14 ms·

Adam Smith did not mean what he is often made to say (1998)

128 points by agomez314 5y ago

mdp2021 5y ago
I must recommend a remarkable primer in Economics in the form of a comic book: Michael Goodwin - Economix (2012) It also proportionately but categorically deals with the matters of the superficial interpretations about Adam Smith. A timeline of the history the book covers, drawn by the book illustrator, Dan E. Burr, is available at: https://economixcomix.com/wp-content/uploads/Econ-Timeline-in-total-revised-small.jpg https://economixcomix.com/wp-content/uploads/Econ-Timeline-i... (as part of the book's website).
api 5y ago
Neither did Keynes. Keynes argued for counter cyclic spending to balance cycles and flexible forms of money. The levels of debt we have would horrify him. There are endlessly many more who are similar. Much of what we think Marx said actually came from Lenin. Ayn Rand was not a conservative. And so on…
- netcan 5y ago
  I'd call nonsense on the Keynes point. Keynes argued for all sorts of things at different points in time. He never observed any sort of Keynesian doctrine or orthodoxy himself. Also, the actual money system was very varied across his career, so prescriptions differ. The current monetary order wasn't something he dealt with at a large scale. In any case, I'm pretty sure Keynes would have called bullshit on the way public debt is quantified or defined today. IE, the sum of money "owed" by Germany or Italy to the ECB would not have worried Keynes... though I think he would have been very interested. Just to be clear, the a priori conservative hypothesis was that 2022 levels of debt are not just morally bad... they're an economic impossibility. Well...
- unfocussed_mike 5y ago
  > Ayn Rand was not a conservative. Which is far less important than the fact that she and Objectivism are not even coherent. Its lack of coherence is what got us to 2016 and beyond on both sides of the pond, and explains the tech industry's obsession with profit-maximising billionaires who are so uncommitted to progress that they are building survival boltholes in New Zealand. She would have been amazed, admiring and horrified all at once; it's the purest moment for her terrible, terrible nonsense, and its consequences play out for everyone to see.
  - missedthecue 5y ago
    There is one billionaire I can think of who is "building a survival bolthole" in NZ, and that's Peter Thiel. Who is eccentric even as far as billionaires go, and who doesn't really have a "survival bolthole" there, just a normal extravagant mansion.
    - ModernMech 5y ago
      > normal extravagant mansion. There's an oxymoron if I've ever heard one.
      - missedthecue 5y ago
        Out of all the mansions, it's not exceptional
    - unfocussed_mike 5y ago
      It was a sardonic point, not a literal point. But it's also a reference to preppers generally among the billionaire classes -- "buying somewhere in New Zealand" is sort of billionaire nudge-wink-speak for a wider trend (according to Reid Hoffman who is quoted below). https://www.newyorker.com/magazine/2017/01/30/doomsday-prep-for-the-super-rich https://www.newyorker.com/magazine/2017/01/30/doomsday-prep-... https://www.theguardian.com/world/2017/feb/17/billionaires-bolthole-new-zealand-preppers-paradise https://www.theguardian.com/world/2017/feb/17/billionaires-b... https://peakoil.com/consumption/tech-billionaires-are-building-boltholes-in-new-zealand-because-they-now-fear-social-collapse-or-nuclear-war https://peakoil.com/consumption/tech-billionaires-are-buildi... Basically, the Randian supermen maximising their happiness are so fully aware of the downside risk of being super-rich that they are now fearfully planning to maximise their happiness somewhere a gang of poor people with guns can be fended off. This is an actual observable trend. It just doesn't always specifically involve New Zealand.
      - deleted 5y ago
        [deleted]
  - 5y ago
- pessimizer 5y ago
  > The levels of debt we have would horrify him. But not specifically government debt, which I can't recall him caring about. The balance of payments, yes. That's what the bancor was for, but it was sabotaged by a high-level US representative that also turned out to be a Soviet informant. https://en.wikipedia.org/wiki/Harry_Dexter_White https://en.wikipedia.org/wiki/Harry_Dexter_White
hprotagonist 5y ago
Reading primary sources is always illuminating. Big Names are often a lot more sophisticated in their thinking than their bullet-point summaries let on.
- asymmetric 5y ago
  Isn’t that by definition?
  - hprotagonist 5y ago
    you'd think!
- alecbz 5y ago
  Yeah, I need to push myself to do this more I think. Relatedly: before I read 1984 I thought I wouldn't get much out of it. I kinda thought "yeah I'm sure this was incredibly eye-opening at the time it was written, but these ideas are pretty mainstream in the cultural zeitgeist now, there's not much that's going to be illuminating in it to me". But I was so wrong; Orwell does a phenomenal job of painting an incredibly vivid and unsettling picture of what that society would look like. The "bullet points" that came from general cultural awareness don't come close to the experience the book conveys. The thing I remember most was how "stuck" everything felt. Like it really sank into you that the 1984 society had reached some tipping point of shutting down conversation that it didn't feel like it was possible to recover. All parts of the system all throughout the stack were keeping everything in check, and you got the sense that it wouldn't be possible for people to break out of it even if a lot of the people in power wanted to. But the main point is that I'm not Orwell, so nothing I write about what I took from the book could substitute for hearing it from Orwell directly.
