Meet the Real Adam Smith

The acknowledged dean of capitalism, Adam Smith (1723-1790), was by profession a moral philosopher, not the amoral dog-eat-dog economist that he has been portrayed to be. His moral philosophy was straight-forward enough: Given the fact that the primary concern of human beings was individual survival, then the natural way to assure social stability was by allowing them to freely exchange labor, goods, and services for profit: If you have something that I want and I have something that you want, and if no king or deity prohibits us from trading what we want from each other, and if whatever those wants are, are not harmful to society, then despite our religious and political differences, whether we personally like each other or not, we can live in harmony. And if others approach us with better deals, then, to maintain our trading relationship, we would have to trump our competitors with even better deals.

Taken at a mega level, it was clear to Smith that this natural competition, as if guided by an "invisible hand," would greatly benefit the whole of society (“Book four, Chapt. Two, Par. Nine”). The main, if not the sole, role of government, therefore, according to Smith was to assure that the competition was free and fair, and, moreover, that the competitors were imbued with an ethical conscience, for otherwise the competition would degenerate into self-destructive law of the jungle.

In his calm, philosophical voice, Smith noted how in his day overlong terms of apprenticeship (a form of slave labor), restrictions against laborers from outside communities (forerunners of today’s undocumented workers), excessive tariffs on imports and tax subsidies to favor domestic industries, collusion among wealthy owners of land and capital to set prices (cartels), banning the start-up of competing industries too close to home (monopoly creation), the stashing by bankers of gold deposits in their private coffers and covering withdrawls with unsecured paper notes (stealing the gold, in effect) were, among other ruses, preventing the "invisible hand" from working its magic.

Smith devotes one-third of his iconic The Wealth of Nations explaining how free-markets can work for the good of society, and the other two thirds how its abuse has had the opposite effect.

In modern-day America and comparable nations, free enterprise as envisioned by Adam Smith is largely alive and well among proprietors of shops, restaurant and other small business on Main Street. But the convoluted collusions between big government and Wall Street tell an entirely different story. The name of the game at this level is not to enable a free, fair marketplace but to manipulate it by whatever means necessary. And if the collusions at times take illegal twists, you can wager that laws will be enacted to make the twists legal. And morality, of course, never enters the picture.

Overpaid CEO's, high power lobbyists, corrupt politicians for sale, and others of their ilk have plunged America, and much of the world with it, into a deep, protracted recession. It may be argued that in some mysterious, elliptical way that only they have the brains to comprehend, these so-called champions of capitalism are contributing to our long-range economic wellbeing. Maybe the crumbs they drop after gorging themselves on shareholder and taxpayer money is reward enough for us ordinary folk at the bottom rungs of the pecking order. In the real world, after all, the losers are many and the big winners few. But those who buy that argument cannot invoke Adam Smith for support. That was not at all what he meant by the “invisible hand.”

Adam Smith, for the record, was a man of modest tastes and means. Financially, he was well-off, living comfortably from a lavish pension and royalties from his books. But the fabled guru of capitalism was himself no capitalist. He never owned a business or held a private sector job as such. His last employment was in the public sector as Commissioner of Customs in his native Scotland.

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