ADAM SMITH’S CLASSICAL THEORY IS COPYCAT/UN-ORIGINAL

Erle Frayne Argonza

Magandang umaga! Good morning from Manila!

As one can see in the title, Adam Smith’s ideas about political economy were unoriginal or copycat. So I’m going to articulate some notes about the matter. This may come as a shocker to the devotees of Smith and fanatical ideologues of liberal or free market capitalism, but it had to be accepted. This is a matter of fact, not of speculation or libel.

This note is not intended to demean Smith nor to denigrate those whose actions are copycat, far from it. Doing copycat items is among the pathways to success, this lesson is greatly stressed most specially among marketing professionals. If one cannot succeed through innovative or original ideas and practices, then take the ‘copycat way’. Network marketing had already perfected the ‘copycat way’ in fact, by way of optimizing the principle of duplication  (duplicate those presentation lines and themes before your niche customers or clients).

There are people who have this wrong notion that Smith invented liberal capitalism, and this has to be corrected. A simple knowledge of economic history will do. Having taught economic history at the Philippine’s premier university (U. Philippines) for some time, I know as a matter of fact that couples of influential writers emerged in the theoretic domain—who were focused on economic questions—before Smith appeared in the social landscape. Smith appeared when physiocracy, to which Smith properly belongs, was already making waves in France through the works of such gentlemen as Quesnay and Mirabeau.

But as one can see, Smith was a Scot, of the British Isle, and right in his own backyard there were couples of gentlemen too who wrote voluminously on the subject of political economy, from a vantage point that was already departing from the mercantilism of the previous couple of centuries. The departure concerned the sources of wealth, where the same thinkers opined that the ‘sphere of production’ had to be emphasized more than the ‘sphere of exchange’ which the mercantilists, notably Thomas Mun, discoursed on.

Some representative thinkers who preceded Smith were the following:

·        Sir William Petty (1623-87): Considered the founder of political economy. A charter member of the Royal Society.

 

·        John Locke, Sir Dudley North, David Hume, David Hume: Further propounded on basic principles of political economy. E.g. rent, trade, role of government.

 

·        Richard Cantillon: His book Essai sur la nature du commerce en general (1755) was “the most systematic statement of economic principles” (E. Roll, A History of Economic Thought).

 

·        Sir James Steuart: Wrote the voluminous Principles of Political Economy (1767), which was among the first textbooks in economics of that time.

 

·        Honore Gabriel Riqueti, Comte de Mirabeau: Enlightenment thinker, involved with the French revolution, a political moderate who opined that modernizing France better follow the US model of industrialization path. He influenced many younger physiocrates.

 

·        Francois Quesnay: Formally a fellow of the ‘economistes’ or ‘physiocrates’, was known for his popularization of the ‘tableau economique’ (economic table, title of his book), bringing political economy closer to empirical science.

 

·        Jean C.M.V. de Gournay: Another eminent fellow of the ‘physiocrates’, who collaborated with Quesnay in advancing principles of political economy.

 

·        Nicolas Baudeau : Wrote Introduction a la philosophie économique (1771).

 

·        G. F. Le Trosne: wrote De l’ordre social (1777).

 

·        André Morellet:  “ best known by his controversy with Galiani on the freedom of the grain trade during the Flour War” (quoted from Wikipedia).

 

·        Mercier Larivière and Dupont de Nemours: Also eminent members of the ‘physiocrates’.

Smith actually lived in Paris during his youthful heydays, where he stayed with the equally youthful Duke of Buccleuch circa 1764-1766. The Parisian exposure was Smith’s way of baptism into the illustrious physiocrats’ thought streams, and the rest was history.

So to my fellows in the professional world and this planet who continue to churn thoughts that Smith was the ‘originator of capitalism’, please rethink your opinions. Historical facts do not the least substantiate your thesis. Rather, what is right is that Smith brought political economy even closer to empirical science than ever, and his Wealth of Nations was a monumental effort during his time to construct a text book on the subject that was considerably a scientific material more than philosophy (ethics, metaphysics) though Smith still wrote philosophical treatises within the ambit of the methods of philosophy.

I need not belabor the point that Smith didn’t invent empiricism. Just by reflecting on the names above, one can see the names of giant figures in British empiricism (e.g Hume, Locke), who themselves took off from intellectual giants that preceded them (e.g. Francis Bacon).

