The New Yorker's Adam Gopnik is a clever chap. He thinks that people who take offense at El Jefecito's petulant attack on success take the words of Adam Smith as gospel.
He goes and finds something about roads and bridges and how they are paid for in Adam Smith's works, and declares the case closed.
Luckily for us, Adam Smith's works are freely available online. Unluckily for us, most Americans likely lack the reading comprehension and critical skills to understand him.
Personally, I am grateful to Oktar Türel for introducing us to the works of Smith, Ricardo, Marx, Bentham, Mill, Keynes and others in the fall of 1987 during my first year in college. Of course, being the obsessive reader I was, I went and read everything I could find on the half empty shelves of METU.
Adam Smith is important not because everything he said is correct. He is important because he was writing and thinking about markets, specialization, the proper role and scope of unions, and public companies, and private toll roads and education, the role of government before there was a United States of America. Yes, "Wealth of Nations" was published in 1776, but, obviously, he started thinking about these matters long before then.
He famously got the Water-Diamond paradox wrong. But, that does not matter: At a time when mercantilism (the idea that countries must run a trade surplus to benefit from international trade) and loyalty to the king dominated, he displayed great insight into how competitive markets where every person pursued his or her self-interest provided the right incentives to make everyone wealthier.
If you read his works, you may run into passages where, if you contort and squeeze enough, he may sound like he's supporting Marxist ideas: Well, Marx got most of his inspiration from Smith and Ricardo, for before them, not many people knew how to think about a society based on markets. On the other hand, when those classical economists were writing, the marginal revolution had not taken place. The central planners had not yet embarked on and failed at their great central planning exercises, the debates between Hayek's and Europe's salon socialists had not taken place, Mises had not written Human Action, and, Frank Knight had not written Risk, Uncertainty, and Profit in which he explained:
If we substitute for business competition, bad as it is, the game of political demagoguery as conventionally played, with rotation in office and "to the victors belong the spoils" as its main principles, the consequences can only be disastrous.
…
The existing order, with the institutions of the private family and private property (in self as well as goods), inheritance and bequest and parental responsibility, affords one way for securing more or less tolerable results in grappling with this problem. They are not ideal, nor even good; but candid consideration of the difficulties of radical transformation, especially in view of our ignorance and disagreement as to what we want, suggests caution and humility in dealing with reconstruction proposals.
I don't know about you, but I don't think you didn't build that carries the kind of caution and humility
which Knight finds desirable.
In any case, here is another interesting quotation from Adam Smith's Wealth of Nations that you can ponder in your spare time:
Of the Expence of the Institutions for the Education of Youth: Those parts of education, it is to be observed, for the teaching of which there are no public institutions, are generally the best taught. When a young man goes to a fencing or a dancing school, he does not indeed always learn to fence or to dance very well; but he seldom fails of learning to fence or to dance. The good effects of the riding school are not commonly so evident. The expence of a riding school is so great, that in most places it is a public institution. The three most essential parts of literary education, to read, write, and account, it still continues to be more common to acquire in private than in public schools; and it very seldom happens that anybody fails of acquiring them to the degree in which it is necessary to acquire them. (emphasis mine)
A cautionary tale of misinterpretation:
ReplyDeleteMy late father, a Turkish pioneer industrialist in pharmaceuticals, was the biggest promoter of free market capitalism. He trated his several hundred employees very generously, especially if they excelled in their jobs. We never lived like royalty, though we could have. He never drove fancy cars or have a driver. He was modest as can be, and concerned only with excellence of human spirit (my phraseology).
At a time of heavy unionization in Turkey, his employees never considered for a moment joining the unions who were ever present. While his competitors got super wealthy, he became rich enough to be comfortable. At the end, as none of us were particularly interested in the business, he practically gave away the business to a trusted employee at basement bargain prices because he wanted his legacy to be continued by a like minded individual. Today, the company is a billion dollar business.
My father was always labeled by my socialist aunt, a professor of ancient Greek theter, the biggest Communist she knew because "he spread his wealth and treated his employees as partners"
So, I am not surprised that Smith or any other true free market capitalist can be interpreted as being collectivists of some sort. You see, actions of those who truly believe in free market capitalism reflect the theoretical (but not actual) actions of so called collectivist humanitarians.
In the minds of those non critical thinkers - no matter how smart they may otherwise be - distinctions are blurred. Hence the ridiculous comparisons.