Home > Uncategorized > Adam Smith’s bad history leads to bad economics

Adam Smith’s bad history leads to bad economics

from Asad Zaman

Guest Post by Donni Wang [author details at bottom of post]. Republished from The Economic Historian blog: “No Go from the Get Go: Adam Smith’s Bad History, Lessons from Ancient Greece, and the Need to Subsume Economics” – She is a historian, and argues here that a false history which portrays progression and progress actually seals off alternatives and choices which we could, and indeed need to, make today. Correcting Adam Smith’s views about history of mankind, using lessons from Ancient Greece, thus creates new possibilities for us today.

WORLDVIEWS THAT gain traction tend to be comprehensive in nature. They account for a wide range of phenomena that define the human condition, one of which being the changes that occur to society over time. This is true also for capitalism as an extensive body of thought. Although there is much emphasis placed on the modern epoch that features the rise of the industrial nation in the West, the weltanschauung of capitalism does supply a neat story of human development that extends back to earlier periods.

The obvious source for this narrative is to be found in the writing of Adam Smith.  Having been rightly credited as the father of capitalism, Smith has contributed much to the overall coherence of the market system by reinforcing it with a supportive philosophical foundation. In fact, his narrative of the past, which is still being circulated in contemporary textbooks and popular discourse, has not only rationalized the ascent of market forces in 18th century Europe, it also validated the major assumptions that undergird orthodox economic thinking today.

The historical account proffered by Smith, however, does not hold up even to the most basic test. read more

  1. Mike Ryan
    March 16, 2019 at 2:28 pm

    Adam Smith shouldn’t shoulder the entire blame. Think about his sponsor Lord Kames. Fast forward to the 1900’s and think about Rockefeller. Rockefeller, like Kames, needed philosophers to sooth his guilt so he sponsored the University of Chicago. From his investment he bought Samuelson, Friedman and many other philosophers to paint idiotic pictures to hide greed and show how the economy doesn’t work. All of this is meant to elevate the rich to god like status and suppress the rest of society.

    As an example – in ten minutes you can learn how Samuelson lied to the world about marginal costs.

    • Craig
      March 16, 2019 at 9:39 pm

      Good exposition. Only problem, it isn’t paradigmatic thinking which isolates the single new concept that creates an entirely new pattern.

      We don’t really need any more critique or iconoclasm, the old pattern has been shattered and invalidated, we need to look for and find the new pattern.

  2. Ken Zimmerman
    March 26, 2019 at 11:22 am

    Ms Wang, loved your book. Read it before I saw this article you wrote. Anthropologists have concluded that the most successful and most economically efficient society ever invented by humans was the first, hunter-gatherer. Everyone’s needs for shelter, food, clothing, etc. and enough time for play and thinking is satisfied. But the human population kept growing so humans attempted to duplicate hunter-gatherer society while adding agriculture (domesticated plants and animals, and no need to move to follow the supply of game and edible plants). It worked for a time until surpluses were created and by accident of location or family some humans acquired more food and other resources than others. Humans’ most basic capability is imagination. So, the humans who acquired more by accident invented a set of ideas and then institutions that explained that accident and identified themselves as a society within society that deserved this “reward.” In today everyday parlance, these humans became “elites” and in current economists’ parlance they received rents. From this start humans invented aristocracy, monarchy, feudalism, serfdom, slavery, etc. With which human history is filled from about 10,000 BCE up to today. But none of this was about self-interest. It was about group-interest. But we need to take note of the groups on which we focus. The life of monarchs and aristocrats were very different from those of serfs, slaves, and even “freemen” who possessed no property and had no personal or group rights. When the European version of this way of life, feudalism failed, and it had to based on its rigid structure and the hatred it generated among groups outside the ruling monarchs and aristocrats, humans imagined other ways of life. Some invented self-interest and the commercial life. While others invented religious ways of devotion to God and faith. Still others invented the commitment to art and beauty that transcends humans. Ancient Greece certainly had monarchs and aristocrats, slave and serfs. But these Greeks also invented something that was not to show up in Europe for about 2,000 years (about 500 years earlier in the Viking lands), and so far not at all in China. They invented the notion of “self-rule.” The notion that citizens of a nation-state such as Athens could choose the way for the nation, and even the King (in Athens it had to be a King) could not stand in the way of those decisions. But again, this was not about self-interest but rather group-interest, and the groups that made up Athenian society were well defined and the limits of their participation in self-rule clearly set out. That’s why Ancient Greece and even Ancient Rome (beginning as an imitation of Greek society, but later slipping into the rule of emperors and other autocrats) were models for the British Empire. But again, humans kept growing, expanding across continents and oceans so that existing strictures became uncomfortable in the new settings, and eventually intolerable to some groups. These groups redefined their roles and importance. They defined themselves with more wealth and more control over their lives. Then, either through bargaining or war, they created changes to gain their goals. These struggles are still going on. None of us knows how they’ll turn out. But still these struggles are about group-interests, not self-interest.

    According to social psychologist George Herbert Mead, Society is generalized social attitudes that continually emerge through coordinated interaction between individuals and groups. Social order is continually emerging. Individual and society are dialectically intertwined — one shapes, and cannot exist w/o the other, but central elements of social interaction take place in one’s imagination. The individual and the society [within] which she/he belongs are mutually dependent.

    Yes, Adam Smith’s history of humanity is fundamentally mistaken. But it’s not just mistaken. It’s mistaken in ways that allow only the voices of certain groups in the human past to be heard. While other groups are erased from human, our, history.

  3. April 23, 2019 at 2:06 am

    Ken – Bravo once again! Spot on, with 1 qualifier: The knowledge & understanding of non-mainstream groups are not totally erased from current collective consciousness, only overwhelmed, rendering the officially, commercially sponsored dogma & shibboleths of the kleptocrats the only viably dominant narrative, so far. Fortunately, it is inherently self-defeating, for all the reasons identified by J. Diamond and D. Schon before him. Luckily, though the kleptocrats & their hypno-droids may take the biosphere down with them, by default, us human beings are not simply addictive meat puppets. Hence, self-extinction by ecocidal ethicide may be just the wake-up call we need to jump-start our next phase of psychospiritual & cultural evolution. Anyway, I don’t see anything we say here or elsewhere doing the job.

    • Ken Zimmerman
      April 24, 2019 at 9:57 am

      MichaelLucasMonterey, Cultures fail for many reasons. But so far, every culture that has existed has failed. Even mighty Rome and the Chinese empire failed. Some recover, with certain changes, others end and never come back. Social scientists and historians have played a big part in erasing many of these cultures, even if they left alive many who called the culture home. Adam Smith was one of the worst offenders. “The Wealth of Nations” destroyed multiple cultures centered around cooperation and the primacy of community by simply denying any such cultures ever existed. Consider all the young people who were denied the chance to even hear about such cultures by the omissions of Smith’s histories. Smith’s omissions may have been just poor scholarship. But today’s economists don’t have that excuse. They have made it clear they will not tell any story other than neoclassical and neoliberal free market economics.

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