'Invisible Handcuffs'?

Michael Perelman teaches at California State University, Chico, and is an active writer from a broadly left-of-centre viewpoint. He is the author of about a dozen books on economics, both theory and policy.

I met him at George Mason University this year, catching a paper he delivered to the Summer School seminar before the main conference of the History of Economics Society, and we spoke a couple of times. I found him most personable and thoughtful; not a ranting ideologue of any kind.

We also corresponded privately on his paper which I read carefully and suggested some amendments, though in retrospect I probably overdid my comments on Michael Perelman’s interpretation of Adam Smith.

In a Blog, Econspeak 'analysis of the economically incorrect' (here) he writes:

‘The Invisible Handcuffs of Capitalism’

‘The sixth chapter puts the subject in historical perspective by looking back at the economic perspective bequeathed by Adam Smith. The chapter emphasizes Smith as a harsh disciplinarian. It shows how Smith eliminated any discussion of modern industry in order to allow him to offer a vision of freedom and liberty.

Smith realized that the harmonious society he advocated depended upon a prior coercion of labor to accept the discipline of the workplace. At that time, violent measures were often required to leave people with no option but to accept the new conditions of wage labor. Even after people became corralled into wage labor, Smith realized that controls had to go deeper into people's lives, including state regulation of religion. In short, for all his positive rhetoric about freedom, Smith's concern was to control people in order to make them obedient workers.

The seventh chapter analyzes the consequences of Smith's work. It describes how later economists simplified Smith's writings and removed its uncomfortable ideological implications. The result was an effective, but unrealistic, propagandistic shell.

The eighth chapter looks at the concept of the Gross Domestic Product, a seemingly straightforward measure of the success of an economy. The chapter reviews the evolution of this highly political concept, showing how, just like with Adam Smith's theory, the Gross Domestic Product focused on convenient matters that put the market in the best possible light.

The chapter ends by contrasting the Gross Domestic Product with the results of a recent field of "happiness studies," in which social scientists, including economists, recognize the disconnect between the Gross Domestic Product and a satisfying quality of life.’

Comment
The ‘Invisible Handcuffs’ has obvious origins in Shakespeare’s use of the metaphor of the invisible hand in Macbeth (1605) and Adam Smith’s Wealth Of Nations.

Evidence for the meanings generating the following sentences by Michael is not obvious to me, though I recognize shadows of the ideas I read and commented upon in my response to Michael’s paper at the GMU Summer School last June:

‘Smith as a harsh disciplinarian.’

‘Smith eliminated any discussion of modern industry’

’Smith realized that the harmonious society he advocated depended upon a prior coercion of labor to accept the discipline of the workplace.’

‘Smith realized that controls had to go deeper into people's lives, including state regulation of religion’

‘Smith's concern was to control people in order to make them obedient workers’.

Rather than go into textual detail on what Adam Smith actually wrote and how Michael Perelman interprets his version of what he wrote, I shall make a general defence of Smith’s views.

Adam Smith was a moral philosopher not a political or ideological agitator. As a philosopher he saw his role to ‘observe, but do nothing’ and he sturdily rejected the role of the ‘man of system’ (Moral Sentiments, TMS VI.ii.2.17-18P pp 233-4) who had a perfect system in mind.

Michael Perelman gives the impression in his paper, which appears to be echoed in this outline of his new book, that Adam Smith had some kind of role in the evolution of commercial society (and in some careless allusions, to the capitalism that followed in mid-18th century).

Wealth Of Nations is not a textbook nor a political economy of capitalism; it is a critique of mercantile political economy, looking backwards to its evolution from the 15th century after the millennium that followed the fall of Rome in 476.

That Smith did not discuss ‘modern industry’, which Michael confuses it with what is now called the industrial revolution (post-1800, not yet evident except in retrospect from 1750-1790), is because it was not agenda when he was constructing his polemic against mercantile political economy.

I shall read Michael’s book when it is published and comment in detail. I hope he takes account of my written private comments to him, not to change his thesis, that would be impertinent, but to ensure he does not associate Adam Smith with ideas he never had and policies he never advocated.

Authors from the left who see Adam Smith as some sort of ambassador for rightwing ideologies are sometimes as exasperating as authors from the right who have picked misleading, including ‘fictional’ notions, about Adam Smith advanced by neoclassical economists, including partial and general equilibrium theorists (some of whom won Nobel Prizes) dominant in US academe.