NeoLiberalism 101

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Adam Smith was even better than you

October 10th, 2008 · No Comments

Adam Smith was even better than you: market fundamentalists!!

Adam Smith’s works is often regarded as key source of neoliberalism. But he has been oversimplified by his critics. One fact should not be left alone: he is a professor not of economics but of moral philosophy; and he offers a vision of how to advance the social good, not through self-interest, as he would later argue in his magnum opus The Wealth of Nations, but through systematic social benevolence; and in this sense, he was morally better than today’s greedy neoliberals or market fundamentalists:

Merchants and master manufacturers are … the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects than with regard to the latter. Their superiority over the country gentleman is not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it (Adam Smith, The Wealth of Nations, Book I, Everyman’s Library, Sixth Printing, 1991; pp. 87-88, 231-232)

Tags: political economy