Rocco: Our Enemy Adam Smith!

“It may, perhaps, give the gentleman pleasure to be informed that the net revenue arising from the Customs in Scotland is at least four times greater than it was seven or eight years ago. It has been increasing rapidly these four or five years past; and the revenue of this year has overleaped by at least one half the revenue of the greatest former year. I flatter myself it is likely to increase still further.”

That’s from a letter Adam Smith wrote to his fellow Customs officer George Chalmers on 22nd December 1785. That’s right: his fellow Customs officer. For a dozen years, Adam Smith was an enthusiastic employee of the mercantilist State, enforcing its protectionist measures and taking immense pride in doing so. He even pushed for all imported goods to be automatically taken to be stored in warehouses, so as to make those protectionist measures, and his role in putting them into practice, still more effective.

You don’t hear about this alot though, do you? Oh yeah, everyone knows about pin factories and invisible hands and that. But not this stuff. Adam Smith – champion of free markets – employee of the month at a Customs House in Scotland. How very strange that is! How very disappointing. And, yet – at the same time – how convenient.

There’s the man, and then there’s the myth; the real and the ideal. In the common telling, Smith is the uber-capitalist, he is Mr Free Trade himself. In reality, though, Smith was very comfortable with State intervention.  He was a fan of taxes on imports; taxes on exports; subsidies to various businesses; ‘temporary’ monopolies; regulations; public works; State education; the Post Office; laws against “usury”; the Navigation Acts; heavy taxes imposed on luxury goods, etc. Further, he believed in ‘public goods’, and ‘market failures’. He was also in favour of something resembling a soak-the-rich income tax policy. Then there’s his  labour theory of value which came in very useful for that Karl Marx chap. Not to mention the infamous ‘alienation’ passage.

We might ask, so what if Adam Smith wasn’t fully committed to laissez faire? And indeed, that is not the problem. The problem is that he is thought to be just that, and as a result interventionists have – as far as most people are concerned – a very powerful weapon: The “Even Adam Smith admits…”. Oh, you want to privatise such-and-such? That’s crazy talk. Even Adam Smith admits… Oh, you don’t think the government should be doing such-and-such? That’s ridiculous. Even Adam Smith admits…

And this isn’t limited to Smith. Both Milton Friedman and Friedrich Hayek, considered to be free market fundamentalists by the mainstream, made numerous concessions to interventionism – Hayek disgustingly so. His exclusive focus on the formal requirements of State activity is so ridiculous that it allows for, among other things, forced labour and confiscation of all property. But only as long as such policies are set out in advance and made applicable to all, you understand. So that’s fine then, yeah?

Hayek is openly hostile to laissez faire. He regards ’eminent domain’ (or rather ‘expropriation’ the word he himself  uses) as a legitimate, neccessary function of government. In fact, he makes so many concessions to interventionism he can rightly be termed a social democrat. But… he is a free market fundamentalist, he is the most wild-eyed advocate of laissez faire who ever walked the earth – as far as most people who talk, or rather, hear about economics are concerned. Oh, you want to do away with compulsory  insurance? But even Hayek admits…Oh, you want to do away with the minimum wage? But even Hayek admits… Oh, you don’t like inheritance taxes? But even Hayek admits… Oh, you don’t like health and safety legislation? But even Hayek admits…  Oh, you don’t want the State to ‘invest in infrastructure’? But even Hayek admits…  Again, take Milton Friedman. Opponent of the gold standard, ridiculed “gold bugs”. A proponent of money printing. Dead keen on State intervention to sort out those nasty, nasty negative externalities. Big time advocate of redistributive taxation. But… Friedman is an extreme libertarian, isn’t he? Possibly the most extreme. That’s what I heard.  And even Friedman admits…

