Turning Adam Smith On His Head

Glenn W. Smith writes (27 April) in Open Left (HERE)

“The Promise of Popular Democracy'

“Can we repair our political practices and achieve something like the popular democracy that has remained always just around the corner? Popular democracy - a democracy in which the wisdom of a self-governing people is translated into policy - was opposed from the beginning of our nation's history by the likes of Alexander Hamilton. Hamilton was a shrewd authoritarian who had the insight that capitalist elites, protected by federal charter and largesse, could rule safely as invisible monarchs. This, of course, unraveled the naïve hopes of Adam Smith, who attempted to include compassion and human sympathy within his rationalist model, and who thought a free, unfettered market economy would promote human sympathy, equality and understanding.”

Comment
This assertion falls on the premise that: “This, of course, unraveled the naïve hopes of Adam Smith, who attempted to include compassion and human sympathy within his rationalist model, and who thought a free, unfettered market economy would promote human sympathy, equality and understanding.”

Adam Smith knew well enough the constraints of ‘rationalist model’ (like David Hume, he viewed ‘reason as the slave of the passions’, and he was sceptical about reason being enough to ensure the survival of the human species, or even for humans to conduct themselves within their social arrangements. Hence he did not attempt “to include compassion and human sympathy within his rationalist model” (where did that notion come from?); if anything he consciously excluded rational thinking from the set of human emotions.

The fault line in Glen Smith’s argument is that he confuses what neoclassical economists created as a rational mathematical model of an abstract economy and back-projected that onto Adam Smith. He has swallowed the line pedalled by Chicago trained economists who give credibility to their models by drawing a link to Wealth Of Nations (while deriding it as ‘unreadable’, ‘confusing’ and benefiting from being ‘cleaned up’ by their maths).

In the closing sentence of my quotation, Glen accuses Adam Smith of believing that who “a free, unfettered market economy would promote human sympathy, equality and understanding”. Not quite what Adam Smith had in mind. His moral philosophy (the chair he actually held from 1752-64) saw human sympathy as an age-old attribute of individuals living in societies; not just those living in commercial societies.

Humans were a long way from other animals in their social behaviours and these had deepened through time as individuals became more dependent on each other, a condition exacerbated by movement through the Four Ages of Man from hunting to commerce, or absolute independence to absolute dependence from the ‘propensity to truck, barter, and exchange’ and its necessary corollary, the division of labour.

Adam Smith was not a ‘utopian’ about “a free, unfettered market economy” – he expressed grave doubts that Britain would ever completely relinquish restrictions on free trade (Wealth of Nations, IV.ii.43: p 471) – and he didn’t consider it absolutely necessary for it to be perfectly ‘free’ to achieve his main interest in the ‘spread of opulence’ to the poorest majority – nor for that matter that commerce was necessary to “promote human sympathy, equality and understanding” (where was Adam Smith in favour of ‘equality’?). These passions – well, at least ‘human sympathy’ and ‘understanding’ were already present (‘equality’ was a 20th century ‘utopian’ goal; has Glyn confused ‘equality’ it with ‘egalitarian’ goals?).

In so far as legislators accepted his case for removing the policies of mercantile political economy, it was reasonable to assume that this historic decision would reduce the proclivity for wars with neighbours, inspired by ‘jealousies of trade’, which would improve life for their victims, but he was sanguine enough to accept that governments and the people who influenced them would not change their behaviours all that much, very quickly.

But ending trade wars – still going on in the 21st century was a step for the better - by ‘promoting human sympathy’ might be regarded as a necessary part of ending them, not the other way round.