Liberals, you must reclaim Adam Smith!

the-theory-of-moral-sentimentsI’ve said it before and must (alas) repeat it ad nauseam. Many of our modern struggles — in the U.S. and across advanced societies — could be altered if both sides actually (for the first time) read Adam Smith.  The left would learn that he  was not the  viciously cruel exploiter of the masses that dopey campus ranters portray him, but rather, the first modern thinker to propose a generally flat and fair (if highly competitive) society, one moderated with many kindnesses that he defended in The Theory of Moral Sentiments. Though yes, he maintained that society could better afford kindness if it maintained a vibrantly creative -competitive marketplace for great new products and services. A forecast of stunning accuracy.

Conservatives would realize that Smith praised competition as the greatest creative force… but that competition’s top enemy is not always a government civil servant!  There is another, older enemy of enterprise and freedom, that crushed opportunity and competition in 99% of societies across 6000 years. The principal enemy of freedom and markets denounced by Smith was monopolistic or conspiratorial oligarchy, of exactly the kind tat the American Founders rebelled-against.

WealthNationsHere’s a summary I found recently:  “Ironically, Smith’s epic work The Wealth of Nations, which was first published in 1776, presents a radical condemnation of business monopolies sustained and protected by the state, in service of a lordly owner-caste. Adam Smith’s ideal was a market comprised of small buyers and sellers. He showed how the workings of such a market would tend toward a price that provides a fair return to land, labor, and capital, produce a satisfactory outcome for both buyers and sellers, and result in an optimal outcome for society in terms of the allocation of its resources.

“He made clear, however, that this outcome can result only when no buyer or seller is sufficiently large to influence the market price—a point many who invoke his name prefer not to mention. Such a market implicitly assumes a significant degree of equality in the distribution of economic power—another widely neglected point.” (excerpted from David C. Korten’s book, When Corporations Rule the World.)

WhenCorporationsRuleIt is an argument made forcefully later by Friedrich Hayek, another genius whom the right idolizes in abstract, while betraying almost everything that Hayek stood for, such as maximizing the number of skilled, empowered and knowledgable competitors and thwarting conspiracies among monopolists and oligarchs, whether those were rooted in government bureaucracy or in narrow owner elites.

This was the point of the Progressive Movement 100 years ago, creating anti-trust laws that shattered the then-looming Gilded Age oligarchy and restored competition to American markets.  It had to be done again in the 1930s and 1940s, resulting in the flattest and most vibrantly entrepreneurial society and fastest-rising middle class the world had ever seen (and shocking the hell out of Marxists, who thought their teleological forecasts could never be reformed away.)

That flattish society (I call it “diamond-shaped) was the product of reforms instituted by the “Greatest Generation” that is much admired on the American Right, for overcoming a depression and Hitler and containing communism.  Alas, for their narrative, the Greatest Generation also adored Franklin… Delano… Roosevelt. Their innovations so reduced class disparities and class friction in America that the Boomer generation grew up assuming that such things were behind us forever.

== But human nature had not been abolished.  ==

ClassWarLessonsHistoryAlas, “class struggle” is a sure theme of our present times. As Smith would tell you, cheaters always find a way to come back, as the flat social order is once again being crushed by skyrocketing (French Revolution-level)  wealth disparities, monopoly and oligarchy.  Raising the question… can Americans do it again?  React not with radicalism or excesses like socialism, but with steel-eyed moderate reforms that restore flat and open competition for another generation? History shows far more instances of the former, than the latter.

“In the real world of unregulated markets, successful players get larger and in many instances use the resulting economic power to drive or buy out weaker players to gain control of ever larger shares of the market. In other instances “competitors” collude through cartels or strategic alliances to increase profits by setting market prices above the level of optimal efficiency. The larger individual and more collusive market players become, the more difficult it is for newcomers and small independent firms to survive, the more monopolistic and less competitive the market becomes, and the more political power the biggest firms wield behind demands for concessions from governments that allow them to externalize ever more of their costs to the community,” writes David C. Korten.

AdamSmithREgulationAdam Smith again said it best, defying the stereotypes and cliched images of him.

“When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

He saw a tacit conspiracy on the part of employers “always and everywhere” to keep wages as low as possible.

Does that sound like the guy who you were taught believed only in dog-eat-dog?  Or that only billionaires are “job-creators”?