Smith, Friedman, Hayek. These represent the boundaries of acceptable discourse. To go further than these puts one beyond the pale. Like I said, how convenient. On our own fair Bogpaper, readers, we have witnessed such tactics. A State-worshipping buffoon left a comment somewhere or other, stating “Even FA Hayek admitted the need for a welfare state. And you don’t get any more pro-market than FA Hayek!” And it is true: Hayek was in favour of a  guaranteed minimum income (which encompassed more than money) which would rise (and encompass more and more) as the general level of prosperity rose. But Hayek is as far out there in capitalist la-la-land as it gets, isn’t he?  Please tell me you’re not actually saying you want to go further than Hayek? No serious person would dream of doing so.  Thus, debate comes to an end

To (almost) return to Adam Smith. I’m not the biggest fan of the Adam Smith Institute. Having said that, there are people associated with the ASI who are very good. Another thing, I believe my distaste for the ASI puts me at odds with the semi-official Bogpaper position, so I will stress that these opinions are my own, and in no way representative of Bogpaper as a whole…yet.

So why don’t I cotton to the ASI?  Because, like the authors mentioned above, it’s damaging to those of us who do advocate free markets and it’s a boon to statists. You might ask: “How can this be? The Adam Smith Institute is one of the foremost advocates of free markets. It’s a force for good. Surely you can’t be serious?” I am serious. And don’t call me Shirley.

Both the ‘Director of Research’,Sam Bowman, and the ‘Head of Macro policy’, Ben Southwood, at the ASI are deeply sympathetic to something called Bleeding Heart Libertarianism. What this means is they believe in Social Justice, redistributive taxation, and egalitarianism. And what this means is, they are not libertarians at all, but rather social democrats. Ben Southwood is the author of ‘A Hayekian argument for the equality of wealth’. Yeah, you read that right. He also wrote What kind of inequality should we be worried about? where he tells us that the type of egalitarianism that he subscribes to (he is a ‘prioritarian’) justifies policies that make some people worse off even without making others better off; and that he is much impressed by claims that the State should redistribute from the “lucky” to the “unlucky”. Yeah, you read that right, too. Sam Bowman is the more well known of the pair. He’s the hip young face of libertarianism in the UK. They have him on BBC3 youth politics programmes. Bowman wrote a piece called “Bleeding Heart Libertarianism and British politics” on the ASI blog, wherein he proposed “libertarian welfarism”. This piece was an outline of a chapter he wrote for a book published by the Liberal Reform group of Lib Dem MP’s. In the full version, he declares himself “very comfortable” with redistribution, and he urges libertarians to “abandon their opposition to wealth redistribution”. What is more, he alleges that a firm commitment to private property is really only a minority position among libertarians anyway. In light of the sort of “even so-and-so admits…” statements taken by enemies of economic freedom, it’s instructive to note that Bowman says this commitment to property rights “only really describes followers of Murray Rothbard and Ayn Rand”, whereas “Hayek and Friedman were both willing to concede numerous areas of policy where property violations were justified”. Clearly then, Rothbard and Rand are more extreme than even Hayek and Friedman! Therefore their views on property rights can be dismissed out of hand. Better to stick with those sensible “libertarians” Hayek and Friedman, eh?

But why on earth am I making such a big deal of this? So what if a couple of important posts at the ASI are filled by chaps who aren’t terribly keen on private property? And so what if the ASI pushes for redistributive taxation in the form of a negative income tax? Well, the Adam Smith Institute is “the UK’s leading libertarian think tank”. It’s a hotbed of free market advocacy. You don’t get any more pro-market.

And even the Adam Smith Institute admits…

20 comments on “Rocco: Our Enemy Adam Smith!

  1. kevinsmith2013
    November 18, 2013 at 6:17 pm #

    I could actually see a situation where I was in favour of wealth redistribution, but only in the context of liberating it from those who have received it themselves through deception, fraud, embezzlement and we all know who they are. These same people should probably be spending the rest of their natural lives in prison, but we also know this is unlikely to happen. They will continue to rip us off, cheat us and lie to us, until their Ponzi scheme collapses around them.

    Anyway, thank you for enlightening us about Adam Smith (no relation) good old Even Hayek (great pun Rocco) and Milton Friedman – although having read “The Shock Doctrine – Naomi Klein” was no fan of his anyway. We need to know these things.

