Oh my, how amusing

Paul Sagar used to be a commentator around here at this blog. He then blogged a bit, now he’s teaching:

Paul Sagar is a lecturer in political theory in the Department of Political Economy, King’s College London.

OK.

Not sure he took quite the right message from reading here though:

Neoliberals often invoke Smith’s name, believing him to be an early champion of private capitalist endeavour, and a founder of the movement that seeks (as Thatcher hoped) to ‘roll back the frontiers of the state’ so as to allow the market to flourish. The fact that there is a prominent Right-wing British think tank called the Adam Smith Institute – which since the 1970s has aggressively pushed for market-led reforms, and in 2016 officially rebranded itself a ‘neoliberal’ organisation – is just one example of this tendency.

It is certainly true that there are similarities between what Smith called ‘the system of natural liberty’, and more recent calls for the state to make way for the free market. But if we dig below the surface, what emerges most strikingly are the differences between Smith’s subtle, skeptical view of the role of markets in a free society, and more recent caricatures of him as a free-market fundamentalist avant-la-lettre. For while Smith might be publicly lauded by those who put their faith in private capitalist enterprise, and who decry the state as the chief threat to liberty and prosperity, the real Adam Smith painted a rather different picture. According to Smith, the most pressing dangers came not from the state acting alone, but the state when captured by merchant elites.

The ASI being one of the prominent groups and places which make exactly this point, no?

And I’m sure he must have misunderstood this:

Indeed, Smith’s single most famous idea – that of ‘the invisible hand’ as a metaphor for uncoordinated market allocation – was invoked in precisely the context of his blistering attack on the merchant elites.

The only WoN mention of invisible hand is about domestic versus foreign investment. Really, nothing at all to do with the later use of the metaphor.

29 comments on “Oh my, how amusing

  1. A meme is gradually forming on the Guardian benches to the effect that Adam Smith was basically the person who first devised the Welfare State and did not like marketd. I guess this is part of the formation of this meme. DBCR will no doubt come along and instruct us in his charm and fact free way, along with another of his wank fantasies about Thatcher and how much better he is than her and something about gold and Jews….

  2. Ah, but DBC has one tiny element of a point. That he endless over- and often ab-uses.

    That Smith was actually quite keen (followed by Ricardo and George) on a properly constructed Land Value Tax.

    Of course, almost all the proposals from serious political actors regarding LVT are not properly constructed but then, that’s politics for you.

  3. People no longer read primary sources, but instead read biased ‘interpretations’ of them.

    For example, most people on the Left won’t have seen Jordan Peterson’s interview on C4, but will have instead seen various tweets, articles and blogs completely misrepresenting it. Thus their opinion of Peterson will be de facto a hostile (and uninformed) one.

  4. My favourite primary source for political mangling and misrepresentation is of course J.S. Mill’s “On Liberty”. Enormous efforts have been expended misrepresenting him and his ideas.

  5. Rob,

    Re JP – even the Speccie got in on that meme today. Somehow vile comments on the internet, on Channel 4’s youtube channel, invalidate JP’s opinion. Or, of course, the _opinion_, however strongly evidenced, that it was a train-wreck interview, is refuted by the _fact_ that there are rude, sexist idiots on the interweb.

    I don’t think Newman’s ineptitude was due to her being a woman. I think it was a combination of her style being aimed at, in a much shorter interview, keeping politicians from roaming off question, and her worldview being directly antagonistic to Peterson’s (the whole 7 women in charge of FTSE100 companies being ‘unfair’ was the obvious demonstration of that.)

  6. All the mangling of Smith comes from right-wingers who make out he is blanket Anti Tax when, in fact, he stated in Wealth of Nations that since good government tends to put up land prices, particularly beneath houses, it has a legitimate right to levy a tax on land so enhanced–but practically nothing else,he insists.
    With industrialisation this tax take would become enormous and allow great redistribution. But the ASI underplays Smith ,the distributor of easy tax largesse, and prefers to misrepresent him as one who sees all flows of wealth as coming only from the hardest competitive trade.Tim Worstall is a particular offender ,damning him with faint praise ,but not facing up to Smith’s potential to galvanise the economy with land tax revenues recycled through the public sector.
    Don’t forget Smith’s revolutionary statements were made in 1776 and are struggling to be heard even now.

  7. With industrialisation this tax take would become enormous and allow great redistribution

    Really. Citation needed. An LVT on _unimproved_ land will be come enormous?

    No, the usual LVT proposed by idiots would, because it takes in to account the user’s (who may or may not be the ‘owner’) improvements. Like building a large factory.

  8. “right-wingers who make out he is blanket Anti Tax ”

    book 1, Chap 9:
    “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things. ”

    He is not blanket anti-tax, but he makes a strong case that there isn’t a strong case for a strong, large state.

