Global Economic Collapse and the Original Vision of Adam Smith (Part 3 of 3)

POSTED September 18, 1:13 PM
Judah Freed - Political Issues Examiner

Adam Smith.Few people today realize that Adam Smith actually was a social progressive. “Civil government,” he wrote, “so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor.”

Adam Smith envisioned wealth and power distributed throughout society, benefiting everyone. Yet he did not imagine "a nation of shopkeepers," as some say dismissively, for he actively promoted manufacturing.

Adam Smith favored small business and small government. He saw monopolies as enemies of free enterprise and fair markets. He labeled trade associations as conspiracies to raise prices.

Unfair and fraudulent market practices deserve regulation, Smith said. This point is especially telling today, for those touting deregulation in Smith's name actually are betraying the vision of their idol.



In fact, Smith heartily endorsed clear laws governing commerce along with sanctions against outlaw enterprises and nations. He favored both spontaneous market sanctions by consumers as well as government-backed law enforcement with corrective actions ending in force as a last resort.

Any modern corporation lacking sympathy for its customers and the general public violates the morality of Adam Smith. He’d decry the inhumane techno-capitalism now being malpracticed in his name. At the dawn of the Industrial Age, he wrote, “The robot is going to lose. Not by much. But when the final score is tallied, flesh and blood is going to beat the damn monster.”

If Adam Smith’s ideas and ideals had been heeded since his time, capitalist economies today may not suffer from the ruinous boom-and-bust “business cycle” that Marx criticized so effectively. If Adam Smith had been heeded for carefully, I contend, we might not be facing global economic collapse today.

Why is Adam Smith so misunderstood?

Unlike other utopian thinkers who first mapped out a vision for an ideal world and then presented a compass to navigate their imagined terrain, Adam Smith published his moral compass first, and only 20 years later did he offer a map for his utopia. We have misread his map because we have forgotten his compass. This is how we’ve lost our way.

You are free to disagree with me on this, of course, but I blame free-market economist Milton Friedman and his followers for misleading us away from the ideals and principles of regulated capitalism as Adam Smith intended.

Unlike ethical self-reliance libertarians (my term) who balance personal and social responsibility, most free-market capitalists today share the exploitive utilitarian values of libertine libertarians (also my term) who want to enjoy all the pleasures of economic freedom without any social responsibility or personal accountability.

In my judgement, the rampant greed of libertine libertarians is what got us into the mess we're in today. Unlike Gordon Gekko in the film, Wall Street, I contends that greed is not good. Heeding the grounded wisdom of self-reliance libertarians like Karl Hess may have spared us from our current woes.

In reaction to the abuses of free-market capitalism, some favor socialism to close the unjust and widening gap between rich and poor. They want the state to control the economy and redistribute all wealth “equally.” We're seeing a step in that direction with the nationalization of Fannie Mae and Freddie Mac.

I agree we need a safety net for those unable to care for themselves. However, I challenge the tendency of codependent welfare states to rob people of incentives to achieve their highest potential and practice mindful self rule. I'm against any form of Big Government, no matter what political party or economic philosophy is behind it. This is why I urge us to beware of any and all messianic leaders promising to save us in trade for the power to make decisions on our behalf.

As we face a global economic collapse inthe coming years, as we look for sane solutions, we might need to create an entirely new economic model. If this becomes a necessity, Adam Smith himself would remind us that democracy and capitalism are not the same thing and that commerce is older than capitalism.

If we use common sense to develop a stable international economic system that fairly empowers people to sustain themselves and their families, so they can prosper in ways that benefit everyone, that system will make global sense.

NOTE: Portions of this column were adapted from my book, Global Sense.