  2. Rocco
    November 18, 2013 at 7:03 pm #

    Thank you, Kevin. That’s very kind of you.

    • dr
      November 20, 2013 at 10:14 am #

      Another one for your letter to Santa.
      “Life after the State: Why we don’t need government” by Dominic Frisby

      • Rocco
        November 20, 2013 at 10:41 am #

        Thank you, dr.

  3. Sam Bowman
    November 19, 2013 at 7:55 pm #

    You may be right that deviations from the purest libertarian position possible – that is, anything short of pure anarcho-capitalism – allow non-libertarians to say that “Even X says…”.

    What you haven’t shown is that this is much of a problem. For a start, it’s a fallacy, and pretty obviously one. It might be useful for propagandists but among serious, intelligent people (and yes, there are plenty of serious, intelligent people who disagree with you) it will not be particularly persuasive.

    Secondly, it doesn’t seem very widespread: a Googling of “Even Hayek Admits…” returns 1,100 results, but about half of the first page’s results are by libertarians complaining about the “Even Hayek admits…” problem – one of the top results is this very article! (A search for “Even the Adam Smith Institute admits”, yields just one result, by the way, and it’s not one I think anyone would mind us “admitting”.)

    So, unless you have any actual examples of “Even Hayek admits…”, we must assume that this is a minor problem.

    On the other hand, there are probably some good things about “Even Hayek admits” too. When it comes to reading non-libertarians, I am more likely to read and think about writers who I think I have some common ground with than writers who I have nothing in common with – I’d prefer to read something by “Marxist libertarian” Chris Dillow or Marxist anarchist Mikhail Bakunin than by Owen Jones or Vladimir Lenin, since the first two probably have more true beliefs than the latter two. Perhaps there are other people like me. If there are, then the existence of heretics like Hayek and Friedman may mean that libertarian ideas gain a wider and more sympathetic audience than they would if these people were as pure as you.

    All of these are empirical questions about strategy, but you have ignored a much more important question of intellectual integrity. The heresies you denounce are beliefs that I hold sincerely, and I presume by the other heretics as well. The final implication of your post is that heretics like us should abandon correct beliefs because they are strategically inconvenient to our wider cause. That’s the intellectual position of a propagandist, not someone who is interested in the truth. In fact, you are quite similar to a progressive who refuses to entertain certain thoughts because they are politically incorrect – the only difference is what you consider to be politically “correct”.

    • Rocco
      November 19, 2013 at 11:16 pm #

      Sam Bowman on our own Bogpaper! Well I never! (How did you find this, if you don’t mind me asking? ) Thank you, very much for replying, dude – and I really do mean that. Incidentally, in a draft of this, when I mentioned you being on TV, I said “…he is a handsome fellow…” I wish I’d kept it in now!
      But to your comment.

      A quick thing, what is it that is a “fallacy”? I’m not sure what you mean by that, man. If you could be more clear, I’d be happy to answer, but I’m at a loss hear now.

      The point of the piece is simply this: that some alleged free market intellectuals are hostile to free markets. Whether this is a big problem or a small one, it is a problem. For one thing, laissez faire is such a minority position that having the “big name” capitalist chaps giving any amount of intellectual ammunition to statists is hardly helpful. For another, people who are initially attracted to free market ideas might end up succumbing to social democratic ideas, given how many concessions the people I mentioned (including yourself) make to State intervention. Another, the popularity of such compromisers ‘crowd out’, so to speak, genuine advocates of free markets. Mises, Rand, Rothbard for example.

      Essentially, in the piece I was writing from a “preaching to the choir” perspective. That is, I didn’t think it neccessary to have to justify opposition to the State stealing from one group to give to another group, given Bogpaper’s libertarian readership – something you’ll not be familiar with over at the ASI. 😉 I’m just messing, dude!
      But honestly, I don’t know where this stuff about “heretics” and my being a propagandist comes from Mr Bowman. I must say, I assumed you were an easy going sort, but reading your comment you seem quite hostile. (Questioning my seriousness and whatnot.) If I’m guilty of provoking this, please accept my sincere apologies. But if it’s to do with the “intellectual integrity” thing, you’re mistaken. I know full well that you are sincere in your beliefs that the State should redistribute wealth, enact egalitarian laws for the sake of social justice etc. And I wouldn’t want you to abandon correct beliefs, Sam. I would be quite happy if you’d abandon the ones about the justice of the State r robbing people.

      • Sam Bowman
        November 20, 2013 at 4:35 pm #

        Hey Rocco – if only you had left that in I would have ignored all the stuff I disagreed with and praised this post to the rooftops…

        What I mean by a fallacy is a logically unsound argument – one that doesn’t actually make sense as an argument. I think that “Even Hayek thinks” is an “appeal to authority” – saying that X is true because John Smith believes it is clearly not a logically sound argument because John Smith may be wrong (even if he is usually right or an expert on this topic). Here’s a longer explanation: http://www.nizkor.org/features/fallacies/appeal-to-authority.html

        You say: “laissez faire is such a minority position that having the “big name” capitalist chaps giving any amount of intellectual ammunition to statists is hardly helpful”

        This is what I’ve tried to address in my comment. Having “impure” free market intellectuals might be harmful for the reason you give because it gives intellectual ammo to statists, but it might also make it harder for them to dismiss libertarianism as a rigid, fringe ideology, so there’s probably a good side to it as well, from a strategic point of view. It’s an open question, and the point I’m trying to make is that it seems at least as likely that having impure libertarians like me and Milton Friedman is helpful to purist libertarians like you and Murray Rothbard. At the very least you haven’t shown that the harm outweighs the benefits.

        When it comes to crowding out, think about the achievements of Milton Friedman and how he achieved them. Possibly the most important was the abolition of the military draft, which was achieved because he was on the govt panel that was chosen to discuss the draft. If Milton Friedman hadn’t existed would Ayn Rand have been appointed instead? I doubt it. And would Ayn Rand have been as persuasive to her fellow panellists as Friedman was? Again, I doubt it.

        I’m sorry if I sounded hostile. This assumption that I (and Hayek and Friedman) am wrong, without any attempt to argue that, is frustrating. Since most libertarians tend to think that Hayek and Friedman had a lot of good ideas about lots of other things, it doesn’t really do to dismiss their beliefs about wealth redistribution the way you might dismiss a random person’s claims about (say) bank regulation. I think that ideological rigidity and political correctness are both very bad things and I worry when I see libertarians who I agree with on 8/10 things treating me as an enemy because of the 2/10 things I don’t agree with them about.

      • Rocco
        November 20, 2013 at 5:41 pm #

        Sam, you may be a handsome devil, but you aren’t half a cheeky bugger! 🙂 I know what a fallacy is, I just didn’t know which bit you were saying was fallacious. And yes I agree with you that arguing from authority is not on. My point was not that such things are a refutation, rather that they can be used to label other beliefs as too ‘out-there’ to be treated seriously.

        Now, I admit that the title wasn’t the best decision, frankly it was a terrible one – ‘enemy’ is far too strong a word. And I’m certainly not of the opinion that there is nothing of value in Hayek, Friedman and others – that would be ridiculous. As it happens, I agree with you, Sam, on plenty of stuff: open-borders, drug legalisation, abolishing prisons, etc. So, regarding the “pure/impure” thing, I agree to a good extent. The problem, as far as I’m concerned at least, is that you concede far too much in terms of State intervention.

        As to my not attempting to show why any of the concessions mentioned are wrong, like I said before, I was writing with an audience largely composed of people who already believe in un-hampered free markets in mind. My intention was to draw attention to the fact that some people commonly believed to be pure laissez faire-ists, deviate from this position to considerable extents. That I’d not anticipated a wider audience reading it, I must attribute to my own naivete.

    • Rocco
      November 19, 2013 at 11:52 pm #

      In fact, Sam, having thought about it, if this really is such a minor problem, then that rather proves my point.

      That even among those who consider themselves free marketeers, so little fuss is made over the stuff that Hayek admits, demonstrates how harmful his admissions were/are.

  4. Ben Southwood
    November 19, 2013 at 8:01 pm #

    Nitpick: due to clumsy wording on my part, you’ve misinterpreted prioritarianism to mean the opposite of what it actually means. (Actually it is a critique of egalitarianism, which says that equality is undesirable because equality sometimes calls for making people worse off even without making other people better off).

    • Rocco
      November 20, 2013 at 12:55 am #

      My word, Ben Southwood, too! I might slag off Madsen Pirie next week in case I can get a comment from him 😀 How is it you fellows are down with Bogpaper? Seriously, man – how did you find this?
      (We’ve ‘spoke’ before you and I, Ben, on that prediction markets post of yours, by the way.)

      So you’re not an egalitarian? But you do believe in redistributing wealth though, don’t you? And you do believe that “social justice is simply justice writ large”? (I’m quoting from memory, but I think that’s from your Hayekian argument for equality of wealth) And I’m right in thinking you’re almost sold on luck egalitarianism, yeah?

      • Ben Southwood
        November 20, 2013 at 11:50 am #

        I’m not exactly sure what I am! Economists have this value ε (epsilon) which they use for “inequality aversion”. When it is 0, one is a pure consequentialist, when it is 1, one is a pure Rawlsian. I am somewhere between a consequentialist and a prioritarian (where a prioritarian is a bit like a more plausible Rawlsian)—I want the most welfare for society but I’m not completely comfortable sacrificing certain people to bad lives for the greater good of society.

        Everyone believes in creating institutions that lead to some outcomes. Some people care about the institutions (Rothbard, Nozick, Hayek, you) and some people care about the outcomes (Friedman, Mises, me). But I don’t think that “redistribution” is very different from “distribution”. I say that *if* market institutions led to people having very bad lives due purely to bad luck, then that would be one important argument for *anyone* to change the wealth distribution.

        The interesting questions are whether (a) cash redistribution systems have to be run by a state-like organisation, (b) any state-like organisation will pick bad policies, institutions etc., so the costs of the welfare system outweigh the benefits (cash payments stopping people from having bad lives), (c) redistribution will reduce incentives to invest and produce on both ends (more than the benefit to the badly-off people), and so on.

        I hope that responds to all of your points satisfactorily!

      • Rocco
        November 20, 2013 at 1:43 pm #

        Ben, thank you for replying. If you don’t mind me saying, although Sam is the more well-known, you – to my mind at least -are by far the more charming!

        So, in simple terms, your position is this:

        Even assuming a world where all property is held legitimately, if the distribution of property makes you feel uncomfortable, the State should step in and forcibly remove property from some people and give it to other people, so that social relations tend towards greater equality.

        That’s a fair description, we can agree? So the question is, how does this position of yours differ from social democracy, Ben?

        As far as your side-point goes, I probably created some confusion with the title (there is a rogue exclamation point typo). It does sound terribly fractious and either/or. It’s meant to be a reference to “Our enemy, the State” by Albert Jay Nock. I certainly didn’t mean that “oh, that Adam Smith is a commie!” or anything. Simply that there are more consistent free market advocates out there than Hayek, Friedman etc.

      • Ben Southwood
        November 20, 2013 at 11:56 am #

        As a side point, it might be worth seeing the issue as not black and white (anarcho-capitalists are libertarian, anyone else is statist) but shades of grey (ancaps are 100% libertarian, ASI is 90% libertarian, current status quo is 60% libertarian, Stalin’s USSR is 5% libertarian). I think it’s a more useful classification, although of course the exact numbers are open to debate!

  5. Ian Wendleford
    November 19, 2013 at 9:52 pm #

    I don’t understand this.

    My gf has recently transitioned from J Goth to Gothabilly, but I still accept her (even though I’m Steampunk Goth, which we can all agree is tonnes different from Gothabilly).

    Can’t we just smash the state?

    • Rocco
      November 20, 2013 at 12:33 am #

      That is a profound, and deeply moving comment, Ian.

