Tuesday, September 16, 2008

Adam Smith 2.0

By Irving Wladawsky Berger, AlwaysOn

The other day, I came across an interesting story about Adam Smith in The Economist. It appears that Adam Smith - the 18th century philosopher and economist, who is generally considered the father of free-market, free-trade capitalism - has been treated with remarkable indifference in his native Scotland. The 17th-century house where he spent the last years of his life has only a small, tarnished bronze plaque mentioning his name. His grave was overgrown until recently, and is still not easy for visitors to find.

The Economist story attributes this indifference to one of Scotland's best known sons to modern politics and historical ignorance. "Smith's most famous work, The Wealth of Nations," the article says, "which describes wealth creation in a competitive commercial economy dominated by the market's invisible hand, has long been appropriated by right-wingers and anathema in left-leaning Scotland."

Driven by their narrow political ideology, some people seem to think of open markets as reflecting a kind of survival of the fittest competition in which anything goes. But such people, I believe, have totally misrepresented not just Adam Smith and open markets, but the principles governing evolution and natural selection, especially as it applies to social animals like us humans.

The Economist story goes on to say that, - led by Prime Minister Gordon Brown, himself a Scot, - people are discovering that Adam Smith is not the right-wing ideologue he has been misunderstood to be. "Leftists much prefer Smith's other big work, The Theory of Moral Sentiments," it says. "Its deeply Scottish Presbyterian fulminations against materialistic desires for trinkets of frivolous utility, and lofty observation that man has some principles which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, can be made to sound almost socialist."

I don't think that Adam Smith had socialism in mind, but something much deeper - sympathy, that is, the very human ability to have a strong feeling of concern for another person. Experts generally agree that Smith advocated both the self-interest of Wealth of Nations, and the sympathy of Theory of Moral Sentiments, with no contradiction between these two positions. In his view, "individuals in society find it in their self-interest to develop sympathy as they seek approval of what he calls the impartial spectator. The self-interest he speaks of is not a narrow selfishness but something that involves sympathy.”

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