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7/16/09

Adam Smith: Is The Age of The Free Market Over?


In The Wealth of Nations, Adam Smith wrote, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." Today, given the disasters ripping Wall Street financial houses and toppling international economies, that passage might be rewritten thus: "it is not from the malice of the butcher, the brewer, or the banker that we expect to be deprived of our dinner, but from their regard to their own interest."

Ayn Rand made Atlas Shrugged a bible for many, as that novel turned self-interest into a gospel, the good news to be spread far and wide.

The only problem is that recent economic events have shown that self-interest can be far from enlightened and can degenerate into an ignorant greed that plunges an entire national economy down onto the brink of an abyss. In short, government is not all bad. Laws are needed. Even former Fed Chief Alan Greenspan, once a disciple of Rand, has publicly stated that he was wrong.

As for Adam Smith, he never would have agreed with the cartoonish ideology of Ayn Rand. A literate man, he would have found her characters stiff and wooden, merely vehicles for her ideas. He strongly believed "that infrastructure and education should *not* be left to the invisible hand, and one can easily imagine he would feel the same way about health care. (He also recognized that the position of the laborer was only good under conditions of market expansion -- exploitation ruled otherwise.) His enthusiasm for the market was a *tempered* enthusiasm, and so should be ours." More

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