Amazingly, yes, he does make some good points. A bit silly his harping on about "the invisible hand" when the phrase appears three times in the million words of Smith’s we have.
Yet the Smith who Brown reveres is not the laissez-faire free-marketeer
of neoliberal lore – the Smith whom Sir Keith Joseph put on his
infamous 1979 reading list for civil servants and who saw the magic of
economic growth delivered by the invisible hand of the market. "It is
not from the benevolence of the butcher, the brewer, or the baker that
we expect our dinner, but from their regard to their self-love, and
never talk to them of our own necessities but of their advantages," as
he famously put it in The Wealth of Nations. This was the "greed is
good" Smith of the Gordon Gekko school of raw capitalism.
Err, no. Greed is good is not what Smith said. That greed, "enlightened self-interest" can have good effects, is his argument here.
At its core was a conviction that the history of commerce was, in
Rothschild’s words, "an epic of the emancipation of the mind". Economic
liberty delivered far more than personal profit: it engendered
political, legal and intellectual enlightenment. And with it a mutual
understanding of human sympathy. Smith thought that any barriers to
this process of individual fulfilment needed to be eliminated, in
particular, the closed shop of corporation, guild and apprenticeship,
which dictated the pre-industrial economy. Hence his celebrated
aphorism that "people of the same trade seldom meet together…but the
conversation ends in a conspiracy against the public." His paean to
commercial freedom was, in fact, a radical call for personal and
political emancipation.
Quite. No union closed shops, just as no business monopolies or collusions.
So rather than being a mindless enthusiast for the vagaries of the
market, Smith supported state intervention to promote fair competition
and root out privilege.
Indeed, when people combine to collude against the public good, stop them. No union closed shops, no business monopolies.
He backed universal, public education;
Steady on there. University education he certainly thought should be privately funded. By the student direct to the lecturer.
he lamented the corrupting effects of worshipping the rich and
powerful; and even complained about the civic disharmony brought about
by windfall profits (for Brown, read City bonuses). "Our merchants and
master-manufacturers complain much of the bad effects of high wages …
They say nothing concerning the bad effects of high profits … They
are silent with regard to the pernicious effects of their own gains."
The answer to which is to have increased competition, to lower those excessive profit rates: this was an argument against, as above, the closed shop of corporation, not of profits earned by innovation.
The central concept of the piece though, that Smith is indeed unfairly lambasted as being a laissez-faire economist, is true. There’s much more to him than that. It is indeed possible to find support for all sorts of things, even up to redistributive taxation and the welfare state, in his writings. But for both sides, right and left, we should take it all as a whole: as and when we can get "the left" onside with the idea that markets work, that markets indeed harness that self-interest to the benefit of others, then, OK, now let’s talk about the other things shall we?
Stepehn King has a much much better piece in The Independent. Still talks about the invisible hand too much though, I think he uses the phrase more than Smith did in the whole two books.
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