No wonder today’s “libertarians” — all-too caught up in the hallucinatory web spun by Rand and Rothbard and by Koch-financed “think tanks” like Heritage and Cato — never refer anymore to the “Fist Liberal” and the founder of true libertarianism.  Because Adam Smith would remind them that the real foe of enterprise has — for 6000 years — been owner-oligarchy and monopoly.  The very forces that are rigging our elections and subsidizing propaganda that has driven a third of our neighbors crazy, re-igniting the American Civil War.  So crazy, they proclaim that only government bureaucrats can harm capitalism, enterprise or freedom.

Competition(A side note: I dare anyone to attribute my assertions here to a scintilla of leftism! Competition is the great, creative driver of our positive sum markets, science, democracy… It is in defense of those creatively competitive arenas that we must, today, face down a bizarre madness that has taken over the American Right.)

(But hang on till the end of this posting, to when I cite a very high authority on this!)

== Smith… the judo master ==

The crux is this. If liberals (and not their crazy leftist allies) really want to do a real jiu jitsu move on the mad right, instead of engaging in futile sumo… then liberals should with agility reclaim the “First Liberal” — Adam Smith — and hammer their opponents with him! It is the one move that would take them utterly by surprise, winning over millions of moderates and small businessmen.

“We like competition and open-flat and fair markets!  They are the wealth generators that then enabled us to take on great projects like education and helping the poor. The real destroyers of that healthy version of capitalism were denounced by Smith, and by the American founders. So stop listening to paid shills pushing a return to feudalism! Come negotiate with us over how to keep it all open and healthy and so productive that we can take on the countless challenges ahead.”

== The Cult of the Anti-Smiths ==

Want to see how blatant and hateful the apologists for oligarchy have become?  The latest monstrous rationalization (from Forbes): “Give Back? Yes, It’s Time For The 99% To Give Back To The 1%.”

GivingPledgeYes, it is randianism/murdochianism in full, shameless fury.  Please… please go read the rant, then come back here.  I’ll wait.

Alas, as usual, this screed makes no distinction between the wealthy who actually built companies that coalesced the efforts of thousands of skilled engineers to deliver win-win goods and services — e.g. Jeff Bezos, Larry Page, Steve Jobs —  versus the other clade that became billionaires either via state-subsidized resource extraction or financial connivance among a cheater-cartel of 5000 CEO-caste golf-buddies.

The former group certainly deserve to be rich!  Though note, that most of the creative-goods-and-services billionaires are also … democrats! Who have signed the Buffett Giving Pledge and who express loyalty to the Smithian mixed society.  So much so that they support higher taxes on the rich! (See Larry Page’s most recent effort to use his wealth to help us all in a win-win fight to halt aging.)

Alas, the wealthy lords whom Randians admire most as “job creators” do nothing of the kind. They are those whom Rand herself called “looters” while the tech moguls who are most like Ayn’s beloved characters — creatively brilliant and great managers of other peoples’ brilliance — are the very ones who hold no truck at all with randianism!  Huh.

WealthDisparitiesAbove all, it is in their betrayal of the true libertarian forefather (and also called the “first liberal”) — Adam Smith — that today’s ‘libertarians’ demonstrate the ultimate hypocrisy.  Which matters not a whit to those whose incantations march them (shouting hosannahs) back into chains of feudalism.

 == They hate what works ==

Getting closer to the news…. Hey. If it is so awful, why not let Obamacare run its course?

Economist Paul Krugman at his most cogent: “In a way, you can see why the food stamp program — or, to use its proper name, the Supplemental Nutritional Assistance Program (SNAP) — has become a target.  Conservatives are deeply committed to the view that the size of government has exploded under President Obama but face the awkward fact that public employment is down sharply, while overall spending has been falling fast as a share of G.D.P. 

(News flash, the latest figures show that the US federal deficit has plunged below 680 billion or 4.2% of GDP, well below the 5% threshold that most economists call “safe.”  Look at the Second Derivative of deficits. The second derivative is ALWAYS positive during Republican administrations and almost always negative in democratic ones.  That single fact should make any deficit hawk or person obsessed with fiscal responsibility a democrat. Period.  Flat and absolute.  But let’s get back to Krugman.)

“SNAP, however, really has grown a lot, with enrollment rising from 26 million Americans in 2007 to almost 48 million now.  Conservatives look at this and see what, to their great disappointment, they can’t find elsewhere in the data: runaway, explosive growth in a government program. The rest of us, however, see a safety-net program doing exactly what it’s supposed to do: help more people in a time of widespread economic distress.

“The recent growth of SNAP has indeed been unusual, but then so have the times, in the worst possible way. The Great Recession of 2007-9 was the worst slump since the Great Depression, and the recovery that followed has been very weak….”