  - simulate-me 5y ago
    I had the same reaction when I read 1984. I went into it with all these preconceived notions about what the book was about. Of course, those topics and themes were present in the book, but what struck me the most was how beautiful the writing was.
simonh 5y ago
> He raised a point that we might at least consider: is our globalization just a new mercantilism? No, and it’s interesting that the article doesn’t actually say what Mercantilism was, to avoid making it obvious that it isn’t. Actually much of what the article says about Smith is accurate and yes he is often misrepresented in the way they described, but their attempt to paint globalisation as mercantilist is bogus. The primary concern of Mercantilism was to maximise exports and minimise imports, because mercantilists believed that trade was a zero sum game. If one side of a trade is benefiting, the other side must be losing. Interestingly Marx thought in exactly the same way, which is why he came to such ludicrously misconceived conclusions about the nature of value. Globalisation is simply about goods and services being provided by the nations best positioned to provide them. Some countries excel at financial services, others at manufacturing, still others at providing natural resources. Yes of course you can put any layer of economic policy you like on top of that, and many countries go. Some apply mercantilist policies, others are more free market, etc. so Mexico is pretty Mercantilist, but the UK isn’t at all because our main deal is services (with a side order of North Sea Oil). Although there was a Mercantilist streak in the Brexit agenda, we’ll see how that plays out. Trumps trade policy was heavily Mercantilist, and anti globalisation.
- deleted 5y ago
  [deleted]
- b112 5y ago
  People always cite global national trade, but there are even trade barriers, organizations, and economic zones which are provincial/state based, and in some places, even city based! An example in Canada is a province with differing legislation for, say, farmers, which may aid the farmer in some way. Then said product is essentially more competitive, so another province may restrict trade in some way. An alternate, is where it becomes more difficult for a farmer, thus local pricing is higher. Lastly, even minimum wage laws, which are provincially controlled, and access to temporary immigrants, which can be eased, makes a difference on the bottom line. Just look at the cost of living in, say, Utah vs California. May as well be entirely different countries, economically. These are the same issues with international trade, yet all people seem to discuss is just that. International. Globization seems to have been a semi-falied policy due to all its baggage, and maybe some manufacturing will return home, so national trade issues may re-express themselves....
protomyth 5y ago
Or you could read Adam Smith's Wealth of Nations yourself as it is available for free from multiple sources. You should his book The Theory of Moral Sentiments first. It helps with the understanding of the later material.
- MaxGanzII 5y ago
  In what way? The subjects are utterly different. All I can think of is that it introduces you to Smith and his style of writing. To my eye, this is not of any particular value.
  - protomyth 5y ago
    It gives you a primer on his thought process and views which is useful to understand the later work. Understanding an author's beliefs can help interpretation of works.
  - psyc 5y ago
    Not writing style. The way he thinks. "Where he's coming from." Some of what his values and worldview are, etc.
  - bobthechef 5y ago
    From Wikipedia: “ The Theory of Moral Sentiments is a 1759 book by Adam Smith.[1][2][3] It provided the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including The Wealth of Nations (1776), Essays on Philosophical Subjects (1795), and Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896).”
    - MaxGanzII 5y ago
      Wikpedia can write what it likes; to my eye that's empty prose.
      - mdp2021 5y ago
        You are supposed to attempt convincing the reader that "your eye" has public merit, credentials, arguments.
nonrandomstring 5y ago
Obviously a lot is lost in translation from Glaswegian Scottish to English but, yes, he is widely misappropriated by economists and misinterpreted to serve modern conceits that occlude his humanistic and compassionate writing that is on a level with Rousseau or Fromm. Smith had an extraordinarily optimistic view of humans and had a similar idea to Aristotle that while people brood and intellectualise over "sordid and selfish" thoughts, when it comes to action we are instinctively "generous and so noble".
- guerrilla 5y ago
  Worse, I think a lot of people quoting him have never read him and don't realize he would condemn a lot of their ideas.
  - MaxGanzII 5y ago
    I was speaking once to a Dutch acquaintence, who told me that in his economics class at Uni, they were taught Smith was in favour of large State subsidies...!
