web analytics
October 31, 2014 / 7 Heshvan, 5775
At a Glance
InDepth
Sponsored Post
Meir Panim with Soldiers 5774 Roundup: Year of Relief and Service for Israel’s Needy

Meir Panim implements programs that serve Israel’s neediest populations with respect and dignity. Meir Panim also coordinated care packages for families in the South during the Gaza War.



Markets, Politics, And The True Legacy Of Adam Smith


Beres-Louis-Rene

We wonder about the endlessly volatile markets and also (not often enough) about plainly unequal distributions of national wealth, but are the nation’s official policy responses based on correct views of classical economic theory? In particular, what about Adam Smith and his oft-quoted arguments for “free market capitalism”? More than any other classical theorist, Smith has been embraced by conservatives.

In brief, Smith reasoned, always capably and persuasively, that a system of private property, though naturally unequal, could still permit the poor to live tolerably. Rejecting Jean Jacques Rousseau’s contrary position that in commerce, “the privileged few…gorge themselves with superfluities, while the starving multitude are in want of the bare necessities of life,” Smith saw in capitalism not only an enviably rising productivity, but also the ultimate prerequisite for political liberty.

Adam Smith published his Inquiry into the Nature and Causes of the Wealth of Nations in 1776. A revolutionary book, Wealth did not aim to support the interests of any one class over another, but rather the overall well being of an entire nation. He discovered, as we all know, “an invisible hand,” an unsought convergence whereby “the private interests and passions of men” will lead to “that which is most agreeable to the interest of a whole society.”

Through capitalistic modes of production and exchange, reasoned Smith, an inextinguishable social inequality might still be reconciled with broad human progress.

Significantly, however, today’s conservative defenders of Smith usually ignore, either deliberately or unwittingly, the full depth of his relentlessly complex thought. A system of “perfect liberty,” as Smith called it, could never be based upon any encouragements of needless consumption. Instead, he argued, the laws of the market, driven by competition and a consequent “self-regulation,” strongly demanded a principled disdain for all vanity-driven consumption. “Conspicuous consumption,” a phrase that would be used far more effectively later on by Thorsten Veblen, could therefore never become the proper motor of economic or social improvement.

Adam Smith understood the dynamics of conspicuous consumption, but he disliked them altogether. For him, it was only reasonable that the market regulate both the price and quantity of goods according to the final arbiter of public demand. Yet, he continued, this market ought never to be manipulated by any avaricious interferers. More precisely, Smith excoriated all who would artificially create or encourage contrived demand as mischievously vain meddlers of a “mean rapacity.”

Today, of course, with engineered demand and hyper-Consumption as both permanent and allegedly desirable market features, we have lost all sight of Smith’s “natural liberty.” As a result, we try, foolishly and interminably, to construct our economic recovery and vitality on sand. Below the surface, we still fail to recognize, lurks a truly fundamental problem that is not political, economic, fiscal or financial. Instead, as Adam Smith would have us understand, it is a plainly psychological or human dilemma, one we should acknowledge can never be resolved by either Barack Obama or Mitt Romney.

Wall Street’s persisting fragility is largely a mirror image of Main Street’s insatiable drive toward hyper-consumption. This manipulated drive, so execrable to Adam Smith, has already prompted certain learned economists to warn repeatedly against saving too much. Could any advice be more ironic?

Whether Democrats or Republicans, all voters believe our national economic effort must always be oriented toward buying more. No one seems to ask, Exactly what sort of society can we expect from an economic system based on imitation and conformance?

Contrived demand has not always been a basic driver of our economy. Before television, and before our latest social networking gadgets, such demand could not have had any such overwhelming power and effect.

Writing in the middle of the nineteenth century, the American Transcendentalist philosopher Ralph Waldo Emerson spoke presciently of “self-reliance.” Foolish “reliance upon property,” Emerson had understood, is the unwanted result of “a want of self‑reliance.”

Now, living apprehensively amid a literally delirious collectivism, the ever-fearful American wants, more or less desperately, to project a “successful” image. This projection, in turn, remains founded upon material acquisition of “all the right things.”

In the final analysis, as Adam Smith himself would have understood, it will be the relentlessly conformist call of American mass society that critically undermines our core economy.

About the Author: Louis René Beres, strategic and military affairs columnist for The Jewish Press, is professor of Political Science at Purdue University. Educated at Princeton (Ph.D., 1971), he lectures and publishes widely on international relations and international law and is the author of ten major books in the field. In Israel, Professor Beres was chair of Project Daniel.


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

No Responses to “Markets, Politics, And The True Legacy Of Adam Smith”

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
Yehudah Glick on the Temple Mount.
Yehuda Glick’s Condition Stabilizing, “He Was Very Lucky” (1:00 PM)
Latest Indepth Stories
Which glass has the poison?

The White House wanted to defame Netanyahu, undermine his reputation, impugn him & his policies

Adolf Hitler and the representative of the Palestinian Arabs, the Mufti of Jerusalem, Amin al-Husseini, December, 1941.

Palestinian anti-Semitism in 2014 is more extreme and mainstream than German A/S in the 1930s.

Sheldon Silver

Woven deeply through it all is the Jewish obligation to fight injustice.

Cravatts-Richard--new

Only in the inverted world of academia would Jewish professors denounce the AMCHA Initiative report.

Many poskim were and are adamant about the responsibility of every individual to vote.

Individuals who may have been abused are the “clients” in need and receiving care and protection.

An accomplished Torah scholar and ardent adherent of Bobov chassidus, he was renowned for his self-effacing dedication and skills as an international lawyer and law professor

The fact that the United States government after World War II sought to take advantage of the expertise of German scientists, even those known to have contributed to the Nazi war effort, is well known and largely accepted as having been necessary for America’s national defense. (Wernher von Braun is perhaps the most famous and […]

The New York State comptroller manages the state’s $180.7 billion pension fund, audits the spending practices of all state agencies and local governments, oversees the New York State and Local Retirement System, reviews the New York State and City budgets, and approves billions in State contracts and spending.

Rabinovich is the author of several popular books on Israel’s wars, including The Battle for Jerusalem, The Yom Kippur War, and The Boats of Cherbourg.

To say he was beloved because of the way he loved his students does not sufficiently capture the reality.

The birth I speak about is to give birth to ourselves, to our full potential.

The extreme hypocrisy, contempt & vulgarity of the attacks indicate more than a policy disagreement

More Articles from Louis Rene Beres
Louis Rene Beres

President Obama’s core argument on a Middle East peace process is still founded on incorrect assumptions.

Louis Rene Beres

Once upon a time in America, every adult could recite at least some Spenglerian theory of decline.

President Obama’s core argument is still founded on incorrect assumptions.

Specific strategic lessons from the Bar Kokhba rebellion.

Still facing an effectively unhindered nuclear threat from Iran, Israel will soon need to choose between two strategic options.

For states, as for individuals, fear and reality go together naturally.

So much of the struggle between Israel and the Arabs continues to concern space.

An undifferentiated or across-the-board commitment to nuclear ambiguity could prove harmful to Israel’s’s overall security.

Printed from: http://www.jewishpress.com/indepth/columns/louis-bene-beres/markets-politics-and-the-true-legacy-of-adam-smith/2012/09/13/

Scan this QR code to visit this page online: