Resolved: Adam Smith was NOT a Capitalist
Debate Rounds (5)
First round is for acceptance only.
Capitalism, an economic system in which the factors of production are privately owned, is commonly attributed to Adam Smith, along with the concept of the "Invisible Hand," (the idea that the market self-regulates). Modern Capitalists and, especially, Libertarians have extended Capitalism to include the role of the government as well. But while the Night-watchman state is partially validated in Smith, there is certainly no indication that Smith believed the private sector was the preferred sector in all cases. This is most notable in his discussion of Education. All of this will be discussed in turn, but first we must define the economic classes in Smith's analysis. We find a detailed discussion of them in Book 1, but the gist of his discussion is found below:
"The whole annual produce of the land and labor of every country, or, what comes to the same thing, the whole price of that annual produce, naturally divides itself, it has already been observed, into three parts; the rent of land, the wages of labor, and the profits of stock; and constitutes the revenue to three different orders of people; to those who live by rent, to those who live by wages, and to those who live by profit." (Smith 2009, 115)
Clearly, the merchants would be the class which gains revenue from the "profits of stock." And here too we find that for Smith, the Merchants are the capitalist class: "His [the laborer"s] employers constitute the third order, that of those who live by profit." (Smith 2009, 116). But what makes Smith"s analysis crucial is that for Smith, the merchant class"s interest are not aligned with the rest of society. For Smith, the landowner"s interests are aligned with society"s interests because their revenue comes from society, independent of any efforts of their own (2009, 115). In addition, because those revenues are not earned by any plan or action on their part, the Land-owning class is fundamentally ignorant of public affairs, unable to make any decisions which may be contrary to their own interests, and thus, by extension, contrary to society"s interests. Thus, the landowners cannot be any threat to the prosperity of society, firstly because their interests are aligned with society from the beginning, and lastly because they are entirely too stupid and ignorant to argue or promote any interests other than their own.
The laborer, too, has his interests aligned with society, according to Smith. "The wages of the laborer, it has already been shown, are never so high as when demand for labor is continually rising, or when the quantity employed is every year increasing considerably. When this real wealth of the society becomes stationary, his wages are soon reduced"When the society declines, they fall even below this." (2009, 116). Thus, we find that Smith considers the landowners and the laborers to be the source of prosperity in society. He calls it "real wealth," and asserts that the landowners and the laborers interests are aligned wholly with those of society. However, the laborers too are ignorant and stupid, according to Smith, because the division of labor which gave rise to the real wealth in society has forced the laborer to concentrate solely on his assigned position and task within the division of labor. As a result, he has neither the time nor necessarily the will to become educated about public affairs, and thus, cannot pose any threat to society"s interests. Two out of the three classes, for Smith, are not just aligned in interests, but entirely incapable of defying them!
So what about the last class, the ones who live for profit? Here, we find Smith taking a wholly un-capitalist and anti-Libertarian approach. The Merchant class, according to Smith, is the most culturally aware and politically adept class. However, their interests are not aligned with Society"s, and are often the polar opposite of Society"s interests. Not only do their interests often deviate from the interests of the society, but "Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw themselves the greatest share of public consideration." (2009, 116) Furthermore, according to Smith, this class is acutely aware of the interests of Society, and adept at political maneuverings. The problem is, they behave with only their interests at heart, and thus not only are they inherently opposed to the interests of Society, they are poised to exact great damage on the interests of society through their awareness of the nature of politics. (2009, 116). "The proposal of any new law or regulation of commerce which comes from this order, aught always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention." (2009, 116) Not only is the Merchant class fundamentally opposed to the interests of Society at large, but society should be extremely wary of anything that comes from the Merchant class. Why are we to be wary? It seems as if Adam Smith was aware of a problem that would plague Capitalists and free-marketers for centuries after: the tendency of the free market to shift towards monopolies. Smith writes that the Merchant class seeks to widen their reach, while simultaneously narrowing the competition, for the sake of profits. (2009, 116) This is extraordinary, because Smith seems to be making the same kinds of arguments that we now hear today against Capitalism itself, only two-hundred and thirty-eight years earlier!
Now for the role of the State. The roles afforded to the State in the world of Smith are limited to the defense of the nation, the maintenance of the justice system, public works, and the maintenance of the sovereign. One would be hard-pressed to find someone who does not agree that the defense of the nation is a priority for the government, likewise for the maintenance of the justice system, or the maintenance of the government itself. The inclusion public works, however, is particularly intriguing, because here Smith takes a distinctly anti-Libertarian or free-market approach. First, Smith asserts that the maintenance of infrastructure is beneficial to commerce, and thus, to society, and as such, the state is not in the wrong when it commits the costs of maintaining infrastructure to the people. (Book V, Chapter 1, Part III, Article 1) Most importantly, however, Smith writes that the government and public should fund public education! According to Smith, the division of labor is to blame for this requirement:
"The man whose whole life is spent in performing a few simple operations, of which the effects, too, are perhaps always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention, in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become." (Book V, Chapter 1, Part 2)
This poses a serious problem for Smith"s analysis. According to Smith, the laborer is the source of technological improvements in production (Book I, Chapter I). How can a stupid and ignorant laborer, as stupid and ignorant as is possible for a human, invent new technology? Smith manages to address this partly, when he asserts that ""the most essential parts of education, however, to read, write, and account, can be acquired at so early a period of life, that the greater part, even of those who are to be bred to the lowest occupations, have time to acquire them before they can be employed in those occupations"" (Book V, Chapter 1, Part 2). His solution, then, is to educate children in the basics before they enter the workforce. This can only be a stopgap, however. For the narrative of the division of labor is that the laborer, through repetition of menial and meaningless tasks, loses his "habit of exertion," meaning whatever habit he once had, is slowly and surely taken from him by the very nature of his work. In this sense, the education of the youth can only stave off the ascension of the laborer to the state of ignorance and stupidity, it cannot prevent it. As if to add to the complications, that education of the society which is to take place in adulthood is religious, and according to Smith, it"s focus is not on the world as we see it, but the afterlife. (Book V, Chapter 1, Part IV) Thus, the religious education can pose little threat to the degradation of the worker"s intelligence.
What we are left with, then, is an Adam Smith who is not only wary of the Capitalistic class, but writes that their interests are diametrically opposed to those of society. Furthermore, we find that Smith believes Public Works and Public Education are the duties of the State, and even writes that private Universities have hastened the decline of education by providing salaries to professors based on endowments and not their performance (Book IV, Chapter I, Article II). All of these combine to form an inherently anti-capitalistic view of the Economy, along with an anti-Libertarian view of the role of the state. I now hand the debate to my opponent.
Smith, Adam. 2009. The Wealth of Nations: Books 1-3. Readaclassic.com.
Smith, Adam. 2009. The Wealth of Nations: Books 4-5. Readaclassic.com
blaze8 forfeited this round.
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