    - guerrilla 5y ago
      I don't specifically remember that form Wealth of Nations, I know he argued against some cases, but he did argue for all kinds of other intervention for sure. "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue but something more than in that proportion."
      - cherrycherry98 5y ago
        Smith very much supported the existence of the state for several purposes. If I recall correctly they are things pretty non controversial like defense, infrastructure, property rights, regulations that enable markets to operate effectively (providing necessary transparency so that people can make informed choices, protections against monopolies and rent seeking behavior). He correctly identifies that while some regulations are necessary, some will seek to use them to protect their own position, ie regulatory capture. Overall, his message is decidedly pro freedom and against top down economic planning and intervention. People are naturally self interested, and enabling them to voluntarily trade with others as they see fit enhances the life of each partner of the trade. Scale that up and society advances itself with an centralized arbiter to guide it. As for taxes, the reason he felt that the rich should pay more is because they derive the most benefit from the existence of the state.
_thph 5y ago
> He saw the interests of large capitalists as conflicting with those of the public: capitalists seek high profits, which corrupt and impoverish society. This is rubbish. WoN is one of my very favourate books. Smith is absolutely - astoundingly in fact - neutral in his writing. He says what happens, and what happens because of it. To write as quoted here, to put opinions into what Smith writes, is to be doing exactly what the article begins with, which is arguing that Smith did not say what he is often made to say. To my recollection, there is in the entire book exactly one time when Smith offers an opinion; he is discussing bounties paid by the English State on exportation of a particular good, then notes that once a particular level is reached, the bounty ceases and is replaced by a penalty, and he opines that it seams improper to encourage people by the bounty to export and so be encouraged to get to the point where they will then be penalized.
mrjangles 5y ago
Whenever I read something in one of these left-wing cultural publications like the Atlantic it always reads like a 12-year old discovering history for the first time, and then they talk as though the stuff they discovered is some kind of amazing gotcha, but which is actually stuff that literally everyone who occasionally reads right-wing cultural publications has heard a thousand times. And then they, invariably, misinterpret their new found knowledge for whatever political end they desire. Anyway, Adam Smith was from the ruling, landed classes in Britain. He was a natural enemy of the capitalist classes, who were, at the time, fighting to overthrow them and bring classical liberalism and internationalism to the world. It isn't at all surprising that he had bad things to say about capitalists. What is truly interesting about Smith's work is all the good things he had to say about what capitalism was bringing to the world. He was simply describing what he saw at the time, which makes it extremely different to later philosophers who tried to both describe what they saw, and hypothesize some amazing future like seers. As for this guys claim that today's globalization is like the mercantilism of antiquity, it really is just not a good take. They are almost diametrically opposite. The entire point of free markets and free trade is to put a stop to all the corruption that he mentions in this article. yes some still seeps through but it is a million times worse under mercantilism, as he does rightly recount. Just because some bad things still exist under today's free market economy, doesn't mean mercantilism and free markets are the same thing.
- aww_dang 5y ago
  The distinction being that laissez-faire publications are generally flagged and removed here. If we are generally curious about these issues and wish to have a robust discussion, then it would make sense to have both sides. If it is too inflammatory to hear the opposition, then perhaps the premise shouldn't be advanced.
  - pessimizer 5y ago
    Or just read the book and decide for yourself.
netcan 5y ago
Good piece. There are plenty of other good ones. Re: Monopolies & Cartels. People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. "Mercantilism" is often rendered mostly as "preference for export.." left at that. That's one chapter out of many. If you look at some other chapters describing Mercantilism or "the commercial system," they sometimes seem to be describing modern (post 1980s) western conservatives. (1) Mercs obsess about "trade imbalances" (2) Merc obsess about "gold stock" in domestic circulation^ (3) Merc's trade deals fleece their own home countries... there are a surprising similarities between Smith's complaints about the incumbent Mercantilists and modern complaints against post 1980s conservative economics. ^Roughly equivalent to modern conservative obsession with public debt
- mhh__ 5y ago
  https://youtu.be/n_wkO4hk07o https://youtu.be/n_wkO4hk07o Import Bad, Export Good as so eloquently put by Liz Truss.
p0nce 5y ago
