Free Market ideologues love Adam Smith and his magnum opus Wealth of Nations - except for the bits that they don't.
Under capitalism the more money you have, the easier it is to make money, and the less money you have, the harder.
Wherever there is great property there is great inequality. The affluence of the rich supposes the indigence of the many.
-Adam Smith
Smith's metaphor of the Invisible Hand is often used to justify policies of
Laissez-faire absolutism, of course this is taking
a very specific quote out of a very specific context of Smith's belief that national level disruptions caused by globalized trade would be restricted by specifically nationalist sympathies. Essentially, exactly
the kind of thinking dismissed by globalization's current high priests as narrow and parochial.Another example of the way Smith's modern followers display their very selective reading of Smith is on the subject of inheritance.
Smith very strongly supported restricting inheritance, believing that beyond insuring the basic needs of widows and children it was something that distorted the equality of opportunity he believed in, creating an aristocracy of wealth.
Amusingly the Adam Smith Institute now argues against the teachings of their name-sake on this and many other issues.
Which brings us now to Anna Nicole Smith and the argument that
whoever fathered her latest child now deserves millions, perhaps billions of dollars as a result. As Erin at Progressive Bloggers points out, this merely highlights the contradiction of such enormous wealth being so completely dependent on heredity in an equal society.
Smith would probably been just as appalled by the bloated pay of CEOs and other executives and the growing canyon between the rich and poor. He would probably have
supported efforts to narrow such gaps and would have sympathized with
the argument that such gaps lead a dangerous class resentment and social instability. Even
Bush has taken notice the dangers of such drastic transfers of wealth from the many to the few, which was the central point of his presidency of course.
We tried it the
Laissez-faire fetishists way for the last several years. The result has been an unstable mess of privilege and imbalance that threatens to upend the whole system. Time to accept that Smith's ideas always included a context of regulation and adjustment. Smith, the real Smith isn't inconsistent with regulation and adjustment - or even socialism, believers in transparent appendages to the contrary.
And if they
are right, they are in effect arguing that fairness is impossible without radical revolutionary change.
UPDATE:
Eugene weighs in.UPDATE 2:
Robustly critiqued by
Gavin Kennedy, Emeritus Professor at Heriot-Watt University of Edinburgh, Scotland Which I will take as a rather bewildering compliment for an off the cuff blog posting from a non-economist on the other side of the planet - I referenced Anna Nicole Smith, for God's sake!
I will say, that if all of the followers of Smith were as cordial and punctilious (He made a point of e-mailing me, with the hope I wouldn't take his critique too badly.) I'd have a higher opinion of the breed.
I may have a response later on, in another post or I may leave the floor to Professor Kennedy - anybody else who'd like to take a crack at his closely written response to my post - again, flattered but a bit surprised I was worth the time - feel free, in the same spirit of courtesy Professor Kennedy showed please.
