Wednesday, December 28, 2005

Adam Smith's Soft Side

Adam Smith's Soft Side
US Congressman Sherrod Brown points out that Adam Smith was not the one-dimensional "classical liberal" portrayed by libertarian historical revisionists.

The whole "classical liberal" term is a propaganda ploy (unhappily adopted by some innocent academics) designed to convince us of authority and historicity of modern libertarian dogma. It's as if libertarianism needed papal succession to justify authority descended from Peter (Adam Smith) to modern popes (Hayek, Mises, Rand, etc.)

And like Catholic dogmas, it's full of gross historical inaccuracies and conveniently overlooks other contemporaneous Christian (liberal) sects.

Added to the Libertarian Revisionist History page.


Glen said...

That article is a little strange in that it seems like it's arguing against a third-hand caricature of Smith. Possibly the version of Smith that liberals believe conservatives are talking about when neither have read him.

The feigned surprise that Smith "sided more often with workers than the elite" is the weirdest part. Anybody who is surprised by that has missed the entire point of WoN. Likewise anybody who is surprised that Smith isn't perfectly libertarian in all his policy prescriptions, didn't pay much attention.

I'm surprised it left out the fact that Smith flirted with the Labor Theory of Value and is in favor of government schooling. And, IIRC, seemed inclined to accept the "infant industry" argument for protectionism.

Glen said...

To elaborate a bit: For those who haven't read _Wealth of Nations_, Smith's fundamental point is that free trade, an open economy and division of labor benefit most of the participants in the economy, including the workers. It's because he cares about "the workers" more than "the elite" that he advocates a minimalist government. His key insight is that many policies that are claimed to benefit the workers actually benefit an elite few who back the policies. Smith sees through much of the propaganda that sells such damaging policies and makes powerfully elegant arguments against those policies.

Thus, only a liberal who assumes conservatism "favors the elite" could be surprised that Smith sometimes sides with "the workers" against "the elite".

Mike Huben said...

Glen, if you read the first few paragraphs, you'll see that the problem is precisely that so many conservatives who worship capitalism are ignorant of the actual writings of Smith. That's nothing new: Galbraith is quoted on it.

Maybe it's old hat to you. But it's not to the innumerable otherwise educated people who haven't read Smith carefully. They've probably picked up the "Smith: avatar of Capitalism" meme that has been so thoroughly disseminated by and among conservatives.

Glen said...

Sure, Galbraith is quoted. But I was kind of hoping somebody would quote an actual conservative before criticising a meme attributed to conservatives as a way of attacking conservatives. In the absence of such a quote I can't shake the sneaking suspicion that a sort of straw man is being attacked. If only because those who quote, admire and/or refer to Smith are much more likely to have read Smith than are those who quote, admire and/or refer to Galbraith.

If you think about it, it's nearly as strange for a liberal to claim conservatives don't understand Smith as it would be for an atheist to claim Christians don't understand the Bible or for you to claim Objectivists don't understand Atlas Shrugged. Sure, the claim might be correct, but you'd want to be damn sure of your position and theirs before making the argument. You'd want more than a vague third-hand account of exactly what claim you are attacking.

Then again, this is just a summary review article. Maybe the book is better. We can hope.

Incidentally, it's old hat to me because I've read _Wealth of Nations_. A few nits and flaws notwithstanding, Smith does a decent job of describing how capitalism ought to work or could work, which is distinct from how it actually does work. When you criticize a notion of "Smith, avatar of capitalism", I suspect the disagreement you perceive has much more to do with the meaning of "capitalism" to each side than the meaning of Smith's writings. Once you realize that conservatives believe "capitalism" benefits workers, produces high wages, and so on, much of the perceived contradiction disappears.

Mike Huben said...

Glen, Glen. If you can't open your eyes to read the Wall Street Journal or The Economist, it's not my fault.

Alternatively, perhaps he's following in Adam Smith's footsteps: after all, Smith didn't name specific people in his book either.

"Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters. "
Adam Smith, "The Wealth Of Nations", pg. 151

"The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers. The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be corrected, may very easily be prevented from disturbing the tranquillity of any body but themselves."
Adam Smith, "The Wealth Of Nations", pg. 382

"Our merchants and master manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effcts of their own gains. They complain only of those of other people."
Adam Smith, "The Wealth Of Nations", pg. 104

Glen said...

To take one of the more dubious examples from the article: are you claiming the Economist and the Wall Street Journal favor slavery? Or even oppose it for clearly different reasons than did Smith?

Or are you perhaps claiming the Economist and the Journal differ with Smith on the nature of "the elite's interest"? To the contrary, I would say they agree with Smith on this issue but now prefer to call the same idea other names, such as "Public Choice Theory".

Or do you just mean that the Economist and the Journal regularly call for freer trade? You're right, they do. But does Smith. Does he offer a few caveats? Sure. But then, so do the Economist and the Journal. (For instance, they don't generally favor free trade in drugs.)

And so on. There's nuance on all sides, not just on Smith's.

Glen said...

(To be slightly more accurate: the _Economist_ sometimes favors free trade in drugs, but never in guns, while the _Journal_ sometimes favors free trade in guns, but never in drugs. In any case: there are caveats all around. The idea that either is rabidly free trade with no restrictions whatsoever - or claims to base such a position on Smith - is a misperception that Sherrod and you apparently share.)

Mike Huben said...

Glen, using your method it would be simple to show that Hitler shared values in common with us, such as motherhood and apple pie. But you'd think we'd be more interested in how we differed from Hitler on some important things.

I listed three examples from Smith that are not typical WSJ or Economist attitudes. You've ignored them.

Glen said...

I ignored your examples because they didn't strike me as relevant. One has to read them out of context and with a particular ideological slant in order to see the contradictions you perceive.

But since you insist...The first quote. You're reading it as if it's a defense of things like minimum wage laws. But Smith gives context and examples that make it clear this is not the case. The context to which he speaks is a legal regime that was SO anti-labor that very few pro-labor rules existed at all. In that environment only the most blatantly "just and equitable" laws could get passed, because labor didn't have enough bargaining power to abuse the law the way some of the employers did. Here's Smith's example of such a "just and equitable" law, in the very next sentence following your quote:

"Thus the law which obliges the masters in several different trades to pay their workmen in money and not in goods, is quite just and equitable."

Nowadays labor has a lot more legal power and employers have relatively less, so one can't today reasonably assume that every law that /today/ favors labor is just and equitable. It's a misreading of Smith to claim he supports such a position.

The second quote in context is part of Smith's (powerful, and still relevant today) argument against protectionism. In this issue he stands firmly on the side of the radical libertarians, the Economist, and some of the Journal writers, and firmly opposed to the status quo. He's saying that big businesses argue for protections we shouldn't allow them to have. Milton Friedman and just about every other economist on the planet - right, left, and center - agrees with Smith on this point.

The third quote is an argument with the sort of structure Milton Friedman often uses. Smith isn't really claiming profits are (in all ways) pernicious; rather, he is calling attention to what he believes is a logical inconsistency in arguments people were making at the time about what causes inflation. Smith thinks high profits are a bigger cause of "pernicious" inflation than high labor costs.

Nowadays we understand inflation and prices differently and I don't think Smith's premise or the argument based on it still works, so you might be right that this quote shows some disagreement between Smith and most modern commentators.

[BTW, the page numbers on your quotes weren't consistent with my paperback copy of WoN, so I looked up your quotes and my followup quotes here instead.]