Reading Smith has been eye-opening on how much different the moral landscape is nowadays. Making money without working was frought upon in Smith days, even called parasitic by "the inventor of liberalism", while nowadays it's considered good.
- antihero 5y ago
  I wouldn’t say it is necessarily considered good. Someone or something is always working for it.
  - n4r9 5y ago
    If you buy a vacant property and hold onto it until population growth and lack of development brings prices up, who is working?
    - Jensson 5y ago
      New entrants, the people who have to pay a million dollars for a small house has to work for that million.
      - n4r9 5y ago
        I don't think that makes sense. It applies to almost any transaction. Those people will be working and earning regardless, it's just that a higher proportion of their income will be devoted to accommodation.
    - antihero 5y ago
      Whoever buys it or rents it
  - ianai 5y ago
    Every company out there has, wants, or wishes they could transform their goods or services into recurring revenue. The Apple “cloud” pivot contributed heavily to their market cap growth to and above 1T. Literal rent seeking.
jokoon 5y ago
Not to mention how current capitalism encourage competition by all means, while it often leads to less than optimal situations. Cooperation also matters a lot, but it is seen as some form of socialism or communism. There is a dominant view that survival of the fittest should prevail in economics, but there is no good philosophical reason for it. That's where politicians leave their power to capitalists and marketers. Even Roosevelt talked about competitive versus cooperation. Both are needed.
- aeternum 5y ago
  Does current capitalism really encourage competition by all means? One if the most common criticisms of capitalism is that large companies acquire others or merge and corner markets / create monopolies. This seems like too much cooperation rather than too much competition.
m4nu3l 5y ago
As a neo-classical liberal I must admit I still have to read the WoN. However, I have done a quite a lot of research to form my view of economics, which include summaries of the work of Adam Smith. I know already he was wrong about some of the things he believed in (Labor Theory Of Value) - hence the "neo". While I don't know if he actually criticized Capitalism, I find it quite irrelevant for two reasons. - For a critique to be of any use you must propose a valid, better alternative. I have never heard of Adam Smith proposing any of that (but I might just be unaware of it). - Even if he actually criticized Capitalism, concluding "hence Capitalism is bad" is the textbook form of the Appeal to Authority fallacy, unless you discuss his critique in a logical argument. The only fair point of the article, in case that's true, would be that we shouldn't misrepresent his views.
- wwweston 5y ago
  > For a critique to be of any use you must propose a valid, better alternative It's always nicer when critiques come with solutions, but a critique is valid if all it does is correctly point out an undesirable state of affairs, because recognizing and articulating problems clearly is an important initial step in ameliorating them, including actually coming up with any of those alternatives. > Even if he actually criticized Capitalism, concluding "hence Capitalism is bad" The article doesn't seem to argue either "Capitalism is bad" or "Adam Smith thought Capitalism was bad." It does seem to argue "Adam Smith thought Mercantalism was bad" and "Adam Smith's ideas seem to be poorly represented in popular thought, and some of his actual ideas may be only situationally applicable." [Clippy: You seem to be mounting an ideological defense of whatever you believe Capitalism to be, would you like help with that?]
alfiedotwtf 5y ago
I found that article weird. > The invisible hand promotes the good of society by leading entrepreneurs to invest at home rather than abroad. IIRC "the invisible hand" was only mentioned once through out the whole Wealth of Nations, and I found it was a passing remark. I'm not sure why everyone focuses on that one sentence like it was a literature device. And about "investing at home rather than abroad", "protectionism is appropriate", and "Smith was concerned with a third category: mercantilism" from the article, I would say that mercantilism was less of an issue in Wealth of Nations compared to protectionism. In fact, I think Adam Smith was hinting that at the macro scale, protectionism is the opposite of the most important idea of the whole book - the Division of Labor! The best example he made to show how absurd protectionism was (i.e the Division of Labor at the macro scale): > The natural advantages which one country has over another, in producing particular commodities, are sometimes so great, that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, hot-beds, and hot-walls, very good grapes can be raised in Scotland, and very good wine, too, can be made of them, at about thirty times the expense for which at least equally good can be brought from foreign countries. ... As long as the one country has those advantages, and the other wants them, it will always be more advantageous for the latter rather to buy of the former than to make. It is an acquired advantage only, which one artificer has over his neighbour, who exercises another trade; and yet they both find it more advantageous to buy of one another, than to make what does not belong to their particular trades.

