Sunday, July 24, 2005

The "God of the Free Market" - Adam Smith

Many modern "conservatives" and economists are prone to tout Adam Smith as the "God of the Free Market" especially when it comes to discussion of American capitalism and globalization. This great letter to the editor (copied below) was recently published in the Times Union and was obviously written by someone who values the REAL and COMPLETE works of Adam Smith. In many instances, Smith's works have been excerpted (or boiled-down) to help rationalize the greed and stupidity that have become almost synonymous with globalization and the unconscious investment that have become so pervasive in our society. The letter is well worth a read.

These "specialists" regularly refer to Smith as a defender of the new breed of laissez-faire capitalism in which they indulge and apparently have little or no idea of what he actually espoused, as this letter clarifies. Their propagandistic and extremely limited view of Smith and his work reminds me of how we, as Americans, often treat the legacy of Martin Luther King. Doctor King understood (and had become quite active against) both poverty and the Vietnam War and all those who profited form both. He understood the connection and in his speech, "Beyond Vietnam", he helped many others to see the structural and class ills that were the primary cause of war and poverty. Then he was murdered. His legacy in the mainstream media (and in many peoples' minds) has become that of the "slain, civil rights leader". We never hear about his very clear and outspoken efforts to alert our populace to the dangers of war and systemic poverty and the interconnections he so clearly saw. I feel that this widespread "dumbing-down" of his message is akin to spitting in his face. To misrepresent his legacy by glossing over those parts that might not be as "marketable or tidy" as they deem the struggle for civil rights to have been is a travesty and those who engage in this "half-celebration" are using Martin's legacy without any real respect for the man or his work.

Many "Smith-appreciators" buy and sell air for a living and exploit third-world and American workers while pretending that they serve some useful function within our society. They think that the vast accumulation and concentration of wealth which their behavior facilitates is somehow in keeping with strengthening the market in keeping with their hero's beliefs and theories. They would do well to study the REAL and COMPLETE works of Adam Smith and maybe they wouldn't be so quick to "fly the Smith flag" as they learn that he was categorically and absolutely against the concentration of wealth. I have included an excerpt from the online encyclopedia, Wikipedia, which, mainstream as it is, seems to encapsulate Smith's convictions in a much more honest manner than most economists and Wall Street types seem to.

Enjoy the letter. Then send to your favorite "faux conservative" or "socially-unconscious" investor who will enjoy it immensely, I'm certain. ;-)


(Letter To The Editor from the Times Union)

In U.S., concentration of wealth is the enemy
First published: Friday, July 22, 2005

The dangerous concentration of wealth, the growing poverty and the erosion of our middle class are disturbing.
Adam Smith's development of the theory of the free market is what is needed. He was born in a time of feudalism when the top 5 percent owned everything. He said:
1. The Free Market requires that money is circulating so all members of society can have the necessities of life.
2. The enemy of the Free Market is the concentration of wealth. If you have the Free Market, you can't have the concentration of wealth, it must be in circulation. They are mutually exclusive.
3. He gave the Deity the name of the Invisible Hand "without which neither morality nor social order is possible."
The Invisible Hand is the moral potential within each person. When that is developed, those planning the economy will not be greedy. "In this way the unsocial actions of acquisitiveness, undertaken solely for private gain, are transmitted into the social act of creating wealth that will benefit all."
You can find this in the book "The Essential Adam Smith" by Robert Heilbroner. We need Adam Smith's Free Market to stop the greed, exploitation and worshipping of wealth running our country.
THE REV. DR. WALTER E. TAYLOR
Saratoga Springs


(excerpted from Wikipedia, the online encyclopedia)

One of the main points of The Wealth of Nations is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called "invisible hand". If a product shortage occurs, for instance, its price rises, creating incentive for its production, and eventually curing the shortage. The increased competition among manufacturers and increased supply would also lower the price of the product to its production cost, the "natural price". Smith believed that while human motives are often selfish and greedy, the competition in the free market would tend to benefit society as a whole anyway. Nevertheless, he was wary of businessmen and argued against the formation of monopolies.

Smith vigourously attacked the antiquated government restrictions which he thought were hindering industrial expansion. In fact, he attacked most forms of government interference in the economic process, including tariffs, arguing that this creates inefficiency and high prices in the long run. This theory, now referred to as "laissez-faire", influenced government legislation in later years, especially during the 19th century. However, Smith criticised a number of practices that later became associated with laissez-faire capitalism, such as the power and influence of Big Business and the emphasis on capital at the expense of labour.

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