it is debateable that ‘capitalism’ existed yet.
Adam Smith NEVER wrote”:
Market forces, as if by an invisible hand, will lead to welfare of all.”
Smith’s reference ONCE in Wealth of Nations (1776) to different subject, specifically to a risk averse merchant who preferred to invest domestically rather than in foriegn trade, for which he was ‘led by an invisible hand’ to benefit the domestic economy by the extent of his investment and its associated employment, which Smith considered to be a public benefit.
Smith also added throughout Wealth of Nations, that many other actions by  “merchants and manufacturers” led to disbenefits, such as import controls, prohibitions and rising domestic prices and less competition, decreasing and slowing the spread of wealth growth.
When Smith was writing there was no:
 “backdrop of industrial revolution when technology was making a tectonic shift in the well being of European nations.” 
Manufacturing was still in its early infancy. Large factories manufacturing prodcts were almost unknown across the land until the division of labour was mechanised with machinery, a process hardly begun before the turn of the century (Watt’s mechanised steam power, in mining and cotton manufactures and such like). The “tectonic shift” came later and took time to spread, requiring large capitals. Many European countries did not participate until mid-19th century onwards
Finally: “Globalization as a concept owes its origin to this free trade theory of Ricardo.
The actuality of “globalization” originated not from a ‘concept’, but from what people did quite independently of the writings of economists. 
Ricardo - and Smith, Marx, etc. - were not, so to speak players, in society. If they had never existed and had not written a word, the industrial revolution, capitalism, imperialism, socialism, modern globalisation and so on would still have happened. 

Though, of course, that creative writers do exist, human understanding is an important element in human culture.


Blogger Mark Brady said...

The updated entry (March 2012) for "capitalism, n.2" in the Oxford English Dictionary online has pushed back the first recorded use to 1833.

"1833 Standard 23 Apr. Whatever tended to paralyse British industry could not but produce corresponding injury to France; when the same tyranny of capitalism which first produced the disease would be at hand to inflame the symptoms by holding out promises of loans, &c.

"1848 Caledonian Mercury 25 Sept. That sweeping tide of capitalism and money-loving which threatens our country with the horrors of a plutocracy."

Of course, your point still stands.

I look forward to your new book when it is published.

3:52 am  
Blogger Gavin Kennedy said...

Many thanks for your comment and it's updated information on the appearance of the word 'capitalism' in English.
The OED has brought the date forward from 1854 to 1833, via 1848.
I have a set of the OED here but their free updating service was suspended some years back, requiring a subscription.
I shall post on the new dates soon.
Thank you again. In retirement since 2005 I am cut off from the University's facilities and seldom leave my home because of my walking difficulties.
Meanwhile the book is moving ahead to a tight - near looming - deadline. ...

7:10 am  

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