Wednesday, August 25, 2010

Adam Smith’s Yankee Breach Babies:

In The Welfare of Nations, the second and better-known book of his planned trilogy, Adam Smith describes capitalism more than he argues for it. And more than he argues against such latecomers as socialism or communism—or consumerism, for that matter. (Smith could not argue against these other economic models, as they had not yet been discovered or invented at the time of Smith’s 1776 work.)

In the Course of His Book, Smith addresses a number of capitalism’s defects as well as its strengths. Such human frailties that many un-reading ideologues presume to be part of Smith’s capitalism—notably, greed—are addressed.

Smith’s First Great Work in the series—The Theory of Moral Sentiments—is seldom mentioned in America. But as the earlier book describes, Smith believed in inherent human motivation to do good to one another. Capitalism, which is based on the division of labor, gives that do-good motivation its best means. Or so Smith apparently thought.

As Far as the Sin of Greed  is concerned, it has no good place in capitalism (despite that greed and other sins are to some extent unavoidable).

As for Our Notorious American Economic Engine, the relentless U.S.S. Competition, the beneficial effects of competition were to reach all in any capitalistic society. Not to reach just the parties involved in creating the wealth, but also to the customer. Under capitalism, competition is a way that we do good unto one another. Not a way to obliterate one another, driving each other into the poorhouse.

So the Ideal of Capitalism as it exists in America today is pretty clearly a perversion of Smith’s work.

For Example:

What Does Adam Smith say about taxation in The Wealth of Nations? I thought these might be a couple of good tidbits to throw to any anti-tax “Capitalists”who happen along this way:

“The revenue which must defray, not only the expense of defending the society and of supporting the dignity of the chief magistrate, but all the other necessary expenses of government, for which the constitution of the state has not provided any particular revenue, may be drawn, either, first, from some fund which peculiarly belongs to the...commonwealth, and which is independent of the revenue of the people; or, secondly, from the revenue of the people.”
     —The Wealth of Nations, Book Five, Chapter Two, “Of the Sources of the General or Public Revenue of the Society,”
“The subject of every state ought to contribute toward towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”
     —The Wealth of Nations, Book Five, Chapter Two, Part I: “Of Taxes”

It’s a Mystery how anyone else finds another way to read that, but to me it supports the income tax specifically, and also supports arguments (posted elsewhere) about the CEOs of America’s multinational corporations:

Virtually All of the American People Pay Federal Taxes

What More Can I Tell You?

The Happy Capitalist,

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