October 1, 2022

What Is Economics According To Adam Smith – One of the most memorable statements of Barack Obama’s presidency so far is his assertion, in his keynote address in December 2013, that expanding and growing economic inequality is “the greatest challenge of our time.” To prove his point, Obama invoked the authority of a seemingly impossible enemy: Adam Smith, the supposed founder of laissez-faire capitalism, who was believed to be devoted to greed and selfishness. of the market. to do his magic.

Many scholars have worked, in recent years, to show that this view of Smith is a big surprise. It has been noted many times, for example, that Smith never used the word “laissez-faire” or even the word “capitalism” and that his two books—

What Is Economics According To Adam Smith

What Is Economics According To Adam Smith

(1776)—are full of passages expressing moral, social, and political dissatisfaction with what he calls “commercial society.”

The Problem With Inequality, According To Adam Smith

Also, it cannot be denied that poverty alleviation was one of Smith’s main concerns, despite the common side effects. Even an amazing study

This issue should be clearly stated. Smith declared, plainly and repeatedly, that the real measure of a nation’s wealth was not the size of its sovereign treasury or the wealth of the rich few, but the wages of the “working poor.” In a passage that Obama quoted in his speech, Smith said that it was a simple “property” that “those who feed, clothe, and build the whole body of the people, should have the same share for their own use.” . work to be well fed, clothed, and entertained.’

However, there is still widespread agreement, even among modern scholars, that Smith was concerned with poverty but not with economic equality itself. According to this view, Smith hoped to ensure that all members of society could meet their daily needs, but he did not care about differences in income and wealth. As long as everyone has food on their table, clothes on their backs and a roof over their heads, the thinking goes, it doesn’t matter if some have more than others. Indeed, it is often argued that Smith saw economic equality as a seemingly good thing.

This type of research is not perfect. Like many of his self-proclaimed followers in the 20th century, Smith suggested that the wealth of a few generally benefits society as a whole, at least temporarily and in the long run. In some cases, their pleasures are almost real: “The houses, the furniture, the clothes of the rich, for a short time, have become necessary for the lower and middle classes,” says Smith, giving examples. of the residence of the Duke of Somerset’s family, he moved to an inn in Bath Street, and the wedding bed of James I, at which time Smith served as “a line dresser at Dunfermline.” In general, he says that the exploitation of the rich stimulates production and provides employment for many. Therefore, the level of economic equality is beneficial, in Smith’s opinion.

The Philosophy Of Adam Smith: The Adam Smith Review, Volume 5: Essays Commemorating The 250th Anniversary Of The Theory Of Moral Sentiments: 9780415562560: Economics Books @ Amazon.com

Those who encounter Smith’s writings for the first time are surprised to learn that he insists that money cannot buy happiness.

What has been overlooked, even by those who approach Smith’s thinking from the modern left, is that he identifies other deeper problems with economic inequality. His apparent concerns are, as I wrote recently in an American Political Science Review article, strikingly different from those that dominate contemporary discourse. When people worry about inequality today, they generally worry that it hinders economic growth, hinders social mobility, harms democracy, or violates some measure of justice. These are the problems that Obama described in his speech, as well as those described by scholars from Thomas Piketty to Joseph Stiglitz and Robert Putnam.

However, none of these problems is Smith’s main point—that economic inequality distorts people’s well-being, causing them to admire and imitate the rich and ignore and even despise the poor. Smith used the word “empathy” in a professional sense to indicate the process of thinking someone in another person’s situation or putting yourself in someone else’s place. So Smith’s ‘sympathy’ is similar to the modern use of the word ‘sympathy’. And he claims that, because of human nature, people generally find it easier to empathize with happiness than sadness, or at least with what they perceive to be happiness and sadness.

What Is Economics According To Adam Smith

As a result, Smith argued, people sympathize more with the rich than with the poor: “the rich man is proud of his wealth, because … of course he draws the world’s attention to himself,” while “the rich are the rich who are proud of their wealth. The poor go out unnoticed, and when he is in the crowd of people, he is in darkness as if he had locked himself in it.’ Not only do people see the rich more than the poor, according to Smith, but they are more likely to accept, admire, and imitate them.

Who Cooked Adam Smith’s Dinner?’ By Katrine Marçal

Furthermore, Smith saw that this perversion of human compassion had far-reaching consequences: it destroyed morale and happiness. First, ethics. Smith saw the fascination with the rich as a moral problem because he did not believe that the rich really wanted to be attractive. Instead, he described the “high ways” of society as full of “evil and folly”, “socialism and vanity”, “perversion and falsehood”, “haughty lust and hatred”. In Smith’s opinion, the reason why the rich generally do not live spectacularly is that, after all, they are highly praised (for their wealth). In other words, the rich are not bad people. Rather, their assets have made them enter a situation where they do not need to behave in order to get the qualities of other people, many of whom are interested in their assets.

Therefore, parallel to the existence of economic inequality, there is also a distortion of human compassion, which allows—perhaps even encourages—the rich to reject the correct moral standards. Smith went further and declared that “the passion and almost slavery of the rich and powerful, and the contempt, or at least the neglect, of the poor and poor” is “a great and universal cause of moral destruction. ” us”.

Smith also believes that the tendency to sympathize with the rich more easily than the poor makes people unhappy. As my students remind me every year, those who encounter Smith’s writings for the first time are surprised to learn that he associates happiness with peace—an internal conflict—and insists not only that money cannot buy happiness, but that it cannot even be sought. wealth generally reduces a person’s well-being. He spoke, for example, about “all this pleasure, all this ease, all this carelessness, which is lost forever” when a person acquires a lot of wealth, and “all the troubles, all the worries, all this destruction that you will. suffer” in its pursuit. Happiness consists mostly of relaxation, and there is little peace in a life of hardship and trying to keep up with the Joneses.

So why do many people spend most of their lives looking for wealth? Smith clearly thought that people did not work hard to “provide the necessities of life”—that is, to obtain food, clothing, and shelter—because “the lowest wage of the laborer can afford it.” Instead, they want more wealth because of the caution it brings: “It is vanity, not ease or comfort that we desire.” In other words, the fact that people easily sympathize with the rich makes them wish to be rich themselves and (wrongly) assume that the rich must be very happy. “When we consider the nature of the prince, in those beautiful colors that the imagination should paint, it seems like the idea of ​​a perfect and happy nature,” he said.

What Would Adam Smith Say About Capitalism Today?

All that said, it is not clear that the residents of today’s business community are as attracted to the rich as Smith thought. It is true that in the political arena, the rich are often praised as innovators and job creators. Indeed, personal wealth is the main (perhaps only) characteristic of a Republican presidential candidate. On the other hand, there is a tendency of the political left to see the rich as greedy, who want to insult the one percent, and many on the right follow the accusations of the left and the rich, which they often do by provoking people. or religion. It is doubtful that many hedge fund managers are overweight

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