Jesse Norman. Adam Smith: father of economics. 2018
Jesse Norman is a Conservative Member of Parliament in Britain and has a PhD in Philosophy from University College London.
“For many on the right of politics, he is a founding figure of the modern era: the greatest of all economists, an eloquent advocate of the freedom of the individual and the staunch enemy of state intervention, in a world released from the utopian delusions of communism and socialism. For many on the left, he is something very different: the true source and origin of so-called market fundamentalism, author of the textbook on contemporary capitalism according to the activist and writer Naomi of Klein, the prime mover of a materialist ideology that is sweeping the world and corrupting real resources of human value, an apologist for wealth and inequality and human selfishness - and a misogynist to boot.” (Norman ix) Sometimes, Smith is used for all ideological purposes to the point of “over-interpretation or outright misappropriation.” (Norman xii) “The result has been to create a caricature known as Adam Smith around whom there is now a vast mythology.” (Norman xii)
For Milton Friedman, “Smith was a radical and revolutionary in his own time - just as Friedman was in his. Smith was a man who believed his own society was overgoverned, and accordingly set himself against state interventions - just as Freeman did in his own time. Smith’s doctrine of the invisible had reflected his view that human sympathy was unreliable, limited and needed to be economized, while free markets generated human well-being-just as Friedman himself held, across a long professional life devoted to expounding these and similar ideas.” (Norman xiii)
However, Friedman is inaccurate. “Adam Smith was not a radical, and did not see himself as one; he does not seem to have believed his society was overgoverned, whatever that may mean, except for perhaps as regards the American colonies; he had no doctrine of the invisible hand, indeed no single theory of how markets work; he did not think free markets always served human well-being, and he did potholed that human sympathy was intrinsically limited or required economizing.” (Norman xiii)
Smith recommended that a state needed to”peace, easy taxes, and a tolerable administration of justice.” Going against nature brings us tyranny. Smith advocated a “system of natural liberty.” (Norman 53)
Smith believed labor a “source of economic value.” (Norman 85)
“The effect of competition in free markets is this to keep profits at a minimum.” High profits for too long demonstrate “poorly functioning markets, shortages of capital or labour, or the operation some special (sometimes necessary) privilege.” (Norman 109)
“The Wealth of Nations is not merely a work of analysis, but a polemic against bad policy making.” (Norman 111)
“The great object of the political economy of every country is to increase the riches and power of that country.” (Norman 111)
“The Mercantile System is marked by its obsession with money. . . . so a mercantilist nation seeks to acquire wealth by storing up bullion. How is this bullion to be obtained? By foreign conquest and the acquisition of mines, traditionally, but also and more insidiously by attempts to manage the balance of trade.” (Norman 113)
“Mercantilism thus tended to distort trade and investment, boost profits, discourage competition and indirectly raise prices.” It made manufacturers happily dependent on the government for their profits. “Lobbies and special interests benefited over customers and workers.” (Norman 113)
Mercantilism created colonialism. This included the slave trade. (Norman 114)) The British East India Company had a monopoly over India. They turned this advanced civilization’s rice production into a famine. (Norman 114)
Mercantilism also caused the American Revolution, creating a people who could only produce and trade with the mother country. (Norman 114)
“The roots of the Seven Years War similarly lay in colonial expansion, which had created the whole expense of the late war, the overall result of which had been a catastrophic increase in debt . . . the contrivers of tissue whole mercantile system . . . the producers, whose interest has been so carefully attended.” (Norman 115)
“Nothing can be more absurd than this whole doctrine of the balance of trade.” (Norman 115)
Government restraint and preferences must be removed, “and a simple system of natural liberty establishes itself of its own accord.” (Norman 115)
The four freedoms in life are: “freedom of occupation or employment, of ownership of land, of internal commerce and of foreign trade.” (Norman 115)
“Commercial privileges and legal monopolies, duties, politicians, and bounties should be curtailed or abolished.” (115)
Restrictive laws of primogeniture, and entail should be repealed, and restraints on the place and type of a man's occupation done away with. And the sovereign power or state should be entirely relieved of the duty of superintending, the industry of private people, and I'm directing it towards the employments most suitable to the entrance of the society.” (115)
“Nevertheless, there are in must be enabling constraints on individual enterprise.” (115-116)
The sovereign must protect society from foreign foes, from each other and have an administration of justice. Erecting and maintaining “public works and have certain public institutions which can never be for the interest of any individual or small number of individuals. These include certain kinds of building projects, a system of local schools, and instruction for those of all ages, especially in positions of public, or professional responsibility, in the study of science and philosophy, in order to reduce their dependency on religion for guidance and moral matters.” (116)
The emergence of private capital created so much "wealth that resulted in economic inequality, which in turn demanded strong institutions, capable of maintaining and administering justice.” (116)
Civil government is meant to secure property, which, in reality, is to defend the “rich against poor, or those who have some property against those who have none at all.” (116)
Government funding of certain commercial initiatives should be approved, even if it means granting the exclusive right “to trade a commodity for a limited. More generally, investment on infrastructure such as roads, canals, and bridges, should be possibly paid for by charges on those to use them, to inhibit frivolous, or economically, irrelevant schemes from being built.” (116)
Smith does not ignore the responsibility society has for the working poor. “No society can surely be flourishing and happy, which the greater part of the members are poor and miserable. It is for equity, besides, that they who feed close and watch the whole body of the people, should have a share of the produce of their own labor has to be themselves tolerably well fed, closed and lodged.” (117)
"Or have a little time to spare for education, and the very division of labor the crate so much Welp also has the unintended consequence of damaging in dehumanizing them. They often work in highly repetitive manual trade which create torpor, corruption and degeneracy, and which saps their intellectual, social and martial virtues. The remedy Smith advances is for government to establish a widespread system of local schools, able to provide a basic education to all, paid for partly a public expense, and partly through very moderate fees.” (117)
Smith believes that a standing army is the only way a modern, commercial society can defend itself. Such an army can best be maintained by an opulent civilized nation, so it alone can defend such a nation against the invasion of a poor and barbarous neighbor. It is only by means of a standing army, therefore, that the civilization of any country can be perpetuated, or even preserved for any considerable time.” (119)
Smith's reputation has grown throughout the ages. In the American colonies, especially, The Wealth of Nations was widely purchased. It was also “cited in the debates on the Constitution 1787-8 and referred to in several Federalist Papers urging its ratification.” (161)
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