Sunday, April 19, 2009

I've been reading Adam Smith's Wealth of Nations this last week. I'd only read the usual assigned excerpts - on division of labor in pins manufacture, of course - back in school. Aside from the strange archaic usages - he uses the term "police" in a fashion utterly alien to modern usage, for instance, almost synonymous with "statute", really - it's quite engaging.

I find that it helps to read period works of analysis like this in an aggressive, argumentative mind-set. Even Smith can argue fallacies, and the free-market commonplaces of economic theory did not spring full-grown from this book, after all. With some effort, you can follow his developing argument against mercantilism, but if you don't pay attention, it can disappear under modern economic assumptions. He's much more hostile to entrepreneurs and labour-centric than his reputation would lead one to assume. You can see why intellectuals & academics as a class would *hate* Smith - he's quite uncompromising in judging them as a class as "unproductive", along with lawyers, courtiers, the military and the clerical order. He's also quite conservative on banking matters, endorsing maximum rates of interest to suppress speculative investment & opposing paper currency likely to gain circulation among consumers, judging paper to be a pure replacement for specie & not at all a supplement.

This passage has never been more apt:
It is the highest impertinence and presumption, therefore, in kings and ministers to pretend to watch over the economy of private people, and to restrain their expence, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.

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