So, please disabuse yourselves of Smith as ‘originator’ of anything. He never even boasted of originating anything at all. Rather, he systematized thought constructs that were already prevalent during his heyday. The purposes of his economic doctrines were already explained in some other articles writ by me.

[22 August 2008, Quezon City, MetroManila.]  

SMITH-RICARDIAN ‘FREE TRADE’ JUSTIFIED SLAVE TRADE

Erle Frayne Argonza

To continue on the theme of laissez faire, a doctrine started by the French physiocrats and systematized further by the Scots, let it be known that the principle of ‘free trade’ generated by physiocracy was largely a doctrinal defense of slave trade. [Physiocrats were philosophers who focused on economic problems, while philosophes who focused on political, ethical, and epistemological problems.]  

I already elaborated in a previous briefer that Adam Smith was an ‘intellectual prostitute’ whose services were procured by the British East India Company, precisely for the purpose of crafting in theoretical form the ‘free trade’ doctrine that was to justify, though subtly, the slave trade of that historic juncture. I gained the information about this rather shady background of Smith from a fellow political economist, Butch Valdez, a Fellow in the defunct Independent Review circle of 1990s Manila.

The physiocrats were already quite sophisticated in their modeling of economic reality then existing, and from out of that physiocratic subculture emerged Adam Smith whose synthesis of the existing doctrines of his time produced the Wealth of Nations. In the same book and related philosophical writings, Smith discoursed both on micro and macroeconomics, explaining in physiocratic terms the source of national income (termed ‘wealth’ at that time) from out of domestic engagements by landlords, capitalists and laborers, as well as international operations notably those accruing from overseas colonies’ operations.

It was from the latter that David Ricardo, disciple of Smith, took off to articulate the principle of ‘comparative advantage’. In the writings of Ricardo, the discipline of political economy moved much closer to empirical science, a feat that I myself had come to admire. David Ricardo was hardly any ‘intellectual prostitute’ to reckon with, but rather was he a financier who engaged in the evolving bourse and speculative pursuits of his own time. But slave trade was very much alive during his time, and there could be no doubt on his part that his theory of international trade served in no small measure to justify the conduct of slave trade.

In my youth yet did I come to learn, from the likes of Alejandro ‘Ding’ Lichauco, a Harvard-schooled economist and corporate executive, that free trade couldn’t be enforced without imperialism. It was a perfect income-generating strategy for Britain particularly since this world power had an entire empire to manage. Absent that Empire, and free trade will collapse. (Ding Lichauco was later a leading Fellow of the Independent Review in the 1990s.)

However, it was only much later that I was able to connect free trade directly to slave trade practices, thanks to my Fellows in the Independent Review, notably Butch Valdez. Slave traders were legion around the years 1700-1850, or up to the decade preceding the US Civil War and China’s Taiping Rebellion, and at one time British traders alone owned over 20,000 ships plying the oceans to market African slaves. Within America, Portugal and Spain both engaged in the same trade, though including Indians aside from Blacks, often with the blessings of the Vatican. It was huge bucks, this slave trade, more so that the bourses began to factor slave availability and chattel quality in the valuation of certain cash crops, which then factored in the valuation of main stock trading articles and nascent insurance forms.

The very same slave traders had in their employ not only those early stock traders in London and elsewhere, but also lobby groups and journalists whose tasks included bribing legislators and bureaucrats to keep them blind about the noxious trading of human chattel. There was no way that slave trade could survive in a policy environment of high regulation, more so in a context of ‘activist state’ intervening so heavily in investment areas (dirigist development).

It was only in a state with least regulations did slave trade flourish, the only regulations it seems coming from God Almighty (who would punish the traders for their sins post mortem). But even God Almighty had a long-drawn policy of non-interventionism in the physical plane, a laissez faire attitude that favored the physiocrats and their notorious slave trader sponsors. As far as Earth was concerned, it was the oligarchs who are gods till now, and so they define which doctrine to advance at every turn of epochs, historic periods and cyclical episodes.

