Adam Smith Supported "Well-Regulated" Not "Unregulated" Markets

The Hartmann Report:  

It’s not like we weren’t warned. Back in 1776, Adam Smith wrote in his remarkable tome on economics, The Wealth of Nations, exactly how rich people following their own greed inevitably destroy the very society from which they extract profits unless that society establishes strong guardrails to protect itself from them.

He argued that in “rich” countries — where the public good is well administered and there’s a more general prosperity — profits are ample to satisfy the business owners needs, but not excessive. When the rich seize control of most of the profits and wealth, however, and thus have the power to exploit society, he said, they always drive nations into poverty and ruin:

“But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”

This year, America saw the highest level of corporate profit in the history of this country, and perhaps in the history of capitalism in developed countries worldwide.

A few sentences later, Smith elaborates:

“The proposal of any new law or regulation of commerce which comes from this [wealthy] order [of men], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.

“It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

The simple reality is that markets, like traffic, work best when they’re appropriately well-regulated. The idea of a “free market” is as absurd as the idea of “free traffic” where everybody is welcome to ignore red lights, traffic lanes, and stop signs. It’s a rhetorical device designed to make average Americans accept changes in the rules regulating capitalism that will benefit the profits of the top one percent and nobody else.

And it’s killing us.

Revolution, Fear, and Power, Thom Hatmann