Read the rest. But above all recall that the core GOP narrative — that there has been expanding overall federal government under Obama — is a lie that is diametrically opposite to true, as the cutting of food assistance is diametrically opposite to moral.

That whirring sound?  Barry Goldwater wailing and spinning over what has happened to conservatism.

==  Political Ammo! ==

Okay, my periodic political rant is nearly over.  But let’s begin our coda with someone who doesn’t deserve a lot of respect, but who in this case makes a lot of sense:

BenefitAndTheBurdenBruce Bartlett, author of  The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take, held senior policy roles in the Reagan and George H.W. Bush administrations and also served on the staffs of Representatives Jack Kemp and Ron Paul.  So his conservative credentials are complete. And yet, in this article in the New York Times, Bartlett assays the lunatic fringe of the GOP that is now spreading the toxic meme that we should default on the debt as a GOOD thing !

What would drive a right winger like Bartlett to say such things? Michael Goldfarb in SALON appraises the roots of the Tea Party’s radicalism in events of 1973… that a four-decade-long war on the press’s legitimacy began with conservative anger over the “lynching” of Richard M. Nixon from the presidency. The idea that it was a biased liberal press that made the molehill of Watergate into a mountain of Constitutional crisis took root:

“Under Reagan, Republican appointees on the FCC abolished the fairness doctrine, the  obligation for broadcasters to air both sides of controversial issues. This led to an explosion of opinionated propagandists on the airwaves relentlessly attacking “liberal” media. It continues to this day, degrading American public discourse.

“A Nixon media operative, Roger Ailes, discussed starting a Republican-slanted news program with the president pre-Watergate. Later, Ailes invented Fox News for Rupert Murdoch. Fox is one of the prime shapers of the hyper-partisan political culture that has made the U.S. practically ungovernable.”

I found Goldfarb’s insights interesting.  Though ultimately, he is wrong.  The roots lie in the Antebellum or pre-Civil War South.  In the romanticism of Sir Walter Scott that Mark Twain denounced in his own people. In a resentment that simmers like hot, kudzu-scented evenings.  We are still mired in a Civil War that is once more coming to a boil. Do not take it personally. We are not the true target of that rage.  It is the Future.

== Rabbis Explain Why Both Left and Right are wrong. But Smith was right! ==

And finally, a little talmudic study from Lord Jonathan Sacks, Chief Rabbi of the UK…

“The rabbis favored markets and competition because they generate wealth, lower prices, increase choice, reduced absolute levels of poverty, and extend humanity’s control over the environment, narrowing the extent to which we are the passive victims of circumstance and fate. Competition releases energy and creativity and serves the general good.

“… However as the critics of capitalism pointed out, the market does not create a stable equilibrium. It engages in creative destruction, or as Daniel Bell put it, capitalism contains cultural contradictions. It tends to erode the moral foundations on which it was built. Specifically, as is manifest clear in contemporary Europe, it erodes the Judeo- Christian ethic that gave birth to it in the first place.

JonathanSacks“Instead of seeing the system as Adam Smith did, as a means of directing self- interest to the common good, it can become a means of empowering self-interest to the detriment of the common good. Instead of the market being framed by moral principles, it comes to substitute for moral principle. If you can buy it, negotiate it, earn it and afford it, then you are entitled to it – as the advertisers say – because you’re worth it. The market ceases to be merely a system and becomes an ideology in its own right.

“Fourth, no one who reads the Bible with its provisions for the remission of debts every seventh year could fail to understand how morally concerned it is to prevent the build up of indebtedness, of mortgaging freedom tomorrow for the sake of liberty today. The unprecedented levels of private and public debt in the West should have sent warning signals long ago that such a state of affairs was unsustainable in the long run. The Victorians knew what we have forgotten, that spending beyond your means is morally hazardous, however attractive it may be, and the system should not encourage it.”

Heh.  I honestly wrote all of that stuff at the top of this column before reading this rabbinical teaching… which conveys almost the identical message, but with more eloquent persuasiveness.  Maybe I should have studied for another profession.

And now… the political lamp is OUT!

3 Comments

Filed under politics

3 responses to “Liberals, you must reclaim Adam Smith!

  1. Timely reminder. I re-read Adam Smith this time last year. Thank you for pointing out the disparities between what he said and what Neo-Feudalists
    want us to think he said. Adam Smith was first and foremost an ethical man.

  2. sftheory1

    Very thought provoking.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s