Since the slave traders then had to reckon with powerful mercantilist doctrinaires such as Colbert, whose writings influenced France’s intellectual and governance circles and US’ policy makers notably A. Hamilton, there was no way that slave trade would fail to catch the eyes of politicians and libertarian groups, and before long the same trading ‘best practices’ would be criminalized as malpractices. The same mercantilist policy makers, who were dirigists and regulationists, swarmed the Kings’ courts everywhere, who didn’t mince words in attacking slave trade and slandering the traders before the nobles and mediocre bureaucrats (who always needed some godfather thinkers as mentor-guides for their actions).  

That was why physiocracy failed to gain foothold in its own home ground of France, and had to be exported to the neighboring British Isle where it obtained further fertilization. Finally, upon the further expansion of the British Empire, physiocracy caught the eyes of the nobles, politicians and bureaucrats. At that moment of convergence of interests for laissez faire, Smith was already ripe for the picking, via the British East India Company, whose satisfactory work was vigorously propagandized by the coteries of doctrinal converts.

Smith gained not only fame but also great following, and among his followers emerged David Ricardo and Thomas Malthus. The works of Smith and his contemporaries, five to seven decades later, inspired another coterie of philosophers, the Classical Evolutionists (Darwin, Spencer, Morgan, Tylor, Frazer, etc), whose theories of ‘natural selection’ (Darwin’s) and/or ‘survival of the fittest’ (Spencer’s) were defended via the physiocratic principles of scarcity and competition.

With a fairly equal number of free market-free trade theorists at hand, promoted in public and private circles by an emerging financier class that was awash with money and enjoyed wide social networks among the elites, free trade came to challenge and demolish mercantilist doctrines in shock waves of mighty discourses. Needless to say, for a certain period, the slave traders celebrated to the highest heavens their shallow victory for seeing their candidate doctrine ascend the intellectual pinnacle, their intoxication behooving them into believing perhaps that they were Gods of Olympus, a deluded image inherited by their financier pedigrees of today.  

That was then. Till slavery in its old form eroded. Free trade declined at the inception of the 20^th century, but was later revived by the Chicago school and its adherents. Are we then ready to slide back into another round of slavery? What would be the forms of slavery this time, if the old form refuses justification and public acceptance? Isn’t the trading of human labor overseas a mere disguise for slave labor? Isn’t the privatization of jails—currently being experimented in the USA—an undisguised slavery as the prisoners will be considered chattel of Big Business, the same corporate groups that fund the purses of ‘corporate social responsibility’?

I’d end this piece right here. A pleasant day to everyone.

[21 August 2008, Quezon City, MetroManila.]

ADAM SMITH: ‘INTELLECTUAL PROSTITUTE’ FOR BRITISH EAST INDIA & SLAVE TRADERS

Erle Frayne Argonza

Amigos y Amigas, Buenos dias! Magandang umaga! Good morning!

The title of this briefer may come as a shock to all those who pretend to know Adam Smith and, more so, for those who revere Mr. Smith as a cult Icon. Just to clarify to everyone, being a political economist and ‘economic sociologist’, I hold Smith personally in high esteem as an intellectual, and this briefer is not meant to flaunt irreverence on this gentleman. Smith’s place in economic history is already granite rock, no matter if laissez faire or physiocracy has become obsolete before World War II yet.

The thing is, fact of all facts, contemporary thinkers such as those guys from the ‘Chicago school’, led by Nobel notable J. Friedman (weren’t there Nobel winners who were demented, nay demonic in mindset? E.g biologist Watson, who claimed that Blacks are genetically inferior in mental intelligence). The revival of laissez faire, as one can see, was responsible for flawed policy regimes that led to the series of short cycle crisis since the early 70s yet, and which is now leading finally to the Great Depression that will mark the death blow to liberal capitalism that is now on its terminal phase. From this point of time onwards, there can be no more return to laissez faire without bringing back humanity to a catastrophic Dark Age reminiscent of that demonic age of the Medieval Era when sanity fled humanity for nigh 200 year at least.

I used to be a Fellow of the Independent Review circle here in Manila, a circle of eminent and illustrious intellectuals and business leaders (I was the only humble fellow here in the 1990s).  Unfortunately, this group disbanded in 2002, due perhaps to methodological differences (I was active only till 2001 when I left for the USA for about a year). Entry to this group was by invitation, and that was how I got wind up of it: a female student of mine at the De La Salle University (DLSU Manila) had some of my articles (readings in class) read by his father, the Undersecretary Butch Valdez (Dept of Education) who in turn extended the invitation to the Independent Review circle thru her daughter.

