Adam Smith

Annette, I appreciate your opinions and advice on the form and content of the essay, and I will endeavour to answer as briefly as I can the questions that arise from it. I will attempt to rewrite and restructure the sentences making them shorter and eliminating anything that may be superfluous and confusing.

I agree, in the main, with your opinion about the long quotes from Adam Smith, Karl Marx and others. I will relegate them to an appendix at the end of the essay. I will not eliminate them completely because I believe that they are important to the main theme and purpose of the essay. They show how the present situation is not a new unforeseen and temporary development, but is the logical consequence of events that have been determined by the natural laws and mechanism of the system.

These are at the core of capitalist evolution. The present problems cannot be fixed within the system that creates them: they will recur in more complex and aggravated forms. What will be the new solutions that will be adopted to overcome the present recession? We could have a guess by looking at the ones that have been adopted to solve the economic problems in the past. The main were 'hire purchase', ‘high pressure advertising' and 'planned obsolescence' in short – CONSUMERISM.
They all derive from the same natural economic laws. The relief could only be temporary, and they have created bigger problems than those they were meant to overcome.

To be able to understand our present economic and social problems we must understand the capitalist system; to understand the system we must understand its nature, its origin and historical development. We cannot do this without referring to Adam Smith, Malthus, Marx and other economists, philosophers and historians of the past.

Adam Smith analysed the early stage of capitalism; he could not fully assess the future development of the system. The development became evident to Karl Marx during the Industrial Revolution a century later. Marx foresaw, as far as humanly possible, the general development and eventual saturation of the economy.
What became clear to him over one hundred years ago should be quite obvious to us today. It is mainly because of misinformation from the media and from capitalist vested interests that today we are so confused.

Another reason why I quoted Adam Smith so extensively was to rebuff the promoters of monetarism who like to quote him as the origin of their economic philosophy.
I had heard about Adam Smith's "THE WEALTH OF NATIONS" since my school days but I had never read it. My curiosity was aroused recently after watching Milton Friedman on T.V. explaining the merits of monetarism in a series of programs entitled "Free to choose". I decided to read "THE WEALTH OF NATIONS" and I found out how much Adam Smith had been misrepresented by monetarist exponents. I also found the solution to the main riddle of the capitalist organism, so I believe. Therefore, I started writing the essay.

Who was Adam Smith? He was born in Scotland in 1723, the son of a Customs officer. He went to school in Kirkcaldy; he studied at the universities of Glasgow and Oxford. He lectured in Edinburgh as professor of philosophy and history. For two years he was the tutor of the Duke of Buccleuch, he traveled with him to Europe. There he met some of the great French thinkers of the time, including Voltaire. In 1776 he published his most important work: "AN ENQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS". He spent his last years as commissioner of' Customs in Edinburgh.

In my opinion he could best be described as a successful academic with great intellectual capacity and honesty, comparable to the great thinkers of the eighteenth century.
Adam Smith understood the new capitalist economic system, and appreciated the progress and new freedoms that it was bringing. He advocated a system of natural liberty regulated by a completely free market.
He must have been a good natured optimist because he believed that rationality and the interest of society could be preserved indefinitely in a situation of competition between selfish personal interests.

I wonder what Adam Smith would have thought if he could have foreseen the social problems, the extent of ecological disruption and the dangers of nuclear technology in the present age.

Regarding the social classes of his time, Adam Smith had good reasons to appreciate the generosity of the nobility, "the proprietors of land”, but he had very little esteem for their judgment: " ...they are the only one of the three orders whose revenue cost them neither labour nor care... That indolence, which is the natural effect of the ease and security of their situation, render them too often, not only ignorant, but incapable of that application of mind which is necessary in order to foresee and understand the consequences of any publick regulation."

He had an appreciation for the labouring class but he believed that it was utterly incapable of deeper understanding: “...But though the interest of the labourer is strictly connected with that of the society, he is incapable either of comprehending that interest, or of understanding its connection with his own. His condition leaves him no time to receive the necessary information, and his education and habits are commonly such as to render him unfit to judge even though he was fully informed....”

Regarding Adam Smith’s poor esteem and distrust of the early capitalists, the "merchants and master manufacturers", there is no doubt that it was justified. He offers plenty of evidence to support his distrust of the mercantile class right through his enquiry. In the conclusion to chapter XI of “WEALTH OF NATIONS” he states in part: "His employers (the capitalists) constitute the third order, that of those who live by profit whose interest has not the same connection with the general interest of the society.....an order of men whose interest is never exactly the same with that of the publick, who have generally an interest to deceive and even to oppress the publick, and who accordingly have upon many occasions, both deceived and oppressed it.”

There is plenty of evidence that, with few exceptions, the capitalists have not changed since Adam Smith's time. They are still motivated by the same economic laws and blinded by the same human passions. His statement that we should never completely trust them is even more valid today.

Regarding his motivation for writing “THE WEALTH OF NATIONS”, I believe that it was the desire of an enquiring mind to explain the new social and economic forces that were gradually overtaking the old feudal mode of production. During the eighteenth century the western world was in ferment with new philosophical and scientific thoughts, Adam Smith was part, of that process.

Capitalism at the time was a progressive force in many respects, and its beginning cannot be separated from the beginning of modern science and 'western democracy'.

I believe that there should be no doubts about the honesty and objectivity of Adam Smith's motivation. Of course, no human being can be completely free from bias; every person is the product of his times and is affected by its limitations.