128 points by agomez314 5y ago

mdp2021 5y ago

I must recommend a remarkable primer in Economics in the form of a comic book: Michael Goodwin - Economix (2012) It also proportionately but categorically deals with the matters of the superficial interpretations about Adam Smith. A timeline of the history the book covers, drawn by the book illustrator, Dan E. Burr, is available at: https://economixcomix.com/wp-content/uploads/Econ-Timeline-in-total-revised-small.jpg https://economixcomix.com/wp-content/uploads/Econ-Timeline-i... (as part of the book's website).

api 5y ago

Neither did Keynes. Keynes argued for counter cyclic spending to balance cycles and flexible forms of money. The levels of debt we have would horrify him. There are endlessly many more who are similar. Much of what we think Marx said actually came from Lenin. Ayn Rand was not a conservative. And so on…

netcan 5y ago
I'd call nonsense on the Keynes point. Keynes argued for all sorts of things at different points in time. He never observed any sort of Keynesian doctrine or orthodoxy himself. Also, the actual money system was very varied across his career, so prescriptions differ. The current monetary order wasn't something he dealt with at a large scale. In any case, I'm pretty sure Keynes would have called bullshit on the way public debt is quantified or defined today. IE, the sum of money "owed" by Germany or Italy to the ECB would not have worried Keynes... though I think he would have been very interested. Just to be clear, the a priori conservative hypothesis was that 2022 levels of debt are not just morally bad... they're an economic impossibility. Well...
unfocussed_mike 5y ago
> Ayn Rand was not a conservative. Which is far less important than the fact that she and Objectivism are not even coherent. Its lack of coherence is what got us to 2016 and beyond on both sides of the pond, and explains the tech industry's obsession with profit-maximising billionaires who are so uncommitted to progress that they are building survival boltholes in New Zealand. She would have been amazed, admiring and horrified all at once; it's the purest moment for her terrible, terrible nonsense, and its consequences play out for everyone to see.
- missedthecue 5y ago
  There is one billionaire I can think of who is "building a survival bolthole" in NZ, and that's Peter Thiel. Who is eccentric even as far as billionaires go, and who doesn't really have a "survival bolthole" there, just a normal extravagant mansion.
  - ModernMech 5y ago
    > normal extravagant mansion. There's an oxymoron if I've ever heard one.
    - missedthecue 5y ago
      Out of all the mansions, it's not exceptional
  - unfocussed_mike 5y ago
    It was a sardonic point, not a literal point. But it's also a reference to preppers generally among the billionaire classes -- "buying somewhere in New Zealand" is sort of billionaire nudge-wink-speak for a wider trend (according to Reid Hoffman who is quoted below). https://www.newyorker.com/magazine/2017/01/30/doomsday-prep-for-the-super-rich https://www.newyorker.com/magazine/2017/01/30/doomsday-prep-... https://www.theguardian.com/world/2017/feb/17/billionaires-bolthole-new-zealand-preppers-paradise https://www.theguardian.com/world/2017/feb/17/billionaires-b... https://peakoil.com/consumption/tech-billionaires-are-building-boltholes-in-new-zealand-because-they-now-fear-social-collapse-or-nuclear-war https://peakoil.com/consumption/tech-billionaires-are-buildi... Basically, the Randian supermen maximising their happiness are so fully aware of the downside risk of being super-rich that they are now fearfully planning to maximise their happiness somewhere a gang of poor people with guns can be fended off. This is an actual observable trend. It just doesn't always specifically involve New Zealand.
    - deleted 5y ago
      [deleted]
- 5y ago
pessimizer 5y ago
> The levels of debt we have would horrify him. But not specifically government debt, which I can't recall him caring about. The balance of payments, yes. That's what the bancor was for, but it was sabotaged by a high-level US representative that also turned out to be a Soviet informant. https://en.wikipedia.org/wiki/Harry_Dexter_White https://en.wikipedia.org/wiki/Harry_Dexter_White

hprotagonist 5y ago

Reading primary sources is always illuminating. Big Names are often a lot more sophisticated in their thinking than their bullet-point summaries let on.

