In the Words of Adam Smith

Wherever There is Great Property There Is Great Inequality

Originally posted in August of 2011

By A. G. Moore

Adam Smith

On this, the second business day after the Standard and Poors’ downgrade of U. S. debt, I turn to the Moses of free market ideology for an indictment of his disciples. Somehow, the “invisible hand” proselytizers get it wrong. Either they don’t read the books or, as with many who engage in biblical hermeneutics, they turn the master’s words to suit their own ends. I will not here argue with the free-market zealots’ advocacy for:  gutting government; eliminating regulation of commerce; eviscerating public education; and destroying unions. I will instead let Adam Smith counter these misguided notions — with his own words. The underlined script is mine; the rest is pure, unadulterated Smith.
On the need to regulate commerce:“The interest of the dealers… in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public… [They] have generally an interest to deceive and even to oppress the public…”

On the need for unions:“We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labor above their actual rate… It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms.”

On a progressive tax code:“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.”

On a living wage: “No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged. “

On the immorality of excessive profits:“Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

On anti-trust legislation:“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. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”

On the undue influence that the rich and powerful exert on government:“Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

On the need for sound infrastructure, as a priority of government:“Good roads, canals, and navigable rivers, by diminishing the expence of carriage, put the remote parts of the country more nearly upon a level with with those of the neighbourhood of the town. They are upon that the greatest of all improvements.”

On the wasteful expenditures of the wealthy:“With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves.”

On necessity to be wary of the influence of owners on legislation affecting commerce:“The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

On the need to be aware of the global, as opposed to patriotic, interests of the merchant class:“A merchant, it has been said very properly, is not necessarily the citizen of any particular country.”

On the nefarious motivation – greed – of corporations and leaders: “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”

On unjustness of taxing basic necessities, such as food:“Such taxes [upon the necessaries of life], when they have grown up to a certain height, are a curse equal to the barrenness of the earth and the inclemency of the heavens; and yet it is in the richest and most industrious countries that they have been most generally imposed. No other countries could support so great a disorder.”

On unequal distribution of wealth:“Wherever there is great property, there is great inequality.”

On the corrupting influence of the rich over the enactment and enforcement of laws:“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”

On the necessity for publicly financed transportation system:“The tolls for the maintenance of a high road, cannot with any safety be made the property of private persons.”

On the necessity for bank regulations, such as Glass-Steagall:“Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from these rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it.”

On the necessity for universal public education:“The education of the common people requires, perhaps, in a civilized and commercial society, the attention of the public more then that of people of some rank and fortune… For a very small expence the public can facilitate, can encourage, and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education.”

On maintaining a perpetual state of fear in the population, such as was accomplished with George Bush’s terror-alert codes:“Fear is in almost all cases a wretched instrument of government, and ought in particular never to be employed against any order of men who have the smallest pretensions to independency.”

Once again, on the justness of progressive taxation:”The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

On “summits”, such as the one Dick Chaney held on energy, and the like, which are closed to public scrutiny:“All registers which, it is acknowledged, ought to be kept secret, ought certainly never to exist.”

Once again, on a living wage and middle class life style:“…his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.”

*ALL QUOTES ARE FROM WIKIQUOTE, WHERE CHAPTER AND BOOK REFERENCES CAN BE FOUND.

References

Biblical hermeneutics:
http://en.wikipedia.org/wiki/Biblical_hermeneutics

An Inquiry into the Nature and Causes of the Wealth of Nations   By Adam Smith:
http://www.econlib.org/library/Smith/smWN.html

Wikiquote:
http://en.wikiquote.orgwikiAdam_Smith

Flat Tax
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104×4192455

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