Sunday, September 30, 2012
Conservative Economic Theory, Wrong in 1776, Wrong Now
Barry, My Liege :
It is stated and implied by economic conservatives that a minimum of government interference into the everyday activities of the economy will create the best of all possible worlds.
'When producers are free to sell what they wish and consumers are free to buy what they will, then the invisible hand of the market place will deliver the greatest material good to the greatest number of people' is how many conservatives express it.
Although this bedrock belief of many conservatives has been proven wrong by countless studies and theories, it persists to this day.
My Liege, it is worth considering the world in which those theories were created to see where they may be correct and or false.
That world of the 18th Century coincided with the birth of the United States of America.
Adam Smith's WEALTH OF NATIONS, the book which codified and justified this philosophy, was published in 1776, the year of our revolution. Some of our founding fathers explicitly acknowledged that the invisible hand identified by Adam Smith helped in drawing our Constitution.
And, our conservative friends rely on that coincidence to support their free market beliefs.
But, it is significant that even Adam Smith suggested that a just and moral society requires curbs on the free play of market forces in order to secure a decent life for all people.
As he wrote his book, he surely observed the life around him. The life he observed consisted of great accumulations of capital and material wealth together with unimaginable social misery in the England of the 18th century.
Describing that life, here is Esme Wingfield-Stratford, D.Sc., M. A., Ex-Fellow of King's College, Cambridge in THE HISTORY OF BRITISH CIVILIZATION, Routledge & Kegan Paul, Ltd., London, 1928, pp 739-740:
"Such was the agricultural revolution of the eighteenth century, and true to the principles of the time, full play was given to individual enterprise in the simple faith that all things would work together for good for those who loved money. It would have been utterly alien to contemporary habits of thought to have made a serious effort to estimate, much less to control, the social relations of this increase of productive capacity. The peasantry and yeomanry, who were so hard hit by the process of enclosure [diverting public lands to private ownership], were at the same time crippled by the rapid development of the factory system, and the consequent loss of domestic manufactures which had helped them to eke out a living. But quite apart from either of these handicaps, the small man, in this age of rapid innovation, was at a hopeless disadvantage against superior capital and education. Gradually the big estates began to eat up the small ones, and the poor man, with all the odds against him, was silently edged off the land by encroaching capital."
We pray you are able to see the dangers to our countrymen from the application of that philosophy.
Your faithful servant,