“As someone from Adam Smith’s neck of the woods, what I’m really wondering if why people continue to refer to his legacy as though it’s something to be proud of. Just about every problem we see in the modern world can be traced back to his system of economics…I’d have thought by the 21st Century we’d have adopted something designed for humans and not the ‘invisible’ or rather the ‘inhuman’ hand of business and the free market.”

Actually, virtually all the problems you blame on “Capitalism” existed, to a far larger extent, in Socialist countries like the U.S.S.R, Maoist China, Cuba, North Korea, and the socialist eastern bloc countries.

The main problem with free market is that there isn’t a photogenic rock-star icon like Che Guavara for free markets… and it is far less sexy to run a company manufacturing synthesizers for example, than it is to kill the people who run the synthesizer company for being capitalist counter-revolutionary pigs. Violence is sexy, and so idiologies based on violent revolution are very attractive to young people.

It’s just plain woolly thinking to blame the free market economy for every problem we see in the modern world! Especially without also giving it credit for all the prosperity. Free markets are the most human of all economic systems because decisions are made at the personal level by the consumer. Designed systems stifle creativity and always fail.

His “The Theory of Moral Sentiments” is an essential read for anyone who studies moral philosophy.

But aside from that, there are clearly others whose theories have much greater relevance today. However, because they build upon the basic economic theories outlined by people like Smith, David Ricardo, and John Stuart Mill they are a bit harder to grasp for those unfamiliar with the subject.

Consequently, I’m at times influenced to some degree both by John Maynard Keynes and Friedrich Hayek. Don’t be mistaken folks, I do believe occasionally in government intervention but only when there is something clearly broken about a specific part of the market.

Overall I believe the market system works amazingly well. Consider the tremendous advancement in the American standard of living over the past century. If you honestly believe that a non-market system would produce better results I suggest you visit the former eastern block sometime.

That said, the market isn’t perfect. No economic system is. However the market is by far the absolute best method of managing the preferences of individuals on the macroeconomic level.

Yes, I clearly studied this stuff in college. I honestly had many of the same feelings bliss had at one point in my life. However the intellectual argument for the free market (which includes mostly unrestrained legal corporate practices) is much stronger than any that advocates some sort of socialist or mixed economy. Reading up on the theories and comparing it to how the world really operates highlights this truth.

But I digress. I think that people need to have a healthy level of doubt when it comes to their beliefs. There’s social conservative aspects of Hayek and Milton Friedman’s theories that I find particularly unpalatable. That’s why it’s always best to be knowledgeable about a wide range of topics, but be open enough to synthesize your own views.

Laters.

link for me, Peter?

Blogger bliss said…

Hi Gavin,

I just wanted to say that my argument over at CDN was intended to highlight the influence that corporate marketing and advertising has on the consumer. That corporations intend to influence markets to some extent by influencing the behavior of consumers through marketing and advertising campaigns.

Will hundreds of millions of viewers tune in to watch the Super Bowl this coming Sunday? You bet. Will each of those viewers also be a fan of professional football? Most likely not. Many will only tune in so that they can feel as if they are taking part in the circus and show — they regard it as nothing more than 4th of July of the wintertime. For those and many others the Super Bowl is the only football game, amateur or pro, that they watch during any year. So, how many supermarkets and liquor stores, who have their own marketing and advertising campaigns, are also trying to cash in on the hype that the major TV sponsors of the Super Bowl have cooked, brewed, and are currently serving to the public?

I’m not sure that I created the impression that Adam Smith’s “invisible hand” is responsible for the behavior of consumers. What I intended to express and explain was that the behavior of consumers is often influenced by the invisible hand of hype that’s delivered through the channels of corporate marketing and advertising campaigns. In response to Atomic_Afro, where I quoted a passage that referenced Adam Smith and his work “Wealth of Nations”, it was with the intent of saying that people are a component of business. That ethical and moral considerations play a part regardless of the corporation’s duty to its shareholders. I admit that I was not that explicit. Nevertheless, my intention was not to drag Adam Smith’s legacy through the mud, so to speak.

In other words, I was explaining a possible cause of consumer behavior in the marketplace. A cause other than price. Consumers form but one of several components of the marketplace. I was not necessarily explaining market behavior.