The Radicalism of Adam Smith??

I have thought for a while (at the very least since reading The Divine Right of Capital by Marjorie Kelly) that a true revolution of the economic system to one that is more just will take an ideological shift as significant as the shift from monarchy to democracy. So I’ve thought sometimes that some of those classical texts about individual political liberties (Locke and Mill and all the others) could be well translated into a fight for individual economic liberty. But apparently, there may be a lot less translation necessary because those writers explicitly addressed economic liberty. Politics of Inequality by Michael Thompson traces the theme of economic inequality in the writings of political theorists throughout American history. He finds that there has been a consistent, if outnumbered, sect among the theologians of American democracy who have argued that severe inequality is no only a problem morally, but also a threat to the success and stability of our democratic system. They saw that government had a responsibility, therefore, to address inequality in order to protect and sustain itself. Economics was seen as a tool to maintain a healthy state, not the other way around. Pretty cool!

Now my one hesitancy with this book is whether it puts some of these classical theorists a bit ahead of their time. So for instance, it quotes a couple fun passages of Adam Smith about how laboring people should be treated fairly, and about how the political systems tends toward protecting the interests of the rich and so forth. However, as Thompson himself points out, the radicalism in Smith’s day (about the same time this country was being founded) was about an emerging middle class defending its own right to enjoy the fruits of its trading labor, since that new mercantile class was becoming a more and more prominent part of what had previously been a static, rigid, aristocratic agricultural economic system. There had always been traders, but they had been more or less on the fringe, since most economies were extremely local and self-sufficient. But as technology improved and trading became both more possible and more enticing, and as the money system loosened up, here came the capitalists. So Smith’s radicalism was about fighting for this emerging group to be recognized as a legitimate part of society, and in fact a contributing class of society. And, of course, that is still the archetypal hero of capitalism—the small scale entrepreneur.

But even as Smith saw the capitalist class breaking through the futsy aristocracies of old, he certainly wasn’t imagining any sort of socialist paradise where prosperity was shared by all. He saw the majority of people belonging to the laboring classes who, in a mature economy, would earn wages not too far above subsistence level. Now, as a matter of morality and political stability, he may have argued occasionally for the laboring classes to receive at least the bare minimum of human dignity (he was against slavery as an example). But he never imagined that his system of “perfect liberty” would give them any substantial levels of economic opportunity.

And should he have? He was already pushing the envelope, or at least describing how the envelope had already been pushed in a more cogent summary than anyone had achieved before. So can we cut him a little slack for being a product of his times? I’m willing to do that. But that means, as Robert Heilbroner points out in his introduction to excerpts from Wealth of Nations, that then we have to take his more radical sounding tidbits with a grain of salt. We have to realize that he could say what may sound now like radial socialist propaganda, but he could say that without being very inflammatory precisely because he never would have imagined that there could ever be a marked reorganization of society to benefit the laboring classes. So he could talk about how oppressive the wealthy class is not as an argument to overthrow them, but as a plea to the wealthy class to moderate their oppression. He just took it for granted that they would always be in a position to be severely oppressive if they so chose.

So then for Thompson to claim that there’s been this deep strain of interest in economic equality throughout Western and American thought seems a bit of a stretch. Are we talking about real radical equality here, or are we talking about a desire on the part of wealthy people to mollify the underlings enough so they don’t make trouble? Because if it’s the latter, undertaken by wealthy classes whose bottom line interest was preserving their own wealth and power from disturbances, then they don’t get a whole lot of credit for wanting “equality” in my book. When you say that inequality is at heart a political issue because it creates inequities in power, than the just position is to be defending individual liberty (of all individuals) against abuses of economic or political power, not conceding just enough to maintain the security and influence of the powerful. So while that doesn’t necessarily have to mean equality of outcome, it does need to mean equality of something. Not just a bare minimum of human dignity.

Thompson, Michael J. The Politics of Inequality: A Political History of the Idea of Economic Inequality in America. New York: Columbia, 2007.

Smith, Adam. Wealth of Nations, An Inquiry into the Nature and Causes of the. In Heilbroner, Robert (Ed.) The Essential Adam Smith. New York: W.W. Norton, 1996.