Adam Smith Was Wrong

Scotland has given a lot to the world.  The Baycity Rollers, Sean Connery, Braveheart and Adam Smith.

At the dawn of the Industrial Revolution, during the Age of Enlightenment, Adam Smith wrote Wealth of Nations.  It’s earned him the title “father of economics” and it greatly influenced the founders of America with its argument that free market capitalism was the best economic system available for a society prone to selfishness.

Adam Smith wasn’t just an economist.  In fact, at the time, economics wasn’t its own field yet.  The best I can figure it was a branch of philosophy mixed with sociology and even a little religion.  Adam Smith, for instance, was a professor of Moral Philosophy at the University of Glasgow – not some mathematician or finance guru working as a prof in a business school. That doesn’t discredit him, of course, but it’s something to keep in mind when reading his thoughts: They’re as much a prescription for morality or theology as they are for business practices.

Adam Smith believed, for instance, that in order for a free market society to prosper, individuals must look out for their own self interests foremost.  “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

The butcher, for instance, wants to stay in business so he can feed his own family, so he works hard, deals fairly, charges a competitive price so that his business and his family will prosper.  Doing business this way is best for the customer also, Smith argued, and for the whole of society.  It produces the best product at the best price.

Those to the right in American politics sometimes argue for a unregulated less-regulated free-er free market system than the one we currently have, making arguments that have grown out of Adam Smith’s philosophy.  But Adam Smith’s examples come from an imaginary world in which butchers have hearts uncorrupted by the Fall.  Real people – real butchers – have a dual nature: one half wanting to behave as Christ and the other wanting to have the power, wealth and position of Christ and to do whatever is necessary to obtain it.

If a butcher were to actually look out for his own self interests first, he could do that by paying an unjust wage to his workers, lying about the quality and origins of his products, making promises for immediate gain with no intention to keep them, etc.  There is no free market because no one participating in the market is spiritually free.

Adam Smith, like I said earlier, came up with his ideas during the Age of Enlightenment – a period characterized in part by radical optimism about the human spirit, denying that all men are born spiritually powerless and corrupt.  Ronald Reagan sounded a lot like a modern day Adam Smith sometimes.  He was very inspiring but very wrong when speaking about the inherent goodness and strength of mankind: “A people free to choose will always choose peace” or “I know in my heart that man is good” or “There are no constraints on the human mind, no walls around the human spirit, no barriers to our progress except those we ourselves erect. ”

No, sir.  A people free to choose will be torn between peace and selfish ambition at all costs.  The heart of man is not good but impoverished, wicked, arrogant, untrustworthy.  His heart is a barrier to justice and equality.

Rush Limbaugh, in a very Reaganesque way, often contrasts “liberals” with “conservatives” by saying that liberals believe the worst about people and conservatives believe the best. If that were true, neither side would be thinking very biblically.  Truth is, every Christian is a mixture of the best of God and the worst of himself.

Adam Smith was wrong.  Free market capitalism might just be the best economic system the world has ever seen.  I assume so, but what do I know about economics?  I’m a musician. But it doesn’t produce the rosy results Smith argued it would either.  A society full of Smith’s imaginary butchers will not benefit the whole of society because the butcher is not inherently good and self-regulating.  He does not naturally pay a living wage to his workers.  He does not naturally keep his promises.  He does not naturally tell the truth at all times.  He’s just like me. And just like you.  If we serve ourselves with no outside restraints placed upon us, we’ll cheat to get more and horde what what we get while the distance between us and the have nots widens.

Folks on the left might think they can use this reality as an argument for increased government regulation.  But the regulator is human as well, just as corruptible.  He also has a history of cheating to get more (power, money, fame, influence) and hoarding what he gets or using it to do more harm.

Or maybe those on the left could use the sinful nature of the butcher to argue for more government spending and services for the have-nots allegedly left in his wake.  But those who are served by government programs have the same heart as the butcher and are just as likely to squander and abuse help as the butcher is his wealth.  And then there are those who aren’t in need of help who will cheat and lie a corruptible system to get it anyway. How may of us have known someone able to work who has taken advantage of the social services system, decided not to work and lived off of programs funded by the butcher’s taxes.

If Smith, Reagan and Limbaugh are all wrong, then so are Roosevelt, Obama, and Wallis.  This error bites all sides of the isle.  Doesn’t it?

Adam Smith’s error may come from his understanding of God.  Adam Smith is believed to have been a deist – someone who thinks “The Great Architect” built the universe but then walked away from it, never to return, never getting mixed up in human affairs, never entering the human heart, never putting on skin and becoming a man for man’s sake, never sending Spirit to guide and teach, never to lead his People to be creators of equality and justice and, well, regulation.

But we’re not deists.  Are we?