dagblog - Comments for "The real Adam Smith"

Sir Smith might be interested

artappraiser — Thu, 25 Jan 2018 22:26:38 +0000

Sir Smith might be interested if he were still alive:

The institutions Americans and Chinese call "broken "

@ Axios.com, Jan. 21

There's a sharp divide between Americans and Chinese when asked which institutions are "most broken," according to the latest annual Edelman Trust Barometer.

Another good point made by

moat — Thu, 18 Jan 2018 23:48:17 +0000

In reply to The real Adam Smith

Another good point made by Sager is:

Smith was warning against all abstract plans alike. Certainly, his outlook urges skepticism about such strategies as taking over the industrial base of a state, presuming to know what goods citizens will want and need over the next five years, and thereby trying to eliminate the market as a mechanism for resource allocation. But it likewise views with deep suspicion a plan to rapidly privatise previously state-owned industries, exposing millions of citizens to the ravages of unemployment and the attendant destruction of their communities. In other words, while she certainly didn’t realise it, Thatcher’s violent restructuring of the British economy during the 1980s was as much a product of the ‘spirit of system’ as any piece of top-down Soviet industrial strategy.

What is true about Thatcher is true about Reagan. Both systems were sold as replacements of existing means to meet social ends.

Sager's observation also reflects Galbraith's argument that the "technostructure" of the "new industrial state" involves planning that Hayek's concept of the spontaneous freedom of unfettered markets does not account for.

The role of policy in political economy appears to have room for improvement.

Thanks, Paul, for putting

PeraclesPlease — Thu, 18 Jan 2018 13:45:00 +0000

In reply to The real Adam Smith

Thanks, Paul, for putting "neoliberalism" back where it belongs - Reagan & Thatcher.

My favorite section that bashes both full deregulation along with the idea of businessmen knowing best how government should run (as a business) along with full socialism/government meddling, and applies to the by-default-concessions to Googles and Amazons of today as much as the officially granted concession for the East India trading company of yesteryear:

Under absolutely no circumstances, Smith thought, should merchants be put in charge of politics. Their monopolistic conspiracies would be ‘destructive’ to all countries ‘which have the misfortune to fall under their government’.

On Smith’s final analysis, the merchants were a pernicious but necessary part of large-scale economies

Nonetheless, something like the reverse was also true: politicians made for terrible merchants, and ought not to attempt to take over the systematic running of economic affairs. This was a product of the structural predicament faced by political leaders, whom Smith claimed have ‘scarce ever succeeded’ in becoming ‘adventurers in the common branches of trade’, despite often having been tempted to try, and often from a genuine desire to better their nation’s condition.

Politicians, according to Smith, were much poorer judges of where and how to allocate resources than the aggregated outcome of individuals spontaneously undertaking free exchange. As a result, in matters of trade it was usually folly for politicians to try to replace the vast network of buyers and sellers with any form of centralised command. This, however, included precisely those networks structured around the profit-seeking activities of merchant elites.

On Smith’s final analysis, the merchants were a potentially pernicious, but entirely necessary, part of the functioning of large-scale economies. The true ‘science of a statesman or legislator’ consisted in deciding how best to govern the merchants’ nefarious activities. Effective politicians had to strike a balance between granting economic elites the liberty to pursue legitimate commercial activities, while also applying control when such activities became vehicles for exploitation. In other words, Smith was very far from asking us to put our faith in ‘entrepreneurs’, those supposed ‘wealth-creators’ whom neoliberalism looks to as drivers of economic prosperity. On the contrary, giving the entrepreneurs free reign would be rather like putting the foxes in charge of the chicken coup.