By John E. Hill
John
Adams (and the founders in general) and Adam Smith were pragmatic idealists.
Think of the meaning of these words in the Declaration of Independence: “…That
all men are created equal, that they are endowed by their Creator with certain
unalienable rights; that among these are life, liberty, and the pursuit of
happiness….” Today we have forgotten how revolutionary those ideals were in
1776. Equality in the pursuit of happiness? Preposterous! The founders’
idealism was combined with the pragmatic willingness to wage a long, and
eventually successful, struggle for independence.
However,
since independence, many, but not all, economic thinkers have forgotten (or
never understood) some fundamental things about the thought of the founders and
Adam Smith. For instance, John Adams argued that commerce makes it obvious even
to someone with the weakest eyesight “‘…that we are made for one another, that
our destination is to be useful reciprocally, that we are members of the same
body and children of the same family’” (Democracy,
Equality, and Justice, p. 89).
Similarly,
Adam Smith argued in Wealth of Nations
that commerce, the market system, was cooperative, a social system. That
dimension of capitalism has been forgotten or ignored. Instead, 21st century
capitalism has been extremely individualistic with a fixation on laissez-faire. This is not Adam Smith’s
capitalism.
Smith
did not advocate laissez-faire; his ideal
system would combine natural liberty with justice. To give just a taste of why
I argue this, look at some of the things Smith argued the government could do
to provide a level playing field for all.
He
listed three major responsibilities for government. I doubt that anyone would
quarrel with the duty of a government to defend its territory against other
nations. Second, the government should administer justice. Public works was the
third duty Smith listed; I will focus on that duty.
In
discussing public works, Smith writes about the commonwealth (think of the
implications of that term) facilitating commerce and “promoting the instruction
of the people” (Wealth of Nations, p.
779). The government role in education includes not only youth but also “people
of all ages” (Wealth of Nations, p.
779). He even wrote that, because instruction in religion would be beneficial
for the whole society, government could pay for religious instruction (Wealth of Nations, p. 877). I certainly
am not advocating that policy; I mention it here simply to illustrate how very
far Smith was from being an advocate of laissez-faire.
Facilitating
commerce includes providing infrastructure such as good roads, bridges,
harbors. Has the laissez-faire
attitude dominant in the US
in recent decades severely weakened the ability of government to provide the
infrastructure that businesses require to function efficiently?
Smith
also included under public works government support for science and “public
diversions” (Wealth of Nations, p. 855).
He thought that, to prevent fraud, government should place quality control
stamps on sterling silver and linen and woolen textiles (Wealth of Nations, pp. 140-141). And while Smith was a strong
critic of taxes on the “necessaries of life,” he advocated luxury taxes to
restrain and possibly prevent the poor from unnecessary expenses. Such
paternalistic roles for government are definitely not laissez-faire.
Smith
believed that it would be good for government to provide incentives for
artisans and manufacturers who excel in their occupations because such prizes
would help improve quality without overturning “…the natural balance of
employments…” (Wealth of Nations, p.
560). Can you imagine a government program to award, say, a $50 million prize
to the first corporation to market an affordable zero-emissions automobile or
cost-effective solar electricity cells?
Smith
not only argued for a larger role for government than commentators usually
note, but he was also egalitarian. There are several examples of this idealist
streak in his thinking. “The difference between the most dissimilar characters,
between a philosopher and a common street porter, for example, seems to arise
not so much from nature, as from habit, custom, and education” (Wealth of Nations, p. 17). Whether or
not he has taken the correct side in the nature vs. nurture argument is not the
point here. The point is that this statement is egalitarian.
In
addition, he repeatedly supported the workers; for instance, he argued for
higher wages for workers, for the end of regressive taxation, and for
governmental programs to mitigate the mentally deadening effects of repetitive
work.
He understood that there would always be wealthy people, who were useful to
society as models for emulation, but he wrote that huge differences in wealth
were dangerous for society. Note also that he sharply criticized the wealthy
for their corrupt control of members of parliament.
My
final argument is this. If Smith was a strong supporter of laissez-faire, why did he actively solicit government officials for
an appointment as a Commissioner of Customs in Edinburgh? He succeeded in that quest and
happily carried out his duties as Commissioner for the last twelve years of his
life. He did advocate free trade, but he
was not an extremist on free trade. In
contrast to the unlimited free trade policy of recent Democratic and Republican
administrations, Smith was more subtle. He wrote that, if free trade would put
workmen out of their jobs, it should be approached gradually.
If
I am right that US government economic power has been eviscerated in recent
decades by an individualistic, laissez-faire
fixation, most, if not all of us, have been harmed because, as Smith
recognized, there are some things which government must do. This goes beyond
national defense and roads and bridges that are safe to drive on. This goes to
the heart of what we are as a country.
Remember
our founders’ claim that all are created equal, with an unalienable right to
life, liberty, and the pursuit of happiness. Can we logically claim today that
all have an equal opportunity to pursue happiness when educational quality
varies so much from community to community? Would Smith today advocate that
instruction for people of all ages include tuition for higher education? (I
think it is abundantly clear that the pursuit of happiness today is severely
undercut for many people by the cost of higher education. There are too many
stories of people ending up in careers they do not like because of the burden
of college loans. How many potentially superb teachers have never been able to
follow that love because of the Catch-22 of low salaries for teachers and the
need to repay $10’s of thousands of college loans?) Can we claim equality in
the pursuit of happiness when 47 million US citizens lack health insurance
(the same number who lacked health insurance decades ago before Medicaid and
Medicare became law)?
In Democracy, Equality, and Justice, I
argue that a deeper understanding of Adam Smith and John Adams would result in
a wealthier and more just nation. To get to that wealthier and more just
nation, we have to accept that there are certain things government can and
should do. Under laissez-faire
ideology, the pendulum of government economic power has swung too far in one
direction. But we must also take care that the pendulum not swing too far in
the opposite direction. Our founders were right: unlimited government power is
dangerous. Like Smith (and the founders) we need a subtle appreciation of what
government can do, as well as the need to limit its power.
Such
a cautious attitude toward government power is realistic. The founders and
Smith based their ideas on real life experience and deep reading of history.
But they balanced that realism with democratic ideals: the founders’ ideals of
equality in life, liberty, and the pursuit of happiness and Smith’s ideal of
justice in the market.
The US has been magnetically attractive to people throughout the world for decades,
perhaps centuries, both because of our ideals and because of the reality of our
economic success. But more recently, many people, in various parts of the
world, have learned to hate us. Obviously, there are foreign policy reasons for
this. But we could regain that appeal in the 21st century if we were to remove
the foreign policy impediments and change our domestic policy to combine the
Declaration of Independence with Adam Smith. Our ideals are powerful; they
could produce a better country for everyone and could help our foreign policy.
In short, our government’s policy should be to provide, in the words of the
pledge of allegiance, “…liberty and justice for all.”
For additional information about the author and to read
excerpts from the book visit http://stumail.curry.edu/~jhill
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