Adam Smith - The father of capitalism vs the Republican Party

Google “the father of capitalism”. Go ahead. I’ll wait. By all means, take the time to follow some of the links to learn about the man and his seminal work “An Inquiry Into the Nature and Causes of the Wealth of Nations“. I recommend you read Investopedia’s excellent article here. And the University of Glasgow has a deeper piece here.

In the mean time I’ll get to the point. The current republican definition of capitalism is pure bullshit. The dream of pure, unregulated capitalism comes not from our founding fathers who were influenced by Smith. But from Ayn Rand‘s twisted theory of objectivism and the simple minded fiction of Atlas Shrugged. The republican speaker of the house Paul Ryan loves Ayn Rand so much he said her influence was “the reason I got involved in public service”. Coincidently, she was also the inspiration for Anton LaVey’s Satanic bible. Take that as you will but I find it fascinating considering the devout religious views of so many on the right.

Tea Party libertarians like to claim that with deregulation, market forces and public perception will force corporations to act responsibly in such important matters as being good stewards of the environment. What they fail to take into account is human greed and the understanding that deception, aggressive public relations (propaganda), and the power of good old legal government corruption thanks to misguided campaign finance laws such as Citizens United.

Here’s what Adam Smith had to say about corporations.

“The interest of [businessmen] is always in some respects different from, and even opposite to, that of the public … The proposal of any new law or regulation of commerce which comes from this order … ought never to be adopted, till after having been long and carefully examined … with the most suspicious attention. It comes from an order of men … who have generally an interest to deceive and even oppress the public”

Full text of the above quote to fill in the blanks can be found here here.

Lets be clear, Smith understood that self interest was the driving force of commerce and that it does drive the wealth of nations and their citizens. In short, Capitalism does work.

“The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniencies and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.”

“Nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw one animal by its gestures and natural cries signify to another, this is mine, that yours; I am willing to give this for that….But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of.”

But he also understood that self interest can be harmful if not managed. Regulations are as necessary for corporations as laws are for citizens. Government by and for the people must be allowed to protect its citizens from toxic chemicals and the very real threat of global warming.

And what would he say about minimum wage laws?

“Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

“A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.”

Flat taxes?.. Lower tax rates for the rich?

“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities.”

Now some people might point out quite fairly that Smith was often critical about governments abilities to control such things as wages (enforcement would have been near impossible in his day) And the more Libertarian scholars will cling to this statement:

“There is no art which one government sooner learns of another than that of draining money from the pockets of the people.”

To which I reply:

“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”

Because ladies and gentlemen, we are no longer a democracy; representative or otherwise. We are a corporate oligarchy. The Supreme court has said that money equals speech. Government leaders are so beholden to giant corporate campaign donations that our representatives no longer represent the average citizen. Read the Princeton University study “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens” in PDF form here. The short version is here. The bottom line is that voting records don’t match public opinion at all, they match corporate sponsorship.