Excuse my lengthy introduction which I find necessary to expain my frame of mind.
I ran into a video badmouthing Adam Smith which I dismissed as just another left wing rant. uTube presented me with a pro Adam Smith video which I enjoyed. I decided to set these left wingers straight but to do that I had watch their video one more time. I found two videos about the subject by the same presenter and the same guest. The first one had been a discussion while in the second the speaker was introduced but not further interrupted. During the discussion, the first video, the presenter asked many leading questions which influenced my negative opinion. In the second the presenter identified himself as an economic historian and talked about his methodology, not just repeating the accepted wisdom but tracking down the influences that led economists to their world views. He went as far back as Cicero of Rome and Jean-Baptiste Colbert who “Lent his name to Colbertism, an economic theory that encourages state intervention and protectionism.” I had to look up some of his references which were unknown to me. Quite an educational experience. On to the subject matter.
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Two statements in the Adam Smith video struck a cord, that everyone should have copy of The Wealth of Nations in his library, I do, and that Smith’s early home overlooked a market.
The Colbertian video recounted a number of historical events many of which I was familiar with in support intervention and protectionism. One that struck a cord was about the East India Company. A presentation I watched a long time ago stressed the huge leap the world economy made during the Age of Exploration or Discovery initiated by the Portuguese in the 15th Century. These ventures by no means can be regarded as ‘free trade.’
WalMart is by no means a free market and it is one of the most successful merchandising enterprises of the 20th century. If Adam Smith is right about the market he looked upon in his youth, and I believe he was right, how come that the most notorious economic developments are not the result of free trade but of “intervention and protectionism public and private?” To reconcile Adam Smith and Jean-Baptiste Colbert one needs to turn to the Science of Complexity.
Markets evolved! From group sharing by hunter-gatherers to farmer’s markets with the advent of agriculture to the present day international trading blocks. Clearly the mechanisms to let these diverse markets function had to evolve as the markets’ complexity increased. Smith’s free market philosophy does not scale.
Curiously, democracy proper does not scale either! It worked in Athens where most inhabitants were excluded, slaves and serfs did not vote, they were not part of the ‘demos.’ America proudly declares itself a republic which is an evolved form of democracy where the demos elects intermediaries to represent them. This is another case of evolution of complex systems.
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The videos you might want to watch:
The Real Adam Smith: Morality and Markets - Full Video
Time 56:40
Free Market: The History of an Idea
Time 1:11:43
The Captain