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Will the real Adam Smith please stand up?

The Scottish economist Adam Smith is to appear on the new £20 notes. I must say I wasn't terribly happy on hearing the news- I've always seen him representing the worst and ugliest side of businesses and capitalism- if the Adam Smith Institute is anything to go by, anyway...

However this article in the Guardian says the Left has claimed Smith as one of their own as well, telling of his work The Theory of Moral Sentiments in which he expressed his profound dislike of selfishness and the belief that businesses have a moral duty to show sympathy for others.

So who's the real Adam Smith? A greedy tax-hating, free market fundamentalist just like the Institute that bears his name, or a socially responsible caring economist who recognised the need to help others and urged social responsibility and selflessness from businessmen?
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Comments

  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    as i understand things, he theorised on the best way to get was you wanted for the most people... though I could be wrong. But this would imply exploiting someone's needs/wants for the greater good from his perspective, but just be exploitative from someone else's
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    There's no contradicition. He argued that free markets are the best system for both the poor and rich in creating wealth and happiness for all. As such he also believed that the wealthy had a duty to be charitable (ie off their own accord, rather than through taxes).

    You can argue whether he's right or not in that predicition of course (for my money the theory is sound. However, like a military plan never survives first contact with the enemy; political, economic and social theories never survive first contact with the people)

    Mind you it also may be hard to argue that Gordon Brown is an economic leftwinger...
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Why are the two mutually exclusive?

    Low taxes and low state inteference is the best for business; caring about employees and ensuring that the poor and weak and cared for is the best for business. Adam Smith's work was always about both, as was the work of Jeremy Bentham that followed.

    There's a reason why places like Port Sunlight and Saltaire got built, after all, and it wasn't solely due to charity. The best employers with the best conditions had the best employees and made the best products, making the most money. Salt's wool was renowned for its quality, and Lever's are still in Cheshire making chemicals now.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Unfortunately we cannot rely on charity donations to help the poor and needed. Never could, and chances are never will.

    Of course, taxes are for a great many things more than just helping the poor and needed. There is no way the money this country needs for various projects from health to education to transport to many others could be raised by charity donations.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    Unfortunately we cannot rely on charity donations to help the poor and needed. Never could, and chances are never will.

    There were enough philanthropists who showed otherwise, especially people like Sir Titus Salt who paid for his employees retirement and illness- a relevation at the time. You should look at Saltaire village, at New Lanark, at Port Sunlight.

    These towns go beyond charity- they make solid economic sense. That was Smith's point and that was Bentham's point- health and education are investments that need to be funded in order to succeed at business.

    If anything taxation removes the responsibility of society for the poor and the infirm- the Government will take care of it all, so why do we need to worry?
    There is no way the money this country needs for various projects from health to education to transport to many others could be raised by charity donations.

    Why does it need to be by tax though?

    The railways and canals were built without a single penny of taxation money being spent on them.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    In today's world I cannot think of any alternatives on how to upkeep vital public services and infrastructure. User fees would simply not be enough unless people were charged the earth for it.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    In today's world I cannot think of any alternatives on how to upkeep vital public services and infrastructure. User fees would simply not be enough unless people were charged the earth for it.

    What's the difference between paying the Government to manage a hospital through your pay packet, and paying BUPA to do so? BUPA's profit is more than offset by the additional bureaucracy costs of having the governmental middleman.

    The transport infrastructure, in particular, was far more vibrant when it was privately owned.

    The notion of taxation to pay for public services is only 50 years old, after all.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    Unfortunately we cannot rely on charity donations to help the poor and needed. Never could, and chances are never will.

    Of course, taxes are for a great many things more than just helping the poor and needed. There is no way the money this country needs for various projects from health to education to transport to many others could be raised by charity donations.

    All that says is that in the real world Adam Smith was wrong. It doesn't mean his thinking was inconsistent. Nor does it mean that those who believe in free markets are deliberately ignoring the poor - I belive in a mixed economy capitalism as the evidence seems to suggest to me that this is the best system. Others see the evidence and believe that the best way yo help the poor is through a totally free market. God forbid, some people see the evidence and still believe Socialism is the best way to help people.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote:
    What's the difference between paying the Government to manage a hospital through your pay packet, and paying BUPA to do so? BUPA's profit is more than offset by the additional bureaucracy costs of having the governmental middleman.

    If you compare how much the US spends on Healthcare and how much we do, the difference is about 4% of GDP.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    budda wrote:
    If you compare how much the US spends on Healthcare and how much we do, the difference is about 4% of GDP.

    Which way? I also assume that when we're measuring healthcare we're measuring not just the direct costs of healthcare, but the indirect costs, eh how much each of us spends on beuracracy, buildings, etc. I suppose a direct correlation would be possibvle between how much we actually spend on drugs, but is it possible to compare wage costs between a US Doctor/nurse and a UK one?
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote:
    What's the difference between paying the Government to manage a hospital through your pay packet, and paying BUPA to do so? BUPA's profit is more than offset by the additional bureaucracy costs of having the governmental middleman.

