Skip to main content

After listening to all the "invisible hand" bullshit from the Tighty Righties, I had assumed that Adam Smith was something of an asshole. Apparently, not so much, according to an article by Deborah Boucoyannis in the British Politics and Policy Blog:

A fair distribution of taxation was key to the soundness of the English economy in Smith. The rich, he claimed, should be taxed “something more than in proportion” to their wealth.  “The inequality of the worst kind” was when taxes must “fall much heavier upon the poor than upon the rich.”  The reasons were not moral.  Bad taxes were simply bad economics.
How's this for a progressive policy prescription?
In Smith, profits should be low and labor wages high, legislation in favor of the worker is “always just and equitable,” land should be distributed widely and evenly, inheritance laws should partition fortunes, taxation can be high if it is equitable, and the science of the legislator is necessary to thwart rentiers and manipulators.
Capitalism puts the interests of Ownership and Labor into direct conflict, as from the point of view of Ownership, Labor is a cost to be minimized. They therefore have an incentive to use their economic power to influence outcomes:
Smith believed the interests of profit-seekers were structurally and thus permanently “directly opposite to that of the great body of the people,” because “the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries” (with a few exceptions, especially new economies). Accordingly, when the economy is sound, wealth concentration should not occur. Only when profit-seekers have rigged the system through legislation do concentrations occur. [emphasis by diarist]
In Boucoyannis' view, Adam Smith believed that the recipe for maximizing the Wealth of Nations was very similar to the one modern Progressives believe will bring the greatest good to the greatest number. I wonder if neo-liberals will ever tire of being wrong.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Tip Jar (7+ / 0-)

    ...if you plant ice you're gonna harvest wind. (RH/JG)

    by telebob1 on Mon Apr 14, 2014 at 08:04:20 PM PDT

  •  Instead of relying on an article, written (0+ / 0-)

    by someone you don't know, that may or may not have an agenda you agree with, and that may or may not have any understanding of what Adam Smith conceived and wrote over two centuries ago...

    why don't you read it for yourself?

    Whats the author of this article discovered (in part) is the lesson here.

    Quit being suckers. Learn for yourselves. Ignore what they say and watch what they do. Stop hoping for some knight in shining armor to rescue you from your own negligence.

    I know that that is what you've been taught to do every day of your life, but it is a lie. It will not happen. Ever.

    Never.

    Capitalism is a system conceived as a less horrible alternative to Merchantilism, the rule of his day.

    "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

    by Greyhound on Mon Apr 14, 2014 at 08:26:13 PM PDT

  •  I read (5+ / 0-)

    'Wealth of Nations' last summer.  Adam Smith was indeed an enlightened  progressive.  Since it is in the public domain you can get it free for an e-reader, phone or computer.  It is not very long and very good.  It helps to have a knowledge or a chart of how British money worked before it got the decimal system.

    "In short, I was a racketeer for Capitalism" Marine Corp Brigadier General Smedley D. Butler

    by Kevskos on Mon Apr 14, 2014 at 09:01:09 PM PDT

    •  Yeah, I've bookmarked the link. (1+ / 0-)
      Recommended by:
      Kevskos

      And will be reading it as soon as I have the time. I'm glad I found this article, I had read a few things that seemed to indicate that he had some good things to say, but now I'm motivated to follow up.

      ...if you plant ice you're gonna harvest wind. (RH/JG)

      by telebob1 on Mon Apr 14, 2014 at 09:55:37 PM PDT

      [ Parent ]

    •  Thanks for that PD tip - looking for it now. (3+ / 0-)
      Recommended by:
      Kevskos, telebob1, cjtjc

      Funny you mention British coin; during an old Outer Limits episode a while back one of the characters referred to "tuppence" and of course a quick dash to the internet to check the actual value turned into an hour long journey through monetary systems of old.

      I don't long to be a kid again, but I sure wish the internet had been around back when I was :)

      The right wing's greatest fear is having done to them what they've been doing to everyone else.

      by here4tehbeer on Tue Apr 15, 2014 at 01:19:44 AM PDT

      [ Parent ]

  •  I don't think Adam Smith believed (3+ / 0-)
    Recommended by:
    telebob1, Sandino, Kevskos

    he was trying to replace Mercantilism with a new system. The Wealth of Nations was not a capitalist manifesto. He was just describing things as he saw them. And he wanted to get rid of the Corn Laws. I've read it cover to cover and, yeah, he was a Liberal for sure.

    The free market is not the solution, the free market is the problem.

    by Azazello on Mon Apr 14, 2014 at 09:08:45 PM PDT

    •  He did lay out an alternative system as well as (1+ / 0-)
      Recommended by:
      telebob1

      describing the reality of his day, making his theories revolutionary by definition.

      It all relies, however, on the establishment and goals of the ruling class/system fulfilling its role by maintaining minimum standards within society at large.

      "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

      by Greyhound on Mon Apr 14, 2014 at 10:47:37 PM PDT

      [ Parent ]

      •  Well, it's been a while since I read it, (1+ / 0-)
        Recommended by:
        Kevskos

        but I really don't remember him proposing any kind of system. He had some good observations for sure, like his prediction that if the colonists didn't separate themselves the King would eventually have to relocate the English capital to America.

        The free market is not the solution, the free market is the problem.

        by Azazello on Mon Apr 14, 2014 at 11:32:26 PM PDT

        [ Parent ]

  •  Ignore What They Say & Watch What They Do! (2+ / 0-)
    Recommended by:
    telebob1, Calamity Jean

    If only we could retrain Republican voters to pay attention to that statement.  Some Dems, too.