  6. Ben Southwood
    November 20, 2013 at 4:12 pm #

    The comment section here seems to only allow three levels of comment stacking, so I’ll have to reply here:

    Market institutions (i.e. property rights that we call “legitimate”) are just one way of organising society. The reason I support them is that they have really good results—societies with market institutions are much more successful than those without. The rules of property are just arbitrary rules that have evolved because they work well. But if the market outcome includes some very bad results, then yes, I will happily change them if I can do so without destroying what makes the market good in the first place.

    I notice you suggest that this is just my view of what constitutes bad results. Well then I think you’re confusing the question and the meta-question. If you want to say that it’s subjective whether or not people living very bad lives is good or bad, then you’re also forced to agree that it’s subjective whether or not property rights are in fact the best way to respect each individual’s subjectivity.

    Property rights have to be enforced on society, whether through the state or private defence companies or individuals or whatever. *You* are just as much choosing to enforce your values (property, libertarianism) on everyone under anarcho-capitalism as *I* am enforcing mine under libertarianism + redistribution. The question is which one leads to a happier, more successful, better outcome for society.

    • Rocco
      November 20, 2013 at 7:27 pm #

      Yeah, that reply limit is a pain, isn’t it.

      Ben, if you want to make this a ‘practical’ question, then you ought to favour anarchism.

      Firstly, if at any time property can be taken from current owners and redistributed to non-owners, then all property becomes, in effect, common property. Therefore, there will be a ‘tragedy of the commons’ effect (however minor) on a universal scale. There will be a tendency by current owners to ‘get the most out of’ their current property before it is snatched away from them. That is, there will be a tendency to favour consumption over investment, with all the problems that go with it.

      Secondly, the practical effect of absolute private property rights is to reduce conflict to a minimum. If you and I were the only two people in the world, and you picked an apple from a tree, it’d be yours to do with as you wish on the basis that you picked it before me. As long as we both accept such a ‘first user first owner’ property institution, there can be no conflict between us, and harmony reigns. But if I – rogue that I am – refuse to accept that particular property institution and say “that’s my apple because I didn’t pick it!”, then there is conflict between us. So if this idea is applied to a society proper, no one can be sure who owns what at any given time, and hence the amount of conflict will be greater than if that society stuck rigidly to the ‘first user first owner’ property institution.

      I hope I’ve expressed that alright, Ben. I’m trying to balance speed of reply, with quality of reply as best I can.

      • Ben Southwood
        November 21, 2013 at 12:34 pm #

        1. Is there really a giant discontinuity between 100% libertarianism and 95% libertarianism? I think 95% libertarianism plus a bit of distribution would in practice leave incentives to work, save and invest pretty much the same. For example, the economically highly libertarian US and UK societies of 1870-1913 saw very substantial growth under their marginal version of libertarianism. You could argue that 1950-70 UK and US saw a similar streak of growth under much less libertarian conditions. I think that markets and capitalism are so robust that even putting them under quite a lot of stress they can deliver the goods.

        2. Did harmony reign in absolutist private property rights regimes? My view of history is that isn’t the case. But more basically, just because we say that property belongs to X, and this is backed up by force, does not mean that this will be accepted by society. In ancap, my ideal, current status quo, socialism there are a certain amount of goods at any one point to be divided out. Getting people to accept the market distribution involves convincing them of its justice or efficacy.

      • Rocco
        November 21, 2013 at 2:57 pm #

        On the first point, Ben, I don’t doubt that markets can cope with a good deal of intervention. The point is they will perform worse with intervention than without. Results will be sub-optimal, that is.

        On the second point, it’s my understanding that ni such regime ever has existed, Ben. But what I meant was that under a pure ‘first user first owner’ system, perfectly enforced, society goes along with as little disturbance as possible. If I own x, you do not, and nor does anyone else. But if I am m merely the current possessor of x, and you and everyone else in society has as much right to out as I do, then there is neccessarily more conflict over scarce resources than in the first case.

        I hope this is clear enough, Ben.

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