Rediscovering Adam Smith Part II: Bringing in Darwin!

While I'm off to Worldcon, let me finish my explication about the rediscovery (especially by liberals) of a co-founder of their movement.

In Part One, I showed how I am no longer a lonely voice, calling for revival of interest in a co-founder of our revolution, Scottish economist and philosopher Adam Smith.  Indeed, among the stupidest failings of today's liberal-moderates has been their failure grasp Smith's importance, and potential usefulness in fighting today's confederate-oligarchic madness.

Again, Smith is most prominently discussed at the moderate-liberal-savvy Evonomics site, where creative market competition merges with compatible notions of public responsibility and a tide of wealth that truly lifts all boats. Those who study Smith are realizing (surprise!) that he despised above all the oligarchic owner lords who cheated in 99% of human cultures -- the same caste the American Founders truly rebelled against.

Here's an amazing slide show of quotations from brilliant modern economists who talk about ways to make market economics more sapient and avoid the one failure mode that always ruined it across 6000 years. 

How weird is it that "libertarians" -- now totally suborned by oligarchs who bought the movement, top to bottom -- now avoid any mention of Adam Smith, or the "c-cord."

Competition.

== Getting part right... and some wrong ==

Ah, but even when smart people dial in to that word, the results can be mixed.

In The Darwin Economy Liberty, Competition, and the Common Good, Robert H. Frank argues that Adam Smith had a poor understanding of competition, compared to Charles Darwin. Unfortunately, the capsule summaries of many books – intending to propel reader interest and potential sales, are often misleading or miss the point. Take this example from the book’s own publisher.

“Smith's theory of the invisible hand, which says that competition channels self-interest for the common good, is probably the most widely cited argument today in favor of unbridled competition--and against regulation, taxation, and even government itself. But what if Smith's idea was almost an exception to the general rule of competition? 

"That's what Frank argues, resting his case on Darwin's insight that individual and group interests often diverge sharply. Far from creating a perfect world, economic competition often leads to "arms races," encouraging behaviors that not only cause enormous harm to the group but also provide no lasting advantages for individuals, since any gains tend to be relative and mutually offsetting.”

That cribbed summary, alas, does Robert Frank no good. (Do online summaries ever convey a book’s core idea well?) This one reveals a stunning lack of understanding of Smith, who said that unregulated competition is exactly what ruined all past societies, because it leads to winners who then cheat, in order to prevent further competition. The resulting pattern - feudalism - always destroyed market creativity… and feudal societies were also immoral. (So said Smith, the author of The Theory Of Moral Sentiments.) 

In fact, Frank in his book debunks the notion that Smith believed in unregulated competition -- unlike the objectivist extremists who have seized on his 'invisible hand' idea.  A direct quote: 

"Smith was well aware that unregulated markets didn't always produce the best outcomes. For the most part, the market failures that were his focus involved underhanded practices by business leaders in a position to wield power."  

Says one of the author’s defenders: “Frank goes beyond Smith in saying that, even in the absence of cheating, even in the absence of incomplete information and irrational choices and all the other ways in which markets fall short, competition for relative goods will by its very nature produce undesirable outcomes, just as competition for mates will produce bull elk that are encumbered by outsize antlers.”

To which I answer… meh. Adam Smith made clear that a society’s fundamental values can be incorporated into weighting various market forces, through incentives, taxes or criminal deterrence. 

And sure, I my libertarian side notes that social incentivizing is dangerous! Race and gender discrimination laws (Jim Crow) reflected earlier generations’ values, as did Prohibition and the insane War on Drugs. Tobacco subsidies and those that encouraged generations of shortsighted water mismanagement join with fossil fuel incentives in a long list of socially or politically-driven market interferences that proved at-best counterproductive or that later generations deemed to be downright evil. Indeed, all past civilizations regulated in ways that favored both the priesthood and the owner-lordly caste, and the priesthood issued declarations that ‘This imbalance of power Is Good.’   

Still, we know that for every example of horrifically awful regulation, there’s likely to be several good ones. Kids in Los Angeles can breathe the air now without feeling (as I did, growing up) as if they were collapsing in a Flanders 1918 gas attack. Tobacco and alcohol taxes decidedly reduce those vices without creating a criminal black market. People now fish from the riverbanks in Pittsburgh and the 1994 CAFÉ auto efficiency standards gave us better cars, saved us tens of billions at the pump and promoted energy independence while hurting the U.S. auto industry not one iota. 

What we are talking about is the weighting of markets to include externalities, like the health of our children and the sustainability of a planet they’ll depend on. The anti-monopoly laws passed by previous generations – and gutted by the recent GOP – were pro-enterprise! Just as today’s Republican Party relentlessly seeks to end flat-fair competition in every way imaginable.  

Smithian market weighting, should always be questioned, skeptically! That is a legitimate role for a vigorous-sane libertarian movement! (Rather than today's lickspittle-lackey obeisance to oligarchs.) 