asymmetric 5y ago
Isn’t that by definition?
- hprotagonist 5y ago
  you'd think!
alecbz 5y ago
Yeah, I need to push myself to do this more I think. Relatedly: before I read 1984 I thought I wouldn't get much out of it. I kinda thought "yeah I'm sure this was incredibly eye-opening at the time it was written, but these ideas are pretty mainstream in the cultural zeitgeist now, there's not much that's going to be illuminating in it to me". But I was so wrong; Orwell does a phenomenal job of painting an incredibly vivid and unsettling picture of what that society would look like. The "bullet points" that came from general cultural awareness don't come close to the experience the book conveys. The thing I remember most was how "stuck" everything felt. Like it really sank into you that the 1984 society had reached some tipping point of shutting down conversation that it didn't feel like it was possible to recover. All parts of the system all throughout the stack were keeping everything in check, and you got the sense that it wouldn't be possible for people to break out of it even if a lot of the people in power wanted to. But the main point is that I'm not Orwell, so nothing I write about what I took from the book could substitute for hearing it from Orwell directly.
- simulate-me 5y ago
  I had the same reaction when I read 1984. I went into it with all these preconceived notions about what the book was about. Of course, those topics and themes were present in the book, but what struck me the most was how beautiful the writing was.

simonh 5y ago

> He raised a point that we might at least consider: is our globalization just a new mercantilism? No, and it’s interesting that the article doesn’t actually say what Mercantilism was, to avoid making it obvious that it isn’t. Actually much of what the article says about Smith is accurate and yes he is often misrepresented in the way they described, but their attempt to paint globalisation as mercantilist is bogus. The primary concern of Mercantilism was to maximise exports and minimise imports, because mercantilists believed that trade was a zero sum game. If one side of a trade is benefiting, the other side must be losing. Interestingly Marx thought in exactly the same way, which is why he came to such ludicrously misconceived conclusions about the nature of value. Globalisation is simply about goods and services being provided by the nations best positioned to provide them. Some countries excel at financial services, others at manufacturing, still others at providing natural resources. Yes of course you can put any layer of economic policy you like on top of that, and many countries go. Some apply mercantilist policies, others are more free market, etc. so Mexico is pretty Mercantilist, but the UK isn’t at all because our main deal is services (with a side order of North Sea Oil). Although there was a Mercantilist streak in the Brexit agenda, we’ll see how that plays out. Trumps trade policy was heavily Mercantilist, and anti globalisation.

deleted 5y ago
[deleted]
b112 5y ago
People always cite global national trade, but there are even trade barriers, organizations, and economic zones which are provincial/state based, and in some places, even city based! An example in Canada is a province with differing legislation for, say, farmers, which may aid the farmer in some way. Then said product is essentially more competitive, so another province may restrict trade in some way. An alternate, is where it becomes more difficult for a farmer, thus local pricing is higher. Lastly, even minimum wage laws, which are provincially controlled, and access to temporary immigrants, which can be eased, makes a difference on the bottom line. Just look at the cost of living in, say, Utah vs California. May as well be entirely different countries, economically. These are the same issues with international trade, yet all people seem to discuss is just that. International. Globization seems to have been a semi-falied policy due to all its baggage, and maybe some manufacturing will return home, so national trade issues may re-express themselves....

protomyth 5y ago

Or you could read Adam Smith's Wealth of Nations yourself as it is available for free from multiple sources. You should his book The Theory of Moral Sentiments first. It helps with the understanding of the later material.

MaxGanzII 5y ago
In what way? The subjects are utterly different. All I can think of is that it introduces you to Smith and his style of writing. To my eye, this is not of any particular value.
- protomyth 5y ago
  It gives you a primer on his thought process and views which is useful to understand the later work. Understanding an author's beliefs can help interpretation of works.
- psyc 5y ago
  Not writing style. The way he thinks. "Where he's coming from." Some of what his values and worldview are, etc.
- bobthechef 5y ago
  From Wikipedia: “ The Theory of Moral Sentiments is a 1759 book by Adam Smith.[1][2][3] It provided the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including The Wealth of Nations (1776), Essays on Philosophical Subjects (1795), and Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896).”
  - MaxGanzII 5y ago
    Wikpedia can write what it likes; to my eye that's empty prose.
    - mdp2021 5y ago
      You are supposed to attempt convincing the reader that "your eye" has public merit, credentials, arguments.

nonrandomstring 5y ago

Obviously a lot is lost in translation from Glaswegian Scottish to English but, yes, he is widely misappropriated by economists and misinterpreted to serve modern conceits that occlude his humanistic and compassionate writing that is on a level with Rousseau or Fromm. Smith had an extraordinarily optimistic view of humans and had a similar idea to Aristotle that while people brood and intellectualise over "sordid and selfish" thoughts, when it comes to action we are instinctively "generous and so noble".

