The Real Adam Smith

The Real Adam Smith
aeon.co

Otherwise, an entire sub-field of economics (it would be a sub-field of "political economy" if that term were widespread today) is Public Choice, which demonstrates rather well that often state intervention is at the behest of the "merchant interests." Public Choice is a direct descendent of Adam Smith’s thinking. Indeed, the very term "state capture" that the author invokes frequently probably derived from "regulatory capture," a term Public Choice helped propagate.

There is also a misunderstanding that Smith’s "invisible hand" concept implies some sort of Utopian paradise, when in fact, Smith meant more that aspiring monopolists who are nonetheless in competition with each other (and often in cooperation with others) lead to an increase in social gains, which on its own seems paradoxical and is highly counterintuitive. Modern economics seems founded on maximizing or minimizing every possible variable of interest, so I suppose some people may actually argue that the invisible hand is a statement about maximization, which it definitely isn’t. In practice, the only people I see invoke the "Invisible Hand" in this manner are harsh critics of any sort of free enterprise regardless of the context, and always advocates of state intervention and thus regulatory capture ("[people] of the system", indeed).

I am most surprised that Smith's sympathies for labor do not appear in this essay, as they seem to be quite strong. Smith discusses the effects of specialization that happens during industrialization, and goes so far as to say it makes workers with repetitive tasks "stupid." In context, his sympathies are clearly with the worker.

I guess as someone with relatively Smithian-Hayekian views, I am missing the overall point of this article, other than to hand-wring that so-called Neoliberalism (I have never met a Neoliberal) is actually unrelated to Smith’s ideas and are a perversion. He is entirely unconvincing, even if one accepts for the sake of argument that "neoliberalism" exists as a coherent philosophy or even ideology (it doesn't).

The point of the article is summarized by the author in a paragraph:

""" The message that Smith conveys cuts across party and ideological lines, and applies to both Left and Right. It is about a pathological attitude that politicians of all stripes are prone to. If not kept in check, this can be the source not just of disruption and inefficiency but of cruelty and suffering, when those who find themselves on the wrong side of the plan’s consequences are forced by the powerful to suffer them regardless. Smith in turn urges us to recognise that real-world politics will always be too complex for any prepackaged ideology to cope with. What we need in our politicians is careful judgment and moral maturity, something that no ideology, nor any position on the political spectrum, holds a monopoly on. """

The dogma of today's right-wing "mercantile" politicians is a perversion of Adam Smith. These politicians state that the invisible hand requires complete government deregulation in order to function. They ignore Smith's point that the invisible hand requires both free markets and government regulation of monopoly to function. The article states that "According to Smith, the most pressing dangers came not from the state acting alone, but the state when captured by merchant elites." If you've followed US politics at all over the last year you could see how the article's point is extremely convincing.