But it is about augmenting the general wisdom of invisible hand mass-market with some actual wisdom from the most-advanced of all human organs – our prefrontal lobes.

== They want us not to even look ahead where we’re going ==

The Rand-Friedman wing of libertarianism - ranting the FIBM (Faith in Blind Markets) message at its extreme - has proved to be stupifyingly insane, spewing endless incantations that civilization should never use those prefrontal organs of foresight, that a hundred thousand generations of human ancestors strove so hard to develop. Their cult belief in perfect, distributed, enlightened self-interest have been disproved from every angle – psychology, human behavior, brain scans, micro-economics and the most brutally market test of all – failure of their beloved predictions to ever, ever and I mean ever come true. 

Friedrich Hayek did have a point, that we should maximize the number of competent market participants. But that - ironically - turns into an argument for liberalism, since interventions to raise up poor children, to build infrastructure and to combat unthinking prejudice all help us to stop wasting talent and instead maximize the number of ready competitors.

Just as any sporting league needs constant regulation, lest each game collapse into a maelstrom of cheating, what works in the economy is well-regulated markets, fine-tuned according to a civilization that strives to keep competition flat-fair-open.

== Willingness to re-evaluate ==

Mind you, this entails finding a sweet spot. And if our parents made calamitous Drug War and talent-wasting gender assumptions, and their parents did it with Prohibition and racism, then can we be sure we’re not gumming the works with our own interventions? Certainly the Soviet state planners felt so sure of their models, which worked well in forging primary industry like steel, and horribly at making a refrigerator anyone would want.

 The Chinese engineer-lords in today’s CPR politburo are sure they’ve solved that problem and I go into that elsewhere. But we still prefer the method that brought us to this festival of wealth and freedom and improving insight – a flatter, more evenly balanced approach, that avoids the failed model of the past – hierarchy.

Alas, misunderstanding of Adam Smith is rampant, only matched by general ignorance of Darwin, whose heirs now know that a healthy ecosystem is made up of a myriad competitive units, but the overall effect is the appearance of healthy cooperation. 

Ecosystems collapse when some predator escapes all feedback loops of restraint, as happened every time small groups of human males - armed with metal implements and priestly justifications - take everyone else’s women and wheat.

== An aspect that is... interesting ==

Robert Frank (see *note below) asserts that – as one supporter put it - there is a homeomorphism between, on the one hand, natural selection and economic competition for absolute goods, and, on the other hand, sexual selection and economic competition for relative (positional) goods.  

Well well. Interesting. And if so, it would explain why half of today’s rich – the stoopid half, mostly – care far more about their relative power over other humans, than about fostering a generally creative society where all boats rise alongside their yachts.

I was skeptical, at first. But yes, this does mesh with one of my own riffs… that we are all descended from the harems of feudalist cheaters who took other mens’ women and wheat. And even though today’s lords might have vasectomies to prevent unwanted complications, they act - reflexively and un-thinkingly - as if driven by an urgent need to win at reproduction.  I get the point, then.

But it still reveals no insight into Adam Smith, who urged that we try to be sapient about all this!  That even if today’s males inherit fantasies from those harem-keeping ancestors, we can choose - both individually and collectively - not to act on them. That even if shortsighted oligarchs - driven by ego, instinct and flattery - threaten to bring back the cheater hierarchies against whom the American Founders rebelled, we can choose – with help from some of the Good Billionaires – to stymie that reflex without falling into the extremes. 

Reform without the bloodiest kinds of revolution.

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== Use Halloween to help end the freak show ==

Here's your costume for Halloween, a week before the US mid-term elections. But wear it all of October. Don't let it start a fight. Just let it speak for itself. Especially if others do it, doo. (And if so, supplies may run out, so order now.)

Here it's cheap enough to buy several as favors/gifts. Pass it along. It's a thing.

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*NOTES: Frank proposes that instead of taxing productive economic activity, such as earnings or sales, government should raise money from activities (including relative goods) whose pursuit is a pernicious drag on society as a whole.... extending "sin taxes" (e.g. on tobacco) to other harmful cycles. At first sight, it's hard to imagine how this might scale-up to levels that would pay for essential services, like infrastructure or uplifting all children. But anyone familiar with Adam Smith and Teddy Roosevelt would know the answer.

Define as a harmful "sin" - and hence taxable - the ways that accumulations of property generally become toxic. Monopoly. Duopoly. And the reflex of aristocrats to stay rich by investing in "rent-seeking," rather than creative or productive enterprise. In other words, the exact opposite to every single "Supply Side Reform."

Healthy markets need incentives and it is right that Elon Musk get richer by working with engineers to give us keys to the Solar System. That's not the same thing at all. And the cult of risk-free, rentier accumulation by a lordly caste is the very opposite.  It is the old enemy of enterprise, across 6000 years.