web analytics
April 23, 2014 / 23 Nisan, 5774
At a Glance
InDepth
Sponsored Post
Spa 1.2 Combining Modern Living in Traditional Jerusalem

A unique and prestigious residential project in now being built in Mekor Haim Street in Jerusalem.



Markets, Politics, And The True Legacy Of Adam Smith


Beres-Louis-Rene

Share Button

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.

Share Button

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.

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

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
Palestinian Authority Chairman Mahmoud Abbas. Who will he take to the dance?
It’s Prom Time, and Abbas Must Choose a Dance Partner – Israel or Hamas
Latest Indepth Stories
Al-Aksa Mosque was claimed to be the site from which Mohammed ascended to Heaven, but it was built nearly 50 years after Mohammed died.

Jerusalem only seems important in the Islamic world when non-Muslims control or capture the city.

Israeli police enter the Al-Aqsa mosque compound in Jerusalem's Old City to disperse stone-throwing Palestinian protesters.

Jordan’s king is adding fuel to the fire on the Temple Mount, blaming Israel for violence by Muslim Arab rioters.

Imam Suhail Webb who boasted his Muslim community persuaded Brandeis President Fred Lawrence to withdraw an invitation to Ayaan Hirsi Ali.

At Brandeis, much of what counts as Western civilization got cold feet and won’t stand with Hirsi Ali.

Text of anti-Semitic flyer distributed to Jews in Donetsk, Ukraine on Passover 2014.

But the lesson from this meditation is that hidden behind the anti-semitic act is the greatest light.

As support of their messianic dream, Halevi and Antepli approve dishonoring Hirsi Ali as a ‘renegade.’

If itis a mitzva to eat matza all Pesach, then why is there no berakha attached to it?

When we are united with unconditional love, no stone will be raised against us by our enemies.

The reporter simply reports the news, but it is greater to be inspired to better the situation.

The Big Bang theory marked the scientific community’s first sense of the universe having a beginning.

Freeing convicted murderers returns the status of Jewish existence to something less than sanctified.

“The bigger they are the harder they fall” describes what God had in mind for Olmert.

We, soldiers of the IDF, who stand guard over the people and the land, fulfill the hopes of the millions of Jewish people across the generations who sought freedom.

How much is the human mind able to grasp of the Divine?

Jews have brought the baggage of the galut (exile) mentality to the modern state of Israel.

The Haggadah is an instruction manual on how to survive as strangers in strange lands.

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.

    Latest Poll

    Now that Kerry's "Peace Talks" are apparently over, are you...?







    View Results

    Loading ... Loading ...

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: