The Case of Adam Smith
Economics, G.K. Chesterton — Posted by G.K. Chesterton on October 22, 2010 12:30 AMIt is generally understood that our Constitution (the pride and envy of, etc.) rules modern Englishmen upon a certain principle of balance; a sort of double basis which is still rather a distinction than a mere compromise. Parliamentarians, now suddenly waking up in a fright on discovering the prolonged unpopularity of Parliament, write feverishly to the Liberal papers to say that, under their system, Englishmen enjoy every kind of Liberty. But most well-informed people know, at least, that it is not so simple as that; and that it really rests on a distinction; and especially on a distinction between facts and ideas. The distinction is practical and perfectly well known. If a man states the facts about modern politics, then he goes to jail for criminal libel, or is made a bankrupt by extravagant civil damages. But if he wishes to state his ideas, it is said, there are now practically no ideas that he may not state. But here again, in modern conditions, the case is considerably more complex. This is an age which boasts that all opinions can be expressed. It is also an age in which next to no opinions really are expressed. Certainly they are not clearly and strongly expressed; nor are they clearly and strongly repudiated. The truth is that we suffer from the lack of any tribunal which can test ideas for any purpose; even merely to record them. We need a Recorder, in other than the legal sense, if only to date and describe their appearance—and disappearance. I do not expect such an official organ to be infallible; nor the Recorder to be the Recording Angel. The Spanish Inquisition was not infallible, as many may learn with surprise; but I do sometimes fancy, so far as my own feelings go, that it would be rather a good thing to have the Spanish Inquisition without the tortures. After all the old word Inquisitor is only the very modern word Inquirer. And such old inquirers did inquire concerning the rise and range of new movements, with whatever motives; they took notes and gave us some data to go on. I do not mean to raise the ethical debate about persecution, when I state, as a fact of history, that a movement is often better documented because it is a heresy. It is much harder to trace when it is only a mood or a mode. I do not want such things persecuted; I am not here concerned even with having them denounced; but I am concerned with having them defined. And it is odd that they hardly ever were defined except, when they were denounced. Everyone knows where Calvinism starts from and what it stands for. But anybody can get muddled, in the modern atmosphere, about what Prussianism stands for, and even where it started; for there are some of our innocent pacifists who find it quite incredible that Prussianism could have started in Prussia. Precisely because it has not been a text for anathema, it has become a mere term of abuse. It is used in a vague and verbal way, about anything from torture to tin soldiers. These ideas wander about without being caught and labelled by a definition; or even a denunciation that has the lucidity of a definition.
Now there have passed over modern England especially, in the last hundred years or so, a succession of these formless ideas, which have formed the mind even while remaining formless. They are at once fixed and forgotten; and the vital point is that, in contrast to the case of the heresies, the old idea generally remains at the bottom of the mind, even when quite contrary ideas are piled on top of the mind. But the apparent composure and continuity of English life is very misleading. There has been no purge or clearance; and perhaps that is connected with there having been no riot or faction fight. But because there has been no political revolution, it does not mean that there has been no philosophical revolution. The truth is that the educated Englishman’s head has been going round like a windmill in one continuous revolution. He has lived quite lately in a series of topsy-turvy worlds. Earthquakes of extraordinary theory have been convulsing his mind—at least theoretically. When we think of the middle class of the middle century, complete with muttonchop whiskers and chimneypot hats, we underrate the wild and even wicked philosophies that have passed like a wind through their heads without disturbing their hats.
In giving one or two examples, in this and the next article, I will start with the secular sciences of the early eighteenth century; those before being entangled in the theological struggles. For one case; does anybody realise what a queer and fantastic faith is covered by the very name of Adam Smith? He is considered a dull and stolid person who invented Free Trade; but he invented much more marvellous things. He had a philosophy and even a religion; and a very rum religion it was. Its theological thesis was this: that God had so made the world that He could achieve the good, if men were sufficiently greedy for the goods. If everybody worked meanly and sordidly for money, the result would be a prosperity that would prove the benevolence of Providence. Adam Smith’s idea of justifying the ways of God to men, was to tell the men to do unjustifiable things which God would justify. Adam Smith was a mystic. He was a sort of Quietist, except that he certainly did not tell people to keep quiet. His creed was that if business men would bustle about from purely business motives, the bringing of good out of evil was the business of God. But he believed that God was good; indeed God was apparently the only person required to be good.
Now, of course, most Englishmen do not take a creed in this clear-cut way; and even when they swallowed the Smith philosophy pretty completely for generations, it was mixed up with other things. But when all such allowance is made, what an extraordinary creed it was to swallow! What a weird cosmos it was to inhabit; in which everything was good because everybody was bad. A world in which the financial speculator grew thistles to attract donkeys; and the thistles grew figs to be the food of all the good and wise; in which your neighbour gathered grapes of the thorns you had planted in order to scratch him. The whole thing was much more rationally stated than are most modern expositions; it was also rank raving nonsense, as anyone would have seen in an age of creeds and common sense. Sanity sees at a glance that society finds it hard enough to hang together, with everybody taught to be unselfish; and that it would simply smash if everybody were taught to be selfish. Incidentally, I may add, it has already smashed. We have seen with our own eyes the Wealth of Nations wither into the Poverty of Nations. But there were stranger examples after Adam Smith; and I shall say something of them next week.
