Marxists, Sort Of, Speak Out

‘The great promise of capitalism, as first suggested by Adam Smith and recently enshrined in "market fundamentalism," was that we didn't have to figure anything out, because the market would take care of everything for us. Instead of promoting self-reliance, this version of free enterprise fostered passivity in the face of that inscrutable deity, the Market.’ ‘Rising to the Occasion’, by Barbara Ehrenreich & Bill Fletcher Jr in The Nation Blog, HERE:

Comment
You can’t blame Barbara and Bill for repeating the error they have been taught by modern generations of economists since the 1950s. It has nothing to do with their sort of, Marxism (read their post in full from the link).

It would be much better to teach what Adam Smith did say about how markets work within a commercial society (Books I and II of Wealth Of Nations), which includes requirements for the rule of law, personal liberties, and appropriate national policies that were not driven by jealousies of trade, monopoly practices and restrictions, and a lack of care for society as a whole.

Perhaps this extract from Moral Sentiments could help set the scene:

“What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these. Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these. On the contrary, what civil policy can be so ruinous and destructive as the vices of men? The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to.” (Theory Of Moral Sentiments, 1759: Book IV)

Adam Smith on Government

I came across the following passage while re-reading Adam Smith’s Moral Sentiments. It refers to his comments on the character of civil governments, both those “fitted either to promote or to disturb the happiness both of the individual and of the society”, which may cast light on the vexed question of the degree to which Adam Smith approved or disapproved of the institutions of civil government – the State – as believed by many who preach his hostility to these institutions.

“The characters of men, as well as the contrivances of art, or the institutions of civil government, may be fitted either to promote or to disturb the happiness both of the individual and of the society. The prudent, the equitable, the active, resolute, and sober character promises prosperity and satisfaction, both to the person himself and to every one connected with him. The rash, the insolent, the slothful, effeminate, and voluptuous, on the contrary, forebodes ruin to the individual, and misfortune to all who have any thing to do with him. The first turn of mind has at least all the beauty which can belong to the most perfect machine that was ever invented for promoting the most agreeable purpose: and the second, all the deformity of the most awkward and clumsy contrivance. What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these. Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these. On the contrary, what civil policy can be so ruinous and destructive as the vices of men? The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to.” (TMS, IV.2.1: p 187)

In my opinion, the above paragraph (expanded in the rest of his chapter) points to a typical Smithian stance; specifically, he regarded the institutions of civil government as justified and necessary, from their first appearance in the “Ages of Shepherds and Agriculture” [LJ(A) i.27:p 14] through to his time. This historical view left him much room for critical comment of “the mischiefs which human wickedness gives occasion to” in all its institutions, including those in the ‘Age of Commerce’.

Those who believe governments of a kind that is compliant with their politics do no wrong, and those who believe that markets, compliant with their ideology, are always right or are always wrong, may wish to reflect that the common factor in all civil governments and all modes of subsistence in history and today, was and is the presence of human beings with their capacity to be among “the prudent, the equitable, the active, resolute, and sober” or among “the rash, the insolent, the slothful, effeminate, and voluptuous”, or some mixture of the two extremes.

Adam Smith did not take sides, nor blind himself to the triumph of hope or despair over historical observation and scepticism

Adam Smith On Government Spending From Taxation and Borrowing

Another misuse of Adam Smith's actual stance, this time on the size of government expenditure.

RomeSentinel.com (New York) carries a punchy Editorial (HERE:)

“When Adam Smith wrote the book on economics, he didn’t trust corporations, unions, lobbyists, interest groups, governments, or anyone else. Smith knew that in an untrustworthy world, more competition was always better than less competition.

Government should be used sparingly, deftly, and narrowly focused. It has a limited purpose: Protect citizens from others and from each other, maintain courts, and minimally help people between jobs. Everything else is your business, because government doesn’t create jobs; people do. Adam Smith explained this 230 years ago.”

Comment
That’s a stripped down version of Adam Smith’s critique of the mercantile economics system prevalent in 18th-century Britain; so stripped down it’s missed a lot of the detail in pursuit of a political view.

Not that I against cutting the size of most 21st-century governments, especially the government of the UK. But I do not think anytime soon the UK, nor the USA; and certainly not Russia or China, are going to reduce the government’s share of GDP going to government legislated expenditures.

Smith’s approved programme for government expenditures was quite extensive, well beyond the editorial writer’s list on Rome Sentenial list.

Smith’s infra-structure programme to ‘facilitate commerce’ would cost tens of millions (good highways linking the main, and growing, cities; harbours; canals; bridges; paving and street lights), all mentioned in Book V of Wealth Of Nations.

The taxpayers’ money plus borrowing to fund the 7-years war at £172 million would have been better spent on british domestic infra-structure, which, of course would incur annual operating, maintenance, and repair costs, part funded by user-tolls, and Smith was pragmatic about whether they were managed by public or private commissioner.

To this you could add a national school system (a ‘little school in every parish – all 60,000 of them), partly funded by local taxes and small fees from families whose children attended them to better prepare them for productive work to supplement their family’s earnings.

He even advocated public funding for palliative care for victims of ‘loathsome diseases’ like leprosy (an agenda of expenditure in the disease-ridden towns that were to grow bigger in the next century).

Smith was not in favour of a ‘night-watchman state, an accusation often levied about him by some of today’s libertarian right. It was a sarcastic remark by a 19th-century socialist called Ferdinand Lassell (1825-64), who was trying to out-left the British left who were not robust enough politically for him; somehow, the Right picked this up as a ‘badge of pride’ and passed it on to their accounts of Smith’s government duties programme.

Smith certainly favoured a small state by today’s standards, but not as small by a long way as some would claim for him. It would make it easier to join these debates if more people read Adam Smith beyond the ‘rent-a-misquote’ efforts of those who don’t read him.