web analytics
November 23, 2014 / 1 Kislev, 5775
At a Glance
InDepth
Sponsored Post
IDC Herzliya Campus A Day on Campus

To mark IDC Herzliya’s 20th anniversary, we spent a day following Prof. Uriel Reichman, IDC’s founder and president, and Jonathan Davis, VP for External Relations, around its delightful campus.



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 (Ph.D., Princeton, 1971) is professor of political science and international law at Purdue University and the author of many books and articles dealing with international relations and strategic studies.


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
What, me incite terror? Abba: "The Jews must be barred by any means possible."
Ex-Senior Justice Official Asks Homeland Security to Ban Abbas from US
Latest Indepth Stories
Jo-map

As Arabs murder and maim Jews, Jordan’s leaders bark the blood libel of “Israeli aggression.”

bulb

Perhaps attacking a terrorist’s legacy broadly and publicly would dissuade others from terrorism?

Medics evacuate the dead and injured after attack on Har Nof synagogue Tuesday morning.

R’ Aryeh yelled “Run, I’ll fight!” Using a chair against terrorists to buy time so others could flee

Kfar Kana Riots

Riot started when Muslim students wore the Pal. kaffiyeh and Druze students demanded them removed

The “Media” didn’t want us to know what a kind, giving, loving young woman Dalia was.

A “Palestine” could become another Lebanon, with many different factions battling for control.

Maimonides himself walked and prayed in the permissible areas when he visited Eretz Yisrael in 1165

Having a strong community presence at the polls shows our elected officials we care about the issues

Israel’s Temple Mount policy prefers to blames the Jews-not the attackers-for the crisis.

When Islam conquered the Holy Land, it made its capital in Ramle of all places, not in Jerusalem.

I joined the large crowd but this time it was more personal; my cousin Aryeh was one of the victims.

Terrorists aren’t driven by social, economic, or other grievances, rather by a fanatical worldview.

The phrase that the “Arabs are resorting to violence” is disgraceful and blames the victim.

Tuesday, Yom Shlishi, a doubly good day in the Torah, Esav’s hands tried to silence Yaakov’s voice.

Because of the disparate nature of the perpetrators, who are also relatively young, and given the lack of more traditional targets and the reverence Palestinians have for their homes, one now hears talk of Israel returning to a policy of destroying the houses of terrorists’ families.

More Articles from Louis Rene Beres

A “Palestine” could become another Lebanon, with many different factions battling for control.

Louis Rene Beres

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

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.

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: