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  • Adam Smith is our guide to perhaps the most pressing dilemma of our time: how to make

  • a capitalist economy more humane and more meaningful.

  • He was born in Scotland in Kirkcaldy – a small manufacturing townnear Edinburgh

  • in 1723.

  • He was a hard working student and very close to his mother.

  • He then became an academic philosopher, wrote a major book about the importance of sympathy

  • and lectured on logic and aesthetics.

  • He was also one of the greatest thinkers in the history of economicsin part because

  • his concerns went far beyond the economic. He wanted to understand the money system because

  • his underlying ambition was to make nations and people happier. Smith remains an invaluable

  • guide to four ideas:

  • When one considers the modern world of work,

  • two facts stand out: - modern economies produce unprecedented amounts

  • of wealth. - many ordinary people find work rather boring

  • and (a key complaint): meaning-less.

  • The two phenomena are in fact intimately related, as Adam Smith was the first to understand

  • through his theory of specialisation.

  • He observed that in modern businesses, tasks formerly done by one person in a single day

  • could far more profitably be split into many tasks carried out by multiple people over

  • whole careers. Smith hailed this as a momentous development: he predicted that national economies

  • would become hugely richer the more specialised their workforces became.

  • One sign our world is now so rich, Smith could tell us, is that every time we meet a stranger,

  • were unlikely to understand what they do. The mania for incomprehensible job titles

  • Logistics Supply Manager, Packaging Coordinator, Communications and Learning Officerprove

  • the economic logic of Smith’s insight.

  • But there is one huge problem with specialisation: meaning. When businesses are small and their

  • processes contained, a sense of helping others is readily available.

  • But when everything is industrialised, one ends up as a tiny cog in a gigantic machine

  • whose overall logic is liable to be absent from the minds of people lower down in the

  • organisation. A company with 150,000 employees distributed across four continents, making

  • things that take five years from conception to delivery, will struggle to maintain any

  • sense of purpose and cohesion. So Smith discerned that bosses of the specialised

  • corporations of modernity therefore have an extra responsibility to their workers:

  • to remind them of the purpose, role and ultimate dignity of their labour.

  • Smith’s age saw the development of what

  • we’d now call consumer capitalism.

  • Manufacturers began turning out luxury goods for a broadening middle class.

  • Some commentators were appalled. The philosopher Jean-Jacques Rousseau wished to banluxury

  • from his native Geneva. He was a particular fan of ancient Sparta and argued that his

  • city should copy its austere, martial lifestyle.

  • Disagreeing violently, Smith pointed out to the Swiss philosopher that luxury consumerism

  • in fact had a very serious role to play in a good societyit generated the surplus

  • wealth that allowed societies to look after their weakest members. Consumer societies,

  • despite their frivolity, didn’t let young children and the old starve, for they could

  • afford hospitals and poor relief.

  • So Smith defended consumer capitalism on the basis that it did more good for the poor than

  • societies devoted to high ideals. That said, Smith held out some fascinating hopes for

  • the future of capitalism. He didn’t want it to stay stuck at the frivolous level forever.

  • He observed that humans have manyhigherneeds that currently lie outside of capitalist

  • enterprise: among these, our need for education, for self-understanding, for beautiful cities

  • and for rewarding social lives.

  • The hope for the future is that well learn to generate sizeable profits from helping

  • people in truly important, ambitious ways. Properly developed, capitalism shoudln’t just

  • service our basic material needs while exciting us to buy frivolous things. It should make

  • money from goods and services that deliver true fulfiflment.

  • Then as now, the great question was how to

  • get the rich to behave well towards the rest of society. The Christian answer to this was:

  • make them feel guilty.

  • Meanwhile, the radical, left-wing answer was then and is now: raise taxes. But Smith disagreed

  • with both approaches: the hearts of the rich were likely to remain cold and high taxes

  • would simply lead the rich to flee the country.

  • He proposed that, contrary to what one might expect, it isn’t money the rich really care

  • about. It is honour and respect. The rich accumulate money not because they are materially

  • greedy, but primarily in order to be liked and approved of.

  • So rather than taxing the rich, governments should understand the vanity at the heart

  • of the rich and their motivations.

  • They should therefore give the rich plenty of honour and statusin return for doing

  • all the good things that these narcissists wouldn’t normally bother with, like funding

  • schools and hospitals and paying their workers well. As Smith put it,

  • The great secret of education is to direct vanity to proper objects.”

  • Big corporations feel very evil to us now, the natural targets of blame for low-paying

  • jobs, environmental abuse and sickening ingredients.

  • But Adam Smith knew there was an unexpected, and more important, element responsible for

  • these ills: our taste. It’s not companies that primarily degrade the world. It is our

  • appetites, which they merely serve.

  • As a result, the reform of capitalism hinges on an odd-sounding, but critical task: the

  • education of the consumer. We need to be taught to want better quality things and pay a proper

  • price for them, one that reflects the true burden on workers and the environment.

  • A good capitalist society doesn’t just offer customers choice, it also teaches people to

  • exercise this choice in judicious ways. Capitalism can, Smith suggests, be saved by elevating

  • the quality of consumer demand.

  • The economic state of the world can seem at

  • once so wrong and yet so complicated, we end up collapsing into despair and passivity.

  • Adam Smith is on hand to lend us confidence and hope. His work is full of ideas about

  • how human values can be reconciled with the needs of businesses. He deserves our ongoing

  • attention because he was interested in an issue that has become a leading priority of

  • our own times: how to create an economy that is at once profitable and civilised.

Adam Smith is our guide to perhaps the most pressing dilemma of our time: how to make

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POLITICAL THEORY - Adam Smith

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    k2466812 posted on 2017/03/13
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