When Adam Smith sounds more like Arundhati Roy than Milton Friedman

Stefan Stern observes in FT 19 Jul 2010:

"...What does the future have in store for us? Short of some fantastic scientific innovation that uncovers vast new sources of clean and sustainable energy, it seems likely that the world faces many severe and related problems.

As Rich Lyons, the dean of the Haas School of Business at the University of California, Berkeley, points out, the straight line extrapolations on a number of important graphs lead you to a pretty scary place.

Over the next few decades the earth’s population looks set to climb to about 9bn. Temperatures and sea levels are rising. But we may not have enough habitable land, water, energy or food to cope with these changed circumstances. Future healthcare costs in a world of greatly increased longevity are daunting. See it human. The outlook is bad..."

They say today's capitalism stands on the foundation laid by Adam Smith.

Reading some of what I have quoted below, it's hard to believe.

James Buchan while reviewing Nicholas Phillipson's book 'Adam Smith: An Enlightened Life' says:

"...Phillipson argues that, having established sociability in The Theory, Smith had no need to take commercial society back to its root in The Wealth of Nations, but could content himself with a sort of shorthand (the non-benevolent butcher, brewer and baker; truck, barter and exchange one thing for another; invisible hand). Alas, the economists took these rather vulgar aphorisms as the foundation of their science and ignored those parts of Smith's system that concerned humanity's sociable, moral, intellectual and aesthetic nature..." (The Guardian, Saturday 14 August 2010 )

It's Mr. Smith who is supposed to have said:"...disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition...is...the great and most universal cause of the corruption of our moral sentiments..."

George Trfgarne writes:

“…….Adam Smith was so incensed that much of his subsequent work was dedicated to attacking not just big government, but big corporations in general and the East India Company in particular. Through its monopoly on Indian trade it had, he said, contrived to raise prices to customers while reducing them for suppliers. It was rife with fraud, cruelty and corruption and was “a nuisance in every respect”.…..

Nick Robins demonstrates that the East India Company was the first recognisable multinational and claims that Plassey is a classic example of a large corporation becoming too un-wieldy and being hijacked by greedy, egomaniacal executives. Clive was a brilliant general, but he enriched himself at the expense of shareholders by pocketing a large chunk of Bengal’s tax revenues and siphoning off deals for himself. East India company also succumbed to hubris, by assuming state-like responsibilities in Bengal and embarking on expensive military campaigns. When the region suffered a horrific famine, the company made things worse by continuing to levy hefty taxes while its employees drove up the price of grain and rice by trading on the side...” (The Spectator, Oct 28, 2006)

Now this sounds more like what The Economist, Reader's Digest of many of India's thought-leaders (neocons?), might call Arundhati Roy's polemic rather than Milton Friedman's sermon!


On which foundation does today's capitalism stand?

An answer:


Artist: Charles Barsotti, The New Yorker