A welcome new appraisal of Adam Smith's
Sunday 19 April 2009
by Dan Glazebrook
When Adam Smith's head first appeared on the £20 note,
presumably as some kind of triumphalist homage to the
dominance of unfettered capital, it struck me just how far
the symbolism of this man has drifted from what he actually
While he was, as we all know, in favour of free markets,
what is usually forgotten by the bourgeoisie in their
eulogising is that he also argued that there should be a
strong state to oversee these markets.
He also believed in a monopoly of land ownership to ensure
that the fruits of the free market result in rising
standards of living for its citizens.
Which state is closest to this ideal today? Not the states
that cast Smith as their prophet, which long ago
conveniently forgot the qualifications to Smith's argument,
but their arch-nemesis - China.
Smith was writing in the late 18th century, at a time when
China was not only the most advanced economy in the world
but, according to Smith, one whose development had followed
a more "natural" - and preferable - economic path then that
taken by most of Europe.
China's economic development was based on increasing
agricultural yields, which facilitated a higher division of
labour and thus enough of a surplus to trade on foreign
Europe followed an inverted and "unnatural" trajectory,
beginning with foreign trade - and slavery and plunder -
and the growth of foreign markets, which then prompted
technical advance at home. In other words, the Chinese path
Smith argued that, although the path taken in east Asia was
economically superior, the monopoly of advanced firepower
acquired by the west had allowed them to dominate the east.
But a dominance based solely on such a monopoly, Smith
believed, could only ever be short-lived, after which "the
inhabitants of all the different quarters of the world may
arrive at that equality of courage and force which, by
inspiring mutual fear, can alone overawe the injustice of
independent nations into some sort of respect for the
rights of one another."
Giovanni Arrighi's thesis is that, with the fast erosion of
the West's monopoly of advanced weaponry, the "equality of
courage and force" prophesied by Smith could well be almost
The failure of US attempts to preserve its world hegemony
through military onslaught has merely served to perpetuate
and deepen its economic malaise, thus opening the door for
a truly multipolar world.
The real achievement of this book is its ability to put the
rapid changes we are currently living through in their
broad historical and economic context - demonstrating just
what a short blip the West's economic dominance of the
world really is or was.
China and Japan's share of world GDP was actually higher
than the combined share of Britain and the US until shortly
before the dawn of the 20th century.
Today, the West's two main projects for maintaining global
inequality - neoliberalism and military aggression - both
lie in tatters.
The increasing confidence and unity of the Third World, led
by the BRIC countries of Brazil, Russia, India and China,
look set to rewrite the rules of international relations.