Adonis Diaries

Archive for November 11th, 2022

Note: Quartz Weekly Obsession posted a valuable piece on Adam Smith’s invisible hand: A mishandled metaphor. That piece game me the incentive to post my article

Adam Smith (1723-1790) was a leading figure in the Scottish Enlightenment, an 18th century intellectual and cultural movement that marked a shift away from established religious thought and towards humanism and rationalism.

The proposition for a “Free Trade” (Not free market) by Smith was made as an argument against mercantilist protectionism adopted at his time by the colonial powers: low imports, high exports. Actually, high import of natural material and very cheap ingredients for the nation manufacturer: Added values for the products generated

Smith was not the free enterprise fanatic he’s often cracked up to be, nor did he think the market was wholly self-regulating. In fact, he was critical of capital owners, and in favor of public works and financial regulation.

Smith loathed the industrialists, the Capital owners and merchants “those third order in society who live by profit..) (the first and second orders being landlords and workers). No doubts Smith new about the slave workers in his society where entire communities were meant to work for the mine owners, including women and children. And the current “Sweatshop” factories, funded by multinationals overseas.

I can conjecture that Smith works were Karl Marx “bed books”

In 2017, from the documentary American Feud: A History of Conservatives & Liberals, Noam Chomsky, professor of linguistics emeritus asserts that Smith’s “invisible hand” has nothing to do with endorsing the free movement of capital, but is actually cited as assurance that there is natural protection against it.

Apparently, the neo-liberal economics and politicians removed all kinds of natural protection and barriers for the free flow of capital of multinational financial institutions

In 1994 Emma Rothschild argues that all three of Smith’s references to “invisible hand” (written in 3 different contexts Not related to economic) are “ironical” and that its meaning not only contradicts other parts of his work, but would have been an unsavory idea to him.

Actually, the term invisible hand was a common term and religious clerics used it to mean that God invisible hand was running our destiny, the Maktoub.

Although Smith believed in the allocative power of a free market, he was not the free enterprise fanatic he’s often cracked up to be, nor did he think the market was wholly self-regulating. In fact, he was critical of capital owners, and in favor of public works and financial regulation. The following ideas from The Wealth of Nations can be interpreted as contradicting the contemporary, free market usage of “invisible hand.”
 On capital owners. Smith voices his distrust towards merchants and manufacturers, or capital owners, on several occasions. In one chapter, Smith writes about “those who live by profit,” or what he terms the “third order” in society (the first and second orders being landlords and workers). He says the third order’s “interest is never exactly the same with that of the public,” and that it has a tendency to “deceive and even to oppress the public.” He further cautions against adopting “any new law or regulation of commerce which comes from this order” without careful consideration.
 On public institutions. Smith says that the state should provide goods and services, citing roads and education as examples, for the benefit of the public. He asserts that a sovereign has “the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”
On financial regulation. Smith endorses the need for financial regulation, and also expresses his concern towards the monopolistic tendencies of merchants and manufacturers. In a passage endorsing banking regulation, he says “those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments.” He goes on to compare the implementation of a banking regulation to fire codes, or in his words, building walls to prevent “communication of fire.”

The book published by Adam Smith:

 The Theory of Moral Sentiments (1759)
He argues that while humans can be selfish (a belief held by his peers Bernard Mandeville and Thomas Hobbes), they also have the capacity for sympathy (compassion?), or the ability to care about others, a trait he sees as innately human. Smith argues humans can make moral judgements, and develop social unity, because we can sympathize.
 An Inquiry into the Nature and Causes of the Wealth of Nations (1776), often shortened to The Wealth of Nations
A work of political economy considered a cornerstone of classical economics, introducing key concepts such as the division of labor, absolute advantage, and gross domestic product. It is also seen as an extended critique of mercantilism, the dominant economic theory of Smith’s day, which relied on trade protectionism—low imports, high exports—to drive national growth.
In The Wealth of Nations, Smith proposes that seeking personal benefit and serving the public good are not mutually exclusive, and insists that the natural forces of a free market, guided by individuals making self-interested economic decisions, will lead to the greatest enrichment and benefit of society as a whole.

adonis49

adonis49

adonis49

November 2022
M T W T F S S
 123456
78910111213
14151617181920
21222324252627
282930  

Blog Stats

  • 1,516,043 hits

Enter your email address to subscribe to this blog and receive notifications of new posts by email.adonisbouh@gmail.com

Join 822 other subscribers
%d bloggers like this: