“Adam Smith: Wealth Without Nations” (Smith 1/4)
Recently, I have bumped into very interesting ideas of a very interesting person and would like to share my discoveries with you.
His name is Gwydion Madawc Williams. He lives in Great Britain. I agree with many of his answers in www.quora.com. He maintains two websites, where one can spend days and days reading: one is specialized in politics, another — on other topics. But for now, I would like to tell you about his book “Adam Smith: Wealth Without Nations” (I bought it at “Athol Books”), in which the author criticizes Adam Smith, well known for his book “Wealth Of Nations” (the full title is “An Inquiry into the Nature and Causes of the Wealth of Nations”). Karl Marx referred to this book and many other well-known economists, politicians, and even philosophers. It became the basis for the leading ideology and world-wide politics and even formed the foundation for the worldview of several generations, including myself.
Everybody, probably, heard about the “invisible hand“, which directs an entrepreneur to the goal of achieving economic prosperity for the whole society, although each entrepreneur cares only about his own profit. It is used for the justification of “rational egoism” and all kinds of views, including Ayn Rand’s and modern conservatism. From all corners, one hears about “self-correcting free market forces”. It was also used in the 1990s to deceive 300 mln people of the USSR to steal the last ruble from their pockets and to privatize by the few all the public funds and property. Now the same slogans are used to cover up the unfair consolidation of enormous wealth in the US and all over the world.
I believed this theory to be true too. The strongest should win, I thought, and that is good for society. Lately, though some doubts started to creep in when I noticed how the society itself began dividing into species, some of which look eerily destined for dying out. I started to ask myself and my friends, is it good that the law of survival the fittest applied inside human society? Will it not decrease the diversity that proved to be so beneficial, so far? Can it lead to the demise of human society in a long run? I have spent a lot of time thinking about it and arguing with others. And not I only. There are many articles and books written on this topic. But only while reading “Adam Smith: Wealth Without Nations” I have discovered facts that explained to me a lot and brought me to the answers that I would like to share with you.
Gwydion showed that the “invisible hand” is a myth and invention by Smith deceived by the logical beauty of his theory. Beauty makes us wish it to be true; logic is used as proof when there are not enough convincing facts. Even the pin production example, used by Smith as proof that the division of labor can happen only in a free market, was, according to Gwydion, “one of many industries that had been promoted in England by government initiative.” It was “exceptional among the industries of the time.”
At that point another association has come to my mind: the way Smith’s theory is presented in the popular media reminds very much of Darwin’s theory of natural selection. But Smith lived a hundred years before Darwin! I searched the internet and found that there are reasons to believe that Smith influenced Darwin (sure not another way around). It turned out that Darwin got his medical degree in the same university in Edinburgh (Scotland) where Smith lectured. Darwin even wrote in a letter that he “studied Smith and Locke.”
Even more, Darwin’s granddad Erasmus Darwin was Smith’s contemporary and also studied at the same university and was connected with it when Smith lectured there. Erasmus mentioned in his poems (he was a medical professional, but wrote poetry too as many of the educated people of his time did) “natural evolution” and relatedness between all the living forms.
On the Beagle, during the trip when he collected the proof for his theory, he read the works of Henri Milne-Edwards, who used Smith’s notion of division of labor while describing the specialization of the human body organs. Later Darwin applied the same idea to his observations: “The advantage of diversification in the inhabitants of the same region is, in fact, the same as that of the physiological division of labor in the organs of the same individual body — subject so well elucidated by Milne-Edwards.”
In his main book, although Darwin did not refer to Smith directly, he uses the expression “economy of nature” (Chapter 4, Natural Selection): “Though nature grants long periods of time for the work of natural selection, she does not grant an indefinite period; for as all organic beings are striving to seize on each place in the economy of nature, if anyone species does not become modified and improved in a corresponding degree with its competitors it will be exterminated.”
After learning all that, I began to read Smith’s works and about Smith as a person and was surprised (and pleased by getting answers to my questions) when realized that I (and many others, apparently) did not know what Smith actually said about the “invisible hand”.
I have to stop now, as I don’t have time to continue but will write more in my next article on this topic. If you got interested, I recommend you to browse his books “The Theory of Moral Sentiments” (1759) and “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776). By the way, notice the year of the publication — 1776. It was the beginning of a new era. This year the thirteen British colonies declared their independence. And thirteen years later — in 1789 — the French Revolution took off. The efforts of those who promoted the Enlightenment came to fruition.