guerrilla 5y ago
Worse, I think a lot of people quoting him have never read him and don't realize he would condemn a lot of their ideas.
- MaxGanzII 5y ago
  I was speaking once to a Dutch acquaintence, who told me that in his economics class at Uni, they were taught Smith was in favour of large State subsidies...!
  - guerrilla 5y ago
    I don't specifically remember that form Wealth of Nations, I know he argued against some cases, but he did argue for all kinds of other intervention for sure. "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue but something more than in that proportion."
    - cherrycherry98 5y ago
      Smith very much supported the existence of the state for several purposes. If I recall correctly they are things pretty non controversial like defense, infrastructure, property rights, regulations that enable markets to operate effectively (providing necessary transparency so that people can make informed choices, protections against monopolies and rent seeking behavior). He correctly identifies that while some regulations are necessary, some will seek to use them to protect their own position, ie regulatory capture. Overall, his message is decidedly pro freedom and against top down economic planning and intervention. People are naturally self interested, and enabling them to voluntarily trade with others as they see fit enhances the life of each partner of the trade. Scale that up and society advances itself with an centralized arbiter to guide it. As for taxes, the reason he felt that the rich should pay more is because they derive the most benefit from the existence of the state.

_thph 5y ago

> He saw the interests of large capitalists as conflicting with those of the public: capitalists seek high profits, which corrupt and impoverish society. This is rubbish. WoN is one of my very favourate books. Smith is absolutely - astoundingly in fact - neutral in his writing. He says what happens, and what happens because of it. To write as quoted here, to put opinions into what Smith writes, is to be doing exactly what the article begins with, which is arguing that Smith did not say what he is often made to say. To my recollection, there is in the entire book exactly one time when Smith offers an opinion; he is discussing bounties paid by the English State on exportation of a particular good, then notes that once a particular level is reached, the bounty ceases and is replaced by a penalty, and he opines that it seams improper to encourage people by the bounty to export and so be encouraged to get to the point where they will then be penalized.

mrjangles 5y ago

Whenever I read something in one of these left-wing cultural publications like the Atlantic it always reads like a 12-year old discovering history for the first time, and then they talk as though the stuff they discovered is some kind of amazing gotcha, but which is actually stuff that literally everyone who occasionally reads right-wing cultural publications has heard a thousand times. And then they, invariably, misinterpret their new found knowledge for whatever political end they desire. Anyway, Adam Smith was from the ruling, landed classes in Britain. He was a natural enemy of the capitalist classes, who were, at the time, fighting to overthrow them and bring classical liberalism and internationalism to the world. It isn't at all surprising that he had bad things to say about capitalists. What is truly interesting about Smith's work is all the good things he had to say about what capitalism was bringing to the world. He was simply describing what he saw at the time, which makes it extremely different to later philosophers who tried to both describe what they saw, and hypothesize some amazing future like seers. As for this guys claim that today's globalization is like the mercantilism of antiquity, it really is just not a good take. They are almost diametrically opposite. The entire point of free markets and free trade is to put a stop to all the corruption that he mentions in this article. yes some still seeps through but it is a million times worse under mercantilism, as he does rightly recount. Just because some bad things still exist under today's free market economy, doesn't mean mercantilism and free markets are the same thing.

aww_dang 5y ago
The distinction being that laissez-faire publications are generally flagged and removed here. If we are generally curious about these issues and wish to have a robust discussion, then it would make sense to have both sides. If it is too inflammatory to hear the opposition, then perhaps the premise shouldn't be advanced.
- pessimizer 5y ago
  Or just read the book and decide for yourself.

netcan 5y ago

Good piece. There are plenty of other good ones. Re: Monopolies & Cartels. People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. "Mercantilism" is often rendered mostly as "preference for export.." left at that. That's one chapter out of many. If you look at some other chapters describing Mercantilism or "the commercial system," they sometimes seem to be describing modern (post 1980s) western conservatives. (1) Mercs obsess about "trade imbalances" (2) Merc obsess about "gold stock" in domestic circulation^ (3) Merc's trade deals fleece their own home countries... there are a surprising similarities between Smith's complaints about the incumbent Mercantilists and modern complaints against post 1980s conservative economics. ^Roughly equivalent to modern conservative obsession with public debt

mhh__ 5y ago
https://youtu.be/n_wkO4hk07o https://youtu.be/n_wkO4hk07o Import Bad, Export Good as so eloquently put by Liz Truss.