  9. Indeed, Smith’s single most famous idea – that of ‘the invisible hand’ as a metaphor for uncoordinated market allocation…

    I was under the impression that that use of ‘the invisible hand’ was from The Theory of Moral Sentiments, which I’ve also not read.

  10. “Paul Sagar used to be a commentator around here”

    Under what moniker? I’ve been reading your blog from its early days, and I don’t recall that name.

  11. @SE
    Citation needed? Try Googling: unimproved value of land act
    ACT being responsible for the LVT levied in the Australian territory round Canberra . LVT is operational ( in places other than Britain naturally).
    @P-G . Smith doesn’t specify that the LVT revenue should support a left-wing or welfare state or even ‘statist’ set-up.
    This is why Land Tax movements often have left wing and right wing members in broad agreement.

  12. Just to explain to visitors who may not be used to DBC and his, err, felicities with facts (ie, he’s found something on the internet that he thinks people who don’t bother to check might believe agrees with whatever he is pretending this time around):

    From the ACT Revenue website:

    Land tax applies to residential rental properties. Land tax also applies to residential properties owned by a trust or corporation, even if those properties are not rented. Land tax does not apply to commercial properties.

    Please explain how this is an effective LVT? It applies neither to residential owners not to commercial owner-users of commercial properties.

  13. The NewmanPeterson i/v was spectacular, because he was spectacular and she thought she could get away with the same old lazy sniping.

    Peterson showed how to do it: Socratean, even-tempered, well-informed.

  14. @SE If you were able and willing to follow the given citation you would see “The unimproved value is what the block of land is worth without any improvements on it such as buildings, landscaping, paths and fences.” I can’t imagine where you have ended up .
    I was presupposing a certain amount of basic intelligence.

  15. Land tax applies to residential rental properties

    If that is true and residential ownership isn’t taxed it’s the worst LVT imaginable. Taxing the person renting the house on the land but not the owner who captures the surplus value? Fucks sake!

  16. “I was presupposing a certain amount of basic intelligence.”

    We made that mistake with you and look where it got us.

  17. DBC,

    You really are a moron aren’t you?

    If it isn’t a comprehensive LVT, it can’t be a comprehensive unimproved value LVT.

    I asked you, if you can remember, to justify your assertion that “With industrialisation this tax take would become enormous and allow great redistribution”.

    You have asserted that a unimproved value limited LVT exists in one state (not country, state. And a massively undervalued one – not in economic terms – by the residents in the rest of the country. Even the bloody Tasmanians treat Canberra as the slum of the Earth.)

    Okay, fine. You win. Just remember that it is a completely spurious battle of your choice. So no cigar.

    Dickhead.

  18. Is this jumping the shark?

    11
    The existing liberal international order cannot be saved because it is beyond salvation. The only question is what replaces it?
    Posted on January 23 2018

    Martin Wolf has just noted on the FT website that:

    Today … the liberal international order is sick. As Freedom House’s Freedom in the World 2018 states, “Democracy is in crisis.” For the 12th consecutive year, countries that suffered democratic setbacks outnumbered those that registered gains.

    Before adding:

    Under Mr Trump, the US also questions the fabric of international co-operation — security treaties, open markets, multilateral institutions and attempts to address such global challenges as climate change. It has, instead, proclaimed its intention to look after its own interests, even at the direct expense of longstanding allies.

    And noting that:

    Nor is the underpinning of the world economy in better shape. The economy may be recovering, but no significant trade liberalisation has occurred since China’s accession to the World Trade Organization in 2001. Brexit will also prove to be an act of deglobalisation.

    Then concluding

    Those who believe in the symbiosis of democracy, a liberal world economy and global co-operation simply have to find all this more than a little scary.

    Before arguing that:

    The liberal international order is crumbling, in part because it does not satisfy the people of our societies. Those who attend Davos need to recognise that. If they do not like Mr Trump’s answers — they should not — they need to advance better ones.

    The overall goal Wolf has in saying all this is as, as the headline notes, that:

    [Davos] delegates need to consider what is to be done to save the [liberal international] model from wreckage

    Now Martin Wolf is no fool, but he’s very clearly asking the wrong question. What is clear is that the liberal international model as was is, as I noted yesterday, dead. So the only question to be asked is not what can save the existing, and deeply corrupted, liberal international order that is beyond salvation as a result, but what better order might replace it?

    I am glad Wolf agrees the parrot is nailed to its perch. But it’s pointless to pretend it is alive as a result, and that is what he is still doing.

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    11 Responses
    Robert Philip Bruce says:
    January 23 2018 at 7:09 pm
    The World now faces complex and rapidly evolving challenges which cannot be answered by simplistic historical ideologies, of either right or left wing politics. The answer to this problem is to delegate the power to make economic decisions to a level never yet attempted in human society.

