Smith's Epigones Strike Again

The more I read about Adam Smith in the US media, the more I realise the price that his reputation pays for the legacy given to him by his epigones that is often the exact reverse of what Smith himself wrote.

The damage done to his true legacy knows no bounds; often the exact opposite of what he said is thrown about, sanctioned by the misuse of his name, as if it’s a mere brand. ‘Chicago Smith’ is an enduring libel on the ‘Kirkcaldy Smith’ from our friends at the University of Chicago, whose graduates spread all over the country, induct generations of students in false ideas and nostrums, which they repeat thoughtlessly, never bothering to read his books for themselves.

I often write, politely, to such individuals suggesting their statements are ‘problematic’ – a scholarly way of saying your ideas about Smith are unfounded in fact – and sometimes I receive an acknowledgement and a ‘thank you’; mostly there is silence.

Take this tendentious piece from Alternet.org (‘the mix is the message’) by Barry C. Lynn, originally in Harpers. Barry is a senior fellow at the New America Foundation (www.newamerica.net) and is one of the ‘exceptionally promising new voices’ bringing ‘new ideas to the fore of our nation's public discourse.’

Well, for Barry, I recommend a short induction into the real Adam Smith. Barry writes:

“There is an undeniable beauty to laissez-faire theory, with its promise that by struggling against one another, by grasping and elbowing and shouting and shoving, we create efficiency and satisfaction and progress for all. This concept has shaped, at the most fundamental levels, how we understand and engineer our basic freedoms -- economic, political, and moral. Until recently, however, most politicians and economists accepted that freedom within the marketplace had to be limited, at least to some degree, by rules designed to ensure general economic and social outcomes.

From Adam Smith onward, almost all the great preachers of laissez-faire were tempered by a strain of deep realism. Most accepted that a national economy ultimately served a nation that had to survive in an often brutal world. So, too, did most accept that all economies are characterized by struggles for power and precedence among men and institutions run by men; in other words, that all economies are fundamentally political in nature. And so most accepted the need to use the power of the state -- most dramatically in the form of antitrust law -- to prevent any one man or firm from consolidating so much power as to throw off basic balances. The invisible hand of the marketplace, and all that derives from it, had to be protected by the visible hand of government.”

Comment
This introductory paragraph fronts an article entitled: “The Case for Breaking Up Wal-Mart”. Now, I have absolutely nothing to say about Wal-Mart because I know little, if anything, about it. My objection is not to Barry’s case against Wal-Mart – there is a judicial system in the US to deal with such matters – but to his dragging Adam Smith into the case from an entirely incorrect perspective. If he were to repeat his libel, innocently I am sure, under oath, he would make Smith an ‘accessory after the fact’.

For a start, Smith did not advocate laissez-faire – he never used the words in all of the million words he published and as many more he spoke in his lectures in Edinburgh and Glasgow between 1748-1764 (plus untold others in his private conversations – that we know of). This absence of use of the words or the concepts came after he met the French Physiocrats in 1764-6, some of whom were believers in laissez faire. Now, this is strange because if Smith was, as Barry claims, one “the great preachers of laissez-faire”, it should be possible for him to refer to where he indicated such an affiliation. Unfortunately, he can’t.

Even stranger, Barry asserts that Smith was associated with laissez-faire advocacy that promised “that by struggling against one another, by grasping and elbowing and shouting and shoving, we create efficiency and satisfaction and progress for all.” This is the heart of Barry’s libel against Adam Smith, for in ‘The Theory of Moral Sentiments’ (1759; 6th edition 1789) Smith wrote, in defiance of the above sort of nonsense:

‘In the race for wealth, and honours, and preferments, he may run as hard and fast as he can, and strain every nerve and muscle, in order to outstrip all his competitors. But if he should justle, or throw down any of them, the indulgence of the spectators is entirely at an end. It is a violation of fair play, which they cannot admit of.’ (TMS II.ii.2.2: p 83)

The guarantee of ‘efficiency and satisfaction for all’ came not from the ‘grasping and elbowing and shouting and shoving’, as Barry would have it, but from competition, from remembering that the consumer is more important than the producer, and from the rule of law and the sanction of justice. Smith called this ‘perfect liberty’, but it was not the liberty to collude and conspire against the public interest, to raise prices to make monopoly profits, and to restrict supplies. In short, Smith stood for the exact opposite of Barry’s mirage about him.

Lastly, Barry’s last sentence that: “The invisible hand of the marketplace, and all that derives from it, had to be protected by the visible hand of government.”

Please, Barry, read Smith on markets (Book I, Wealth of Nations). He says nothing about invisible hands in relation to markets or in Book V about visible hands of governments. The invisible hand, a lone metaphor, is a single sentence in Wealth of Nations (p 456) and one only in Moral Sentiments (p 184), and in neither case was he talking about markets. That is a transposition located in the environs of Chicago that changed an idle metaphor (originally from Shakespeare in Macbeth in 1605, and from Defoe in Moll Flanders, 1722) about people’s motivations, some of which had benign outcomes (raised economic growth) and some of which had malign outcomes (monopoly).

Behaviour does not automatically ‘create efficiency and satisfaction and progress for all’ – it can create the nightmare of hell too, which recognisably is laissez faire’s weakness as a policy.

For the rest of the lesson in what Smith actually wrote about read his books, read this Blog regularly, or read “Adam Smith’s Lost Legacy”, Palgrave Macmillan, 2005.