p0nce 5y ago

Reading Smith has been eye-opening on how much different the moral landscape is nowadays. Making money without working was frought upon in Smith days, even called parasitic by "the inventor of liberalism", while nowadays it's considered good.

antihero 5y ago
I wouldn’t say it is necessarily considered good. Someone or something is always working for it.
- n4r9 5y ago
  If you buy a vacant property and hold onto it until population growth and lack of development brings prices up, who is working?
  - Jensson 5y ago
    New entrants, the people who have to pay a million dollars for a small house has to work for that million.
    - n4r9 5y ago
      I don't think that makes sense. It applies to almost any transaction. Those people will be working and earning regardless, it's just that a higher proportion of their income will be devoted to accommodation.
  - antihero 5y ago
    Whoever buys it or rents it
- ianai 5y ago
  Every company out there has, wants, or wishes they could transform their goods or services into recurring revenue. The Apple “cloud” pivot contributed heavily to their market cap growth to and above 1T. Literal rent seeking.

jokoon 5y ago

Not to mention how current capitalism encourage competition by all means, while it often leads to less than optimal situations. Cooperation also matters a lot, but it is seen as some form of socialism or communism. There is a dominant view that survival of the fittest should prevail in economics, but there is no good philosophical reason for it. That's where politicians leave their power to capitalists and marketers. Even Roosevelt talked about competitive versus cooperation. Both are needed.

aeternum 5y ago
Does current capitalism really encourage competition by all means? One if the most common criticisms of capitalism is that large companies acquire others or merge and corner markets / create monopolies. This seems like too much cooperation rather than too much competition.

m4nu3l 5y ago

As a neo-classical liberal I must admit I still have to read the WoN. However, I have done a quite a lot of research to form my view of economics, which include summaries of the work of Adam Smith. I know already he was wrong about some of the things he believed in (Labor Theory Of Value) - hence the "neo". While I don't know if he actually criticized Capitalism, I find it quite irrelevant for two reasons. - For a critique to be of any use you must propose a valid, better alternative. I have never heard of Adam Smith proposing any of that (but I might just be unaware of it). - Even if he actually criticized Capitalism, concluding "hence Capitalism is bad" is the textbook form of the Appeal to Authority fallacy, unless you discuss his critique in a logical argument. The only fair point of the article, in case that's true, would be that we shouldn't misrepresent his views.

wwweston 5y ago
> For a critique to be of any use you must propose a valid, better alternative It's always nicer when critiques come with solutions, but a critique is valid if all it does is correctly point out an undesirable state of affairs, because recognizing and articulating problems clearly is an important initial step in ameliorating them, including actually coming up with any of those alternatives. > Even if he actually criticized Capitalism, concluding "hence Capitalism is bad" The article doesn't seem to argue either "Capitalism is bad" or "Adam Smith thought Capitalism was bad." It does seem to argue "Adam Smith thought Mercantalism was bad" and "Adam Smith's ideas seem to be poorly represented in popular thought, and some of his actual ideas may be only situationally applicable." [Clippy: You seem to be mounting an ideological defense of whatever you believe Capitalism to be, would you like help with that?]

alfiedotwtf 5y ago

I found that article weird. > The invisible hand promotes the good of society by leading entrepreneurs to invest at home rather than abroad. IIRC "the invisible hand" was only mentioned once through out the whole Wealth of Nations, and I found it was a passing remark. I'm not sure why everyone focuses on that one sentence like it was a literature device. And about "investing at home rather than abroad", "protectionism is appropriate", and "Smith was concerned with a third category: mercantilism" from the article, I would say that mercantilism was less of an issue in Wealth of Nations compared to protectionism. In fact, I think Adam Smith was hinting that at the macro scale, protectionism is the opposite of the most important idea of the whole book - the Division of Labor! The best example he made to show how absurd protectionism was (i.e the Division of Labor at the macro scale): > The natural advantages which one country has over another, in producing particular commodities, are sometimes so great, that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, hot-beds, and hot-walls, very good grapes can be raised in Scotland, and very good wine, too, can be made of them, at about thirty times the expense for which at least equally good can be brought from foreign countries. ... As long as the one country has those advantages, and the other wants them, it will always be more advantageous for the latter rather to buy of the former than to make. It is an acquired advantage only, which one artificer has over his neighbour, who exercises another trade; and yet they both find it more advantageous to buy of one another, than to make what does not belong to their particular trades.