    The transport infrastructure, in particular, was far more vibrant when it was privately owned.

    The notion of taxation to pay for public services is only 50 years old, after all.
    Funnily enough so is the NHS ;)

    Before that, millions of people had no access to a doctor. As it is indeed the case in countless other nations, including the world's richest.

    The fact is that in practice is is impossible that a country today could cater for the needed and offer decent, appropriate and affordable services and infrastructure for all without taxes.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    budda wrote:
    If you compare how much the US spends on Healthcare and how much we do, the difference is about 4% of GDP.

    The US government pays for 60% of the healthcare funding in the US. Alot of the difference between European health spending and US is the massive amounts spent on research.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    NQA wrote:
    All that says is that in the real world Adam Smith was wrong. It doesn't mean his thinking was inconsistent. Nor does it mean that those who believe in free markets are deliberately ignoring the poor - I belive in a mixed economy capitalism as the evidence seems to suggest to me that this is the best system. Others see the evidence and believe that the best way yo help the poor is through a totally free market. God forbid, some people see the evidence and still believe Socialism is the best way to help people.
    If I had to choose between Socialism and Free Market I wouldn't hesitate for one second to choose the former.

    In theory both movements claim to work for all and to ensure the needs of the poor are met. In practice neither system has pulled the trick. But I know which one is fairer and if implemented properly has a bigger chance of success.

    The much trumpeted 'trickle down effect' is IMO a monumental load of rubbish, and a theory brought up at every opportunity by free market supporters and the rich to justify their selfishness and reluctance to part with any of their wealth, no matter how small.

    Though I'm happy to agree with you that Adam Smith himself might have come with very honest and honourable sentiments, most of his present day advocates have a rather different agenda and feelings.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    NQA wrote:
    Which way?

    Total health expenditure as % of GDP

    http://www.who.int/countries/gbr/en/ = 8% of GDP

    http://www.who.int/countries/usa/en/ = 15.2 of GDP

    That's according to the WHO.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:

    'trickle down effect'

    how 1980s :D
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    minimi38 wrote:
    The US government pays for 60% of the healthcare funding in the US. Alot of the difference between European health spending and US is the massive amounts spent on research.
    Another difference is the millions upon milliions of people who have next to no access at all to healthcare. Or dying people left in a stretcher outside a hospital while doctors argue with managers about whether the victim might have health insurance.

    It is nothing short of a disgrace that in the richest nation on earth millions have no access to health because the immensly rich there don't like paying taxes.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    minimi38 wrote:
    how 1980s :D
    Still brought up regularly when discussing these matters, incredibly enough.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    It is nothing short of a disgrace that in the richest nation of on earth millions have no access to health because the immensly rich there don't like paying taxes.

    Its really not as simple as that, not only is there an instint against trust in government there which we dont really have here. But also, can you imagine the size of a NHS for the whole of the US? Ours is the third biggest employer in the World, it just wouldnt work.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    I believe the 6th or so of the population not covered are covered by goverment health insurance. The people who suffer are those with incomes too high for government insurance or too low to afford or want to pay for private or whose jobs do not contribute.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Who mentioned anything about "trickle down"- the economic theory is that employers make more money out of motivated, educated and healthy workers than they do out of miserable, stupid and ill ones.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    The Scottish economist Adam Smith is to appear on the new £20 notes. I must say I wasn't terribly happy on hearing the news- I've always seen him representing the worst and ugliest side of businesses and capitalism- if the Adam Smith Institute is anything to go by, anyway...

    However this article in the Guardian says the Left has claimed Smith as one of their own as well, telling of his work The Theory of Moral Sentiments in which he expressed his profound dislike of selfishness and the belief that businesses have a moral duty to show sympathy for others.

    So who's the real Adam Smith? A greedy tax-hating, free market fundamentalist just like the Institute that bears his name, or a socially responsible caring economist who recognised the need to help others and urged social responsibility and selflessness from businessmen?

    Why don't you read his stuff then you will find out.....
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    If I had to choose between Socialism and Free Market I wouldn't hesitate for one second to choose the former.

    In theory both movements claim to work for all and to ensure the needs of the poor are met. In practice neither system has pulled the trick. But I know which one is fairer and if implemented properly has a bigger chance of success.

    The free market? It allows everyone to grow wealthier, but you keep to keep the fruits of your own labour and the weak are protected voluntarily rather than cohercion (which reminds me Klintock would love this debate).

    But neither has a chance of being implemented properly - simply because the perfect world both exist in does not and never will exist.
    The much trumpeted 'trickle down effect' is IMO a monumental load of rubbish, and a theory brought up at every opportunity by free market supporters and the rich to justify their selfishness and reluctance to part with any of their wealth, no matter how small.