  •  The first question to be asked when reading (4+ / 0-)
    Recommended by:
    OHBRAD, organicus, Kevskos, telebob1

    The Nature and Causes of the Wealth of Nations is, in fact, what is the nature of wealth? Smith was at great pains to demonstrate that it is not money or property, but the capacity to produce what is useful and needed, and to distribute it to those for whom it is useful, and who need it.

    In particular, Smith devoted significant space to the economic policies of the Spanish Empire when it had possession of nearly all of the gold, silver, and jewels of South America outside of Brazil. The Emperor decreed that none of those riches could be spent outside the Empire, with the idea that that would make the Empire rich forever. Instead it got one of the worst rates of inflation in world history, up until the 20th century. Among other problems. The Spanish economy was destroyed, and never recovered.

    The second question is what are the causes of wealth. At the top of the list Smith put productivity. That is why the opening chapter of Wealth of Nations is about division of labor, and much of the text is about capital investments, in improvements on land as much as on factory equipment.

    After measures to increase productivity, Smith directed the reader's attention to distributing the profits from productivity, most of which he held should go to the workers.

    A very large fraction of the book is devoted to the financial shenanigans of the rich in demanding political favors such as subsidies and legislation giving them monopoly or oligopoly power in markets. He favored freeing markets from the depredations of companies, not for them.

    Naturally, the lunatics in charge of the asylum, that is those financing chairs of economics at certain universities, have done everything they could to propagandize the notion of Smith as a champion of so-called Laissez Faire, meaning let the rich do whatever, and prevent anybody else from doing anything economically meaningful.

    If there is interest, I can expand on those ideas and others at any length you may desire, and more. ^_^ And I can relate them to the particular political fights we are having now.

    Back off, man. I'm a logician.—GOPBusters™

    by Mokurai on Tue Apr 15, 2014 at 08:44:29 AM PDT

    •  Thanks for this insightful comment. (0+ / 0-)

      And yes, please! I've just started reading Wealth of Nations, and I could use some help understanding some of his ideas and the olde-tyme language. For instance, in the intro to the above linked text, the editor quotes from one of Smith's lectures:

      The objects of police are the cheapness of commodities, public security, and cleanliness, if the two last were not too minute for a lecture of this kind. Under this head we will consider the opulence of a state.
      After several readings, I adopted a faux-French accent and realized that "police" did not refer to testosterone-poisoned control addicts, but rather to "policy," which in retrospect makes much more sense.

      ...if you plant ice you're gonna harvest wind. (RH/JG)

      by telebob1 on Tue Apr 15, 2014 at 02:04:51 PM PDT

      [ Parent ]

      •  Excellent topics (1+ / 0-)
        Recommended by:
        telebob1

        Cheapness of commodities is one of the chief virtues of open, transparent, efficient markets where everybody is on an equal footing for both buying and selling. It is the essence of the Law of Supply and Demand as worked out by later equilibrium theorists considering not only single goods but optimizing costs for every product and service in an entire economy.

        Lowering the prices of goods is one of the chief benefits of a well-regulated economy, in that the producers need make no more than enough to ensure that they can keep producing, which is adequate for them, and everybody else benefits from the lowered price in acquiring goods for personal use or for producing something else at lowered cost. Rich merchants and manufacturers of course object to such economic efficiency, or plot ways to secure all of its benefits to themselves.

        Public security covers a wide range of measures for physical safety and also preventing economic, political, and other depredations. In Thorstein Veblen's terms, in The Theory of the Leisure Class, protection against force and fraud.

        Cleanliness includes the public health services, not just the availability of baths and sewer systems.

        This passage omits public education, another of the founding inventions of the Scottish Enlightenment in which Smith played such a great part.

        Back off, man. I'm a logician.—GOPBusters™

        by Mokurai on Tue Apr 15, 2014 at 07:23:07 PM PDT

        [ Parent ]

        •  Again, thank you. (0+ / 0-)

          Perhaps you'd like to tackle "opulence of the state?" I haven't had time to go back and read more, and this phrase might sound strange to modern readers.

          ...if you plant ice you're gonna harvest wind. (RH/JG)

          by telebob1 on Wed Apr 16, 2014 at 01:35:01 PM PDT

          [ Parent ]

          •  This? (0+ / 0-)
            It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people.
            The Wealth Of Nations, Book I, Chapter I, p. 22, para. 10.

            The very definition of a well-governed society is one in which the wealth (and thus the political influence) is spread around.

            Back off, man. I'm a logician.—GOPBusters™

            by Mokurai on Wed Apr 16, 2014 at 09:04:24 PM PDT

            [ Parent ]

            •  Actually, (0+ / 0-)

              I was thinking of the quote in my previous comment, where he appears to be referring to the responsibility of the state to use good policy to enhance the "general welfare," as our founders phrased it.

              It seems, however, that we are really talking about the same idea, appearing in both Wealth and Lectures.

              ...if you plant ice you're gonna harvest wind. (RH/JG)

              by telebob1 on Thu Apr 17, 2014 at 12:24:21 AM PDT

              [ Parent ]

  •  Adam Smith falsely believed that... (1+ / 0-)
    Recommended by:
    telebob1

    the worst excesses and abuses of capitalism would naturally be restrained by the guiding hand of Christian morality upon the souls of the capitalists.

    This was a fairly natural assumption on the part of a mainstream Christian intellectual in the 18th century.

    But here in the 21st century, where capitalists willingly facilitate mass murder in the form of factory collapses in Bangladesh to shave a few cents off the cost of a t-shirt, it's blindlingly obvious that Smith was wrong on this.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site