Within the circle, it was Butch Valdez, the eminent Principal of the Valdez & Co that is one of the Philippines’ top auditing firms, who studied with intensity the physiocratic paradigm. He came across various readings about the life and works of Adam Smith, and wrote series of articles in the Independent Review (a journal-type magazine) in ‘97 and ‘98. Being among DLSU’s privileged coterie of most brilliant alumni, Valdez’s most revealing inquiry—Smith’s being a paid intellectual for the slave traders—did come as a shock to me, though it doesn’t shock me anymore that intellectuals do prostitute themselves before high paying clients (Antonio Gramsi and Edward Said devoted kilometric pages about intellectuals, both the ‘organic’ and the ‘autonomous’ types).

The research findings of Mr. Valdez concerning Mr. Smith can be summed up as follows:

·         Previous to the years before the ascent to eminence of Smith, slave trade and the British East India Co or BEIC were among the accepted economic modalities. Needless to say, the BEIC was engaged in the trading of slaves. [Actually, my research went beyond that, as the same BEIC was also engaged in the DRUG TRADE, in the opium trade, and had an army of its own separate yet from the King’s army.]

 

·         Physiocracy, which bannered ‘free enterprise’, was especially important for the BEIC and related monopolistic imperial groups since the paradigm promoted ‘free trade’ as well. Laissez faire was in a clash with mercantilism’s dirigist policy regime, remember, as it was also opposed to mercantilism’s promotion of industrialism even as laissez faire championed agriculturalism and the ulterior interests of the landlord class. Needless to say, physiocracy championed the cause of the gentry or big planter landlord and was scornful of the industrial class (in the Philippines there is nary a disjunction between ‘landlord’ and ‘industrial’ interests anyway, they are in conjunct.)

 

·         At that historic juncture when the British Empire was expanding and eclipsing its power, the BEIC desired to optimize its profits from out of diverse trading engagements, most of all for optimizing the slave trade. It need not belabored that slaves were tied up to colonial plantations, and plantation economy was the only modality permitted by the British Monarchy as the definitive economic formation for the ‘4^th world’ peripheries (colonies). The BEIC engagements’ optimization can best be done by procuring the services of intellectual mercenaries who could articulate in sophistical vogue the very doctrinal expectations of the Lords of the BEIC Hierarchy  (a ‘Committee of 300’, per my research findings).

 

·         It was precisely at that juncture of expanded slave trade when the BEIC’s talent scouts eyed the services of a Scottish gentleman, named Adam Smith, who could fit into the mental Pied Piper prototype for BEIC enslavement pursuits.  It would be no wise to contend that Smith was a mental robot or ‘Manchurian Candidate’ controlled by overlords behind the scenes, for Smith was a man of his own mind, and up to the last instance he was indeed that ‘organic intellectual’ for the slave traders. He just couldn’t qualify as ‘independent intellectual’ though, for Smith was, in the yardsticks of the autonomous intellectuals, a ‘prostituted intellectual’ or ‘intellectual prostitute’.

The rest was history. Both the erudite and simpleton among the schooled populations of Earth know what Smith’s economic doctrine is all about. And many folks today are aware that the neo-liberal policy regime of the moment was a rehash of the same Smithian physiocracy.

I do wish that I could converse with Antonio Gramsci face-to-face today and request this noblesse thinker whether the term ‘intellectual prostitute’ is appropriate an inference for Adam Smith. I might have erred in judgement. Mr. Smith was a willing party to the enslavement, plunder and looting by the British oligarchs, and this ‘willing party to’ aspect may cancel out my inference altogether. Sous rapture, to quote Jacques Derrida.

At any rate, I have shared my notes, and thanks to the gentleman Butch Valdez for his inquiries shared to our circle. Thanks to Gramsci and Said too for their recondite peregrinations about intellectuals. Fellows, I hereby leave the inferential option to you, to decide whether Smith was indeed ‘intellectual prostitute’. Have a nice day!

[Writ 21 August 2008, Quezon City, MetroManila.]