Economics and Context

Starting in the eighteenth century, according to Robert Heilbroner, “the idea of gain which underlay [capitalism] was so firmly rooted that men would soon vigorously affirm that it was an eternal and omnipresent attitude” (36). Still, even though “The world of Adam Smith has been called a world of atomistic competition” (56), Heilbroner suggests that we ought to keep in mind that Adam Smith’s world was, in fact, eighteenth-century England, and not twenty-first century global culture. The free marketeers and libertarians who sing the praises of Adam Smith in support of lassez-faire deregulation seem to me to be deeply conservative in the persistent belief that there are ahistorical and transcendent principles that ought to govern human interaction — economic, social, or otherwise — no matter what the context, forgetting that capitalism itself arose out of historically transcendent circumstances. In a world of huge and increasing inequality, is it really appropriate to cite an eighteenth-century moral philosopher as support for the dictum of everyone for herself? It might provide a useful antidote to consider, as Heilbroner does, Smith’s characterization of “the mean rapacity, the monopolizing spirit of the merchants and manufacturers” who “neither are, or ought to be, the rulers of mankind” (66), and suggestion that the laborer’s “manly virtues” will suffer “unless the government takes some pains to prevent it” (67). Or to consider the ideas of Smith’s successor, businessman and successor David Ricardo, who “saw that the escalator [of progress] worked with different effects on different classes, that some rode triumphantly to the top, while others were carried up a few steps and then were kicked back down to the bottom. Worse yet, those who kept the escalator moving were not those who rose with its motion, and those who got the full benefit of the ride did nothing to earn their reward” (77). Even a George W. Bush cabinet sock puppet like economist and textbook author N. Gregory Mankiw concedes the massive influence of Smith and Ricardo on contemporary mainstream economic thought in his books — but only insofar as they support the dogma of competition and advantage. Mankiw bowdlerizes the very foundations of his own work, throwing out what doesn’t suit him — and yet this work is, again, supposed to present transcendent and ahistorical principles that apply regardless of context. This is, of course, nonsense: the economic is as local and particular as the political.