The Wealth of Nations, Revisited

A Contradiction of Interests

I’m not sure if this is a real contradiction or not. But it seems to me that Adam Smith has a perspective problem. Smith famously argues that what is best for the individual is best for the society, and yet at the same time he argues that slavery is not best for the society because slaves lack individual incentive to work hard. This may be true, but it certainly seems to serve as a counter-example to the notion that what is best for the individual is what is best for the society. For when he suggests this, we must sincerely ask, which individual? The slave or the slaveholder?

What is true in Smith’s slave argument is that it is not best for the slave to be a slave, and correspondingly it would not be best for a society that the slave be so either. The slave’s disincentive to work would lead to less work performed in general, and correspondingly to a less productive society. However, is that which is best for the slaves or the best for the slaveholders? As a slaveholder, owning many slaves is what is best individually. If the rule holds, we must conclude that owning slaves is what is best for society. Is this not a contradiction? It cannot be both best and not best for a society to have slaves. Perhaps we could claim that being a slaveholder requires the existence of slaves, which we just said were not beneficial to society. But then the question becomes, why should we take the slave as “the individual” and not the slaveholder, as Smith clearly does? 

Smith’s problem seems to be one of perspective. The value of the rule that societies do best when people are free to pursue their own interests is debatable. It may depend entirely on which individuals’ perspectives we adopt. Is it better that a landlord is allowed to collect rent or that every person own the property they live in? Is it better than an employer negotiate wages before the sale of the product or that laborers are paid in accordance with their efforts? These perspective questions shoot holes all through the idea that liberty is the best policy and its more general precept that individual interests can be used as the best guide for social action.

The Utopia of Competition

It seems to me that competition itself becomes romanticized under most libertarian writers. The reason for this is if they use it as a cure-all for many economic injustices. The assumption works like this: as long as the rules are fair, then competition will lead to the best possible use of resources. And so it would, as long as we had some way to ensure the fairness of the rules. What does it mean to be fair? Who decides what is fair? On what basis is that decision to be made?

One can always succeed in competitions through two different methods. The first method is exactly what the libertarian writers imagine, a system where everybody follows the rules, the rules are fair, and then the winner deserves what they get, and this would work out best for society, just as Adam Smith suggested. The reason is that if everyone competed this way, we would all benefit from the maximized effort competition elicits. But unfortunately, there are no umpires or referees in economics, no one to turn to and say, “Hey, that’s not fair!”.

The second method for success in competition is free and unrestricted. Players follow their own best self-interest, and when the “rules” of fair play get in the way, they abandon them. In this method, one might succeed by making their competition under-perform or advance themselves through some form of subterfuge. This method focuses on distinguishing oneself by making all of the others look worse. This, of course, is a natural tendency of free competition that ultimately degrades society.

So we have a choice. Either competition is regulated to enforce an external set of rules that foster fair-play or economic competition is not good for society. If we were to have the former, a sport-like instead of war-like competition, then we would have to insist that the players do not get to dominate the body that makes up the rules. In real terms, this means that businesses would have to have minimal effect on political determinations of economics.

The Fable of the Bees?

It is perhaps ironic that Mandeville’s “The Fable of the Bees” features so heavily in Smith’s thought. The poem presents the idea that it is private vice (greed) that drive humanity to the public good (prosperity). The irony is not what climate change and over-use of pesticide have done to the bees, but the fact that Mandeville chose bee’s as his perfect society turned waywardly toward virtue to the ruin of all.

Bees are hive-minded totalitarians. The structure of bee society is based on homogeneity. The hive is comprised of nearly identical genetically speaking. The small individuality comes in the form of castes: the Queen, the product of royal jelly is tasked exclusively with all the breeding for the entire colony; the drones, a small subset of males, whose only function is impregnating the Queen; and the workers who do everything else to make the colony run. There is some break down among the work performed by the workers but this too is regulated exclusively by age. The high organization by nature is related to the Orwellian suppression of individuality inherent in bee society.  

There is no private vice in bee society because there is no individuality. Private vice requires individuals whose interests, even if entirely dependent on the efforts of others for their survival, can still conceive of themselves outside of the society. If private vices are public virtues then it perhaps proves that what is best for the individual is not what is best for society and vice versa. For it seems that public vices can just as well be private virtues.

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