Adam Smith views on capitalism

September 27, 2015
Smith made clear (as I ll

Mention of the name Adam Smith calls to mind the “invisible hand” of the market, free trade, even capitalism itself. And money makes this capitalist world go round. So the Bank of England’s decision to feature Smith’s face on its twenty-pound notes, starting this spring, certainly seems appropriate

The Bank’s Governor, Mervyn King, says that Smith reminds us of how “openness to trade with others” allows us to “seize opportunities to specialize” that result in higher “productivity, incomes and standards of living for citizens of all countries.” To drive this point home, the new banknotes will have an engraving of a pin factory, which Smith used as an example of how the division of labour increases productivity, with the caption: “and the great increase in the quantity of work that results.” King hopes the new banknotes will encourage visitors to Britain “press their own politicians to support the opening up of trade, which has been at the heart of the British Government’s efforts to reform the world economy.”

The image of Smith presented on the banknotes, while not incorrect, is certainly one-dimensional. It ignores those aspects of his investigation of capitalism that run directly counter to some of the cherished beliefs of his followers.

That is not to suggest, however, that Smith was an anti-capitalist. Some like Noam Chomsky have flipped through the pages of The Wealth of Nations to uncover ideas critical of capitalism, but this effort seems misguided and unhistorical. Smith undeniably had faith in capitalism, but this view arose naturally from living in an ascendant capitalist system that had yet to fully reveal its contradictions. Compare this to the contemporary cheerleaders for capitalism who can only maintain their belief by denying reality. In late 18th century Europe, there was no socialist spectre haunting the sleep of burghers like Smith. If anyone had insomnia it was aristocrats worrying about the rising bourgeoisie. With the peace of mind that this situation afforded him, Smith pursued the sort of disinterested study of capitalism that could only be carried out a century later by critics of capitalism, such as Marx.

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