    Adam Smith isn't really concerned with trickle down. trickle down is that decreasing the taxes of the wealthy will allow them to spend more and thus 'trickles down' to the poorest. Smith's views is that free markets produce competition and competition means that all firms will produce the best quality goods at the lowest price will produce the best products for people and that firms will compete for staff and that will drive up wages and ensure people are well treated (OK thats a very simplified view of Adam Smith and the 'trickledown argument'
    Though I'm happy to agree with you that Adam Smith himself might have come with very honest and honourable sentiments, most of his present day advocates have a rather different agenda and feelings

    I disagree. I've had dealings with the Adam Smith institute and the people in it strike me as much nicer human beings than say, Blagsta. They do honestly seem to believe that a free market is better for both rich and poor than Socialism. You seem to be falling into the trap of thinking 'because I believe something is true, everyone else should believe it is true and if they don't that's because they're evil, with an ulterior motive'
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Toadborg wrote:
    Why don't you read his stuff then you will find out.....
    I was hoping those who have read this books would give me their opinion to start with...
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    NQA wrote:
    The free market? It allows everyone to grow wealthier, but you keep to keep the fruits of your own labour and the weak are protected voluntarily rather than cohercion (which reminds me Klintock would love this debate).
    That whole system is based on the assumption that employers will give employees decent wages instead of rubbish ones.

    Regardless of what the theory might say, the reality is that the more free market a society is, the bigger the gap between rich and poor, and the more miserable existence ordinary workers endure.

    Clearly the system doesn't work. There is too much greed around.

    Adam Smith isn't really concerned with trickle down. trickle down is that decreasing the taxes of the wealthy will allow them to spend more and thus 'trickles down' to the poorest. Smith's views is that free markets produce competition and competition means that all firms will produce the best quality goods at the lowest price will produce the best products for people and that firms will compete for staff and that will drive up wages and ensure people are well treated (OK thats a very simplified view of Adam Smith and the 'trickledown argument'
    Fair enough.


    I disagree. I've had dealings with the Adam Smith institute and the people in it strike me as much nicer human beings than say, Blagsta. They do honestly seem to believe that a free market is better for both rich and poor than Socialism. You seem to be falling into the trap of thinking 'because I believe something is true, everyone else should believe it is true and if they don't that's because they're evil, with an ulterior motive'
    If they really believe that they must be really dissapointed with the way things have turned out just about everywhere.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    That whole system is based on the assumption that employers will give employees decent wages instead of rubbish ones.

    Regardless of what the theory might say, the reality is that the more free market a society is, the bigger the gap between rich and poor, and the more miserable existence ordinary workers endure.

    Clearly the system doesn't work. There is too much greed around.

    But even that is too simplistic- Saltaire and Port Sunlight didn't build themselves.

    Any ideology isn't going to work because they all rely on the "ideal" world which isn't there.
    If they really believe that they must be really dissapointed with the way things have turned out just about everywhere.

    But how much of that is because of Governmental interference?
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    If they really believe that they must be really dissapointed with the way things have turned out just about everywhere.

    I wouldn't have thought so. I just look at the alternatives and how they have failed to produce health, wealth and happiness and think that Mixed market capitalism still produces the best societies. Nowdays hardly anyone (not even the Adam Smith Institute) believes in an absolutely free market, but societies which have mixed free market capitalism with some regulation and Govt economic and social intervention together with the liberalism in ideas and actions needed for capitalism to work tend to be among the world's nicer places.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote:
    But how much of that is because of Governmental interference?
    I'd say none of it. The government certainly isn't stopping anyone from giving their employees decent wages.

    On the contrary, the government goes out of its way to ensure there is such thing as public health, education and infrastructure for all- including those who would simply not be able to afford private alternatives, taxes or not taxes.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    NQA wrote:
    I wouldn't have thought so. I just look at the alternatives and how they have failed to produce health, wealth and happiness and think that Mixed market capitalism still produces the best societies. Nowdays hardly anyone (not even the Adam Smith Institute) believes in an absolutely free market, but societies which have mixed free market capitalism with some regulation and Govt economic and social intervention together with the liberalism in ideas and actions needed for capitalism to work tend to be among the world's nicer places.
    I kind of tend to see high tax places such as Northern Europe nations as the most socially advanced and fair societies in the world.

    Whereas a degree of capitalism does appear in practice to be a necessary evil when it comes to achieving a prosperous society, the closer that society is to free market capitalism the more unjust it becomes. And (IMO, and I know this will not agree with some of you) the higher the taxes, the better and fairer the society.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Aladdin wrote:
    Clearly the system doesn't work. There is too much greed around.


    That isn't the result of the system, that is just the way people are.

    The main point of free market economics as initially espoused by Smith as that given people are self-interested then markets will normally be the most efficient way to organise things. People will do things largely in their own interests whatever so the job is to provide the best framework in which those instincts can be made good use of.

    Smith did not advocate a totally free market (pretty much no-one ever has for that matter) but he saw that private firms could often do things very efficiently (through specialisation and economices of scale) and often governments would stifle that by excessive regulation and interference, often (if not normally in those days) for the benefit of themselves.
  • Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    Kermit wrote:
    There's a reason why places like Port Sunlight and Saltaire got built, after all, and it wasn't solely due to charity.

    So Titus Salt could spy on them ;)
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