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11 Comments
It´s allways nice and fun to read G.K. As i posted in another thread, reading Adam Smith is quite a metaphisical experience. He introduces ideas about good an evil in an economic analysis, something undone after even by his followers, and the idea of personal selfish leading to common wellfare sounds a little bit like a paradox from Chesterton but without fun and common sense. But i think many of the criticism we put on the scottish custom officer is because we think, like Chesterton in his time, that his ideas are the column or the ideology that makes our world so materialistic and unfair. In my opinion we should appreciate that Smith tried a moralistic approach to the economical problems, and were their selfconsidered followers, the neoclassics, and not him the ones that thought about economics only in terms of eficiency and forgot about the ideas of good an evil.
Dear Alfonso,
Certainly Smith was much more moralistic than most of his Enlightenment peers, however I do not think we can ignore his “invisible hand” and how these ideas would manifest themselves within society. Again, I do agree that many of Smith’s succesors have taken that “invisible hand” comment two, three, maybe four steps further than he intended, but his basis in rational self-interest as the pillar which will result in justice – a justice without need of a specific higher framework – I think is part of the problem with our current system.
1) His ideas in The Wealth of Nations need to be read in the light of his earlier The Theory of Moral Sentiments.
2) His ideas about free trade did raise the standard of living of the poor markedly in time (e.g., The Corn Laws).
3) He did not envision the world of huge corporations. His idea on scale were much closer to the scale that Distributists envision than the giant combines that followed. A local businessman following self-interest in his business and the sentiment of compassion and civic pride in his neighborhood is a very different thing from a plutocrat with investments around the globe.
http://www.medaille.com/the%20forgotten%20agrarian.pdf
At this point, our aggrieved capitalist
may complain, “But Smith was talking
about mercantilists; we’ capitalists! We’re
for free enterprise!” However, a glance at
the laws and budgets of the national, state
and local governments reveals a system of
laws and subsidies identical to the one’s
condemned by Smith; the system under
which we live is identical to the
mercantilism of Smith’ day. Indeed, it is an
open question as to whether large-scale
capitalism could ever be anything other than
mercantilism. We cannot say for sure that it
cannot be otherwise, but we can say for sure
that it never has been otherwise. And the
reason for this is fairly easy to locate.
As capitalism concentrates wealth,
so it must always concentrate power, for
money will always purchase power. To
ignore this fact in one’ economic and
political calculations is to betray an
unacceptable naiveté. The price of a
politician, no less then the price of any other
worker, is an investment that must have a
return. The billions spent electing all the
offices, from President and Prime Minister
down to the town councilor, is a cost upon
which the prudent investor demands a profit,
and that profit comes in the form of
favorable laws and subsidies, lax
enforcement, and compliant courts. By and
large, our investors have been repaid, many
times over, and this happens regardless of
which party is in power. And we should
expect nothing less. The pernicious effect of
this economic oligarchy is to offer us a
“democracy” in which the choices on the
ballot are confined to candidates exhibiting
small differences within a mostly common
vocabulary, a vocabulary that has been
previously vetted by the men with the
money.
John Medaille
If we define Smith’s approach as moralistic, then we might as well define any man’s approach to anything as moralistic, in the sense that he claims one thing is better than another. Moralism is no virtue because it is the fundamental basis of human character. All ethical philosophies are moralistic (even Nietzsche’s, in his own confused way). To break out of self-interest, now that is moral progress. And Smith never made the first step.
That is entirely right, Carl.
The problem was a typical in-out issue. As a businessman I have to consider my workforce as a resource, I have to consider my market place as a resource, I have to consider their society, their government and the whole damn lot of it as my interest.
Trying to separate out my business, while being impossible in reality, is a neat way of reinforcing mechanical economic operation instead of divisive and possibly subversive methods which require further consideration.
Basically consideration is an element Smith doesn’t really get.
He seemed to have confused a unit with a system. At least in moral senses. I’m not sure morals do extend beyond a single person, but I’m sure economics do.
I do like the phrase: “The sum is greater than it’s parts”, but wish it had been phrased: “The sum is unrecognisable from it’s parts”
I don´t think morals are something only personal. Of couse everybody can´t agree in everything being “good or bad”, but there´s a “corpus” of morals, call it “natural right” if you want to, that are common for the whole society, even when some elements inside it would never respect any rule.
Economics, as social science, it also has room from a moralistic approach. The first approaches to economics in history were moralistic (the spanish scolastica, arguing about if why a price is fair or if it´s a sin to ask for interest in a loan) and so is Schumacher and that doesn´t make him “less economic” than others.
I think that the approach of Smith is diferent to the modern ones in the sense that his idea of the “invisible hand” and the existence “economic laws” starts and match a conception of world when God exists.
In my opinion he was not saying something as hard as “come on, let´s be bad”. Like Hobbes, he started from the idea that “people are bad are behaving only by their personal convenience” but, unlike Hobbes, that proposed an strong State to rule and put in the good way that world of bad people, what Smith wanted to point is that even being bad people could self-regulate in economic terms better than the state. Because the State, at last, it´s just an small part of the people, so they are for sure having the same vices of the “common people”. Smith was believing in natural laws because he was not believing in people, his system was like an “optimistic result” from a “pesimistic starting”.