Monday, May 26, 2014

Things Adam Smith said that you haven’t heard till now – 2

You knew, of course, that as a free marketer Adam Smith could not have been enamored of monopolies. But to the level of contempt he had for monopolists, perhaps you haven’t a clue. I did not either till I am more than halfway through his book Wealth of Nations.
At first thought I found that strange because in current discussions the free market thinkers even while not endorsing monopoly do not have much nice words to say about the regulators who ensure there is open competition – throw stones at anti-trust regulators, breaking up or avoiding the formation of monopolies or stopping companies from becoming “too big to fail”. Smith’s contempt for monopoly is not as intensely expressed as their contempt for regulation.
How intense was Smith’s feeling against monopolists? I will give you only one short quote:
“[A] company of merchants … by a strange absurdity regard the character of the sovereign as but an appendix to that of the merchant, as something which ought to be made subservient to it …”
If you interpret the quote to suit the current climes, it reads like the Ur clamor for the head of the governments becoming the CEO of the country / states, to focus on market demands and nothing else! What is most interesting to me is the classification of such a clamor as “a strange absurdity”. Must note that it was none other than the high priest of free market thinking who did the classification. Had I thought you would have had the patience to read many statements form the book that carry this tone, I would have given a plethora!
Yes, Adam Smith comes out as a staunch free marketer, but the nuances of his thinking fly above the heads of the current proponents of the same philosophy. Oops, the current philosophy may not have much similarity, except superficially, to what Adam Smith said. This is why you are not hearing a whole lot about the statements I am drip-feeding you!
Raghuram Ekambaram


Amrit Yegnanarayan said...

Thanks for the post. I need to read the book. Looks interesting.

mandakolathur said...

Thanks Amrit ... the next one is up!