    It should be easily understood that money is essentially the power to control the work of others. The right wing want all this power to reside with corporations and owners of wealth, while the left wing want the government to control spending, so that they can determine what jobs are available ( including so called job guarantee schemes ). But the real answer is to be brave enough to give this power for the first time to individual citizens and local communities in the form of a Universal Basic Income.

    Once their basic spending needs are met, individuals are free to determine their own “work” priorities and come together with others to do what seems important to them within their local communities. Such an approach scares the pants off politicians and academics alike, who all suspect that working people are either inherently lazy and/or too stupid to be trusted to make the right decisions. The truth of course is that many will make mistakes, but for each individual or community that gets it wrong, there will be many more that thrive, creating new models and successful examples for others to follow.

    The real question is whether the elites who already have the personal freedom that only education and stable income can convey (including politicians, journalists, campaigners and probably anyone reading this article), are willing to see this power of choice given to every citizen. Once we are willing to take this step we will unlock human potential across our societies far beyond anything we have seen in human history to date. But will any of those who fight constantly to carve out just a little corner of power over policy, be willing to give it over to ordinary citizens, and create a different kind of economy. So far few show this maturity of spirit, but we can yet hope.

    Reply
    Steve Day says:
    January 23 2018 at 7:54 pm
    What new system?

    My money is on a system very similar to the current one, which has created more wealth, seen more innovation and lifted more people out of poverty in the last 100 years than has occurred in the whole existence of mankind before.

    Certainly not the sort of poverty creating, incentive destroying centrally managed economy that you would prefer. That’s about as inviting as a week old dead fish for supper.

    Reply
    Richard Murphy says:
    January 23 2018 at 9:13 pm
    I argue for a mixed economy in which private enterprise plays on a level playing field

    What’s your system? Please tell me (spoiler: it’s not what I am asking for)

    Reply
    Duncan Thickett says:
    January 23 2018 at 9:25 pm
    Care to name one thing currently done mostly by government which should be done by the private sector?
    And one thing currently done mostly by free enterprise that government should do?
    That would at least be a sign of a mixed economy fan.

    Richard Murphy says:
    January 23 2018 at 9:38 pm
    Government has been so cut back it is hard to think of a move required in that direction

    The Royal family could raise theor own funding though

    After that I struggle becasue far too much ahs been privatised already

    All natural monopolies have to be in the state sector to prevent abuse: there is no market

    And to deliver a true mixed economy tax collection has to be properly enforced

  19. All natural monopolies have to be in the state sector to prevent abuse: there is no market

    I don`t see how having a natural monopoly run by another one prevents abuse and I doubt we would all agree about what is or is not a natural monopoly . Would education and health , for example be natural monopolies , energy supply or the Railways ?
    If you take education , for example the private sector certainly crowds out the Public sector and I see no justification for tax breaks given to those who wish to buy advantages for their children from Commercial organisations .
    On the other hand we could easily have a ferocious market in the provision of education within the framework of social goals decided by us all . People who are rich but stupid could still buy their tutors but the costs for basic education could be vastly better controlled
    We currently run Primary schools on the basis that a career in marking 8 year old potato prints is a suitable background to run a large business …… the chaos that ensues is hardly surprising

  20. Newmania, you are on an entirely other planet if you think that the 8% private schooling sector “crowds out” the 92% that’s public.

    Since neither education, energy, or health are provided on a monopolistic basis in most European countries, I think it’s fair to say that they’re not “natural monopolies”.

    “I see no justification for tax breaks given to those who wish to buy advantages for their children from Commercial organisations .”

    Except that very few private schools are commercial organisations. Which you’d know if you knew anything about them.

    And why not ask yourself the question as to why private schooling is seen as an advantage? It’s cos the state provision is, in general, crap. And parents pay for good state schools via increased housing prices in their catchment areas.

  21. If I were to take the 8% of your life that was the best bit do you think you would notice ?
    Numbers are not everything, a pound of flesh would hurt . It is commonly observed that single entrant to a monopoly transforms the market and the social effect of that 8% is transformative for the character of the state educational system, to the detriment of the rest .
    Public schools are commercial organisations in that the fees they charge would have to be higher if they paid taxes simple as that. If we think taxes should be on bad things and tax breaks on good thigs then this selfish behaviour should be taxed.

    Take your point on the problem of housing in this country but that no reason to make a structural problem even worse

    My point however was not only that Public schools are a selfish exercise in opportunity hoarding which should bear punitive taxes if not an outright ban . My point was that introducing the private sector into education could be done with more imagination within a socially good context by outsourcing management

  22. Oxfam is a commercial organisation because it would need to raise more in donations if there wasn’t charitable tax relief on them.

    Hint: No.

  23. Newmania, you’re living in a diffferent world of your own mental creation where terms no longer have their normal definitions.

    If you’re going to play humpty dumpty then there’s no point in discussing anything.

  24. They could take the disordered lump that passes for your brain Facepainter and you wouldn’t even know it was gone.

    Nor would anyone else.

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