Friday, April 10, 2015

Debate about Noam Chomsky's interpretation of Adam Smith (and many, many other things...)

A friend of mine from France sent me this video today as a means of criticizing libertarianism (normally I would embed it but the owner has disabled playback on other websites, so you'll have to watch it on YouTube directly. Damn corporations...)

First, I think he’s wrong about Adam Smith’s primary message, and so do most informed critics. I doubt that’s some grand capitalist conspiracy to keep the truth hidden; it seems more likely to me that the body of the evidence outweighs his arguments. Chomsky’s a smart guy, but he’s (in?)famously Marxist leaning, and he’s doing a very selective reading of Smith by tuning out the parts he doesn’t like and exaggerating the prominence of the parts he does like. The vast majority of scholars who have studied Smith have come away with the conclusion that his primary contribution to Enlightenment thought was recognizing the amazing ways which people can help one another accidentally by pursuing their natural, self-serving interests. He may have said other things also, but that’s the part they focus on because that’s the most original and insightful part of his work, or what separates him from other writers of that era. It’s not a coincidence that one of the only guys who doesn’t think this also happens to be a lover of Marx; it’s more likely he’s doing a biased revisionist history to suit his ideology.

Second, even if he’s right about Smith, it doesn’t mean libertarians are wrong about him. Smith said a lot of things, and libertarians may only agree with some of them. By coincidence, a pretty balanced libertarian reading of Smith showed up in my email yesterday, which you can read here.

Third, even if libertarians are wrong about Adam Smith, it doesn’t mean we’re wrong in general. There are many, many other libertarian heroes and ideological influences besides Smith who are just as prominent and influential in libertarian thought (John Locke, Frederic Bastiat, John Stuart Mill, Henry David Thoreau, Ludwig von Mises, Lysander Spooner, Frederick Douglass, FA Hayek, Gandhi, Milton Friedman, MLK, Robert Nozick...I could go on). So our arguments do not rely on our interpretation of Smith.

Fourth, if it is true that capitalism is fatal to democracy and they cannot coexist, this still does not settle which is preferable. Maybe capitalism does more good for people (especially the poor) than democracy does, and in fact I think there is strong evidence that this is true in some cases. Billions of people have been lifted from poverty since 1970 in places like China and India thanks mostly to economic globalization and free trade between nations, even though neither of those countries have strong democratic institutions. I’m not saying democracy isn’t good – it’s the least bad form of government I know of! - I’m just saying it is neither a necessary nor a sufficient condition for good outcomes.

Fifth, even if he’s right about their incompatibility, and even if democracy is preferable to capitalism, libertarians are not necessarily capitalists. Libertarians support free markets. There is a difference. Even Marx agreed you could have markets without having capitalism. For example, I also oppose several of the policies he criticized in the video as examples of capitalist oppression. I blame the state, he blames capitalists working through the state, but we both agree the state is doing something bad in many cases.

I also have some questions for you. If we cannot have both capitalism and democracy, which is the United States? Which is France? Both are usually presented as capitalist democracies. Why are the people who say that wrong?

Also, with what would you replace capitalism? How, specifically, would you do this?

Update: My friend responded to these remarks, and I to hers, and we wound up having a really interesting dialogue. I'll post the transcript below. Her text is in italics, mine is in regular font.

First I don’t think there is any capitalist conspiracy about the way we read smith today, I think that what is broadly thought of as adam smith’s message is what posterity made out of it (just like it turned Keynes into another classical economist, which he wasn’t in reality) Smith was against the arbitrariness of the monarchy that protected the interests of the powerful, that’s what he developed his theory against. He was in favor of the pursuit of individual interest (on the basis of strong moral values) to thwart the economic dominance of the aristocracy, but he sure wasn’t against a democratic regulation of the economy, as Chomsky underlines on the basis of what smith actually wrote

Second, you’re probably right: smith is not exactly a libertarian, he was just mentioned as one of the fathers that are being constantly referred to (inconsistently with what he actually said, in my opinion, libertarianism being opposed in many ways to classical liberalism, as Chomsky says). This doesn’t settle the main question: is capitalism compatible with democracy? Smith tries to say it is, libertarians don’t even bother to, because, as you say, they think that capitalism (or free markets if you want – let me get back to this later) is definitely preferable to democracy (hayek is an excellent example for this). First of all your argument about capitalism lifting people out of poverty seems a bit doubtful to me: I think we shouldn’t forget that what plunged people in India and China into poverty was western colonialism, that destroyed their traditional societies to plunge them into misery, for the sake of capitalism itself. The same thing even happened in Europe (proletariat is a historical fact, not an ideological construct). And the only reason Indians and Chinese are coming out of poverty is because they have been forced to accept a model of development that profits us most and them least, and that reproduces in their countries the dramatic inequalities that we can see in the west, worsened by the fact that they have very little welfare and social protections – the life of the average Chinese or Indian is still far from being desirable.

As to whether democracy is preferable to capitalism I’d say without a doubt that it is, for a simple reason: democracy is freedom, namely the freedom of deciding individually and collectively about our future, whereas capitalism is serfdom to the quest of ever more money, regardless of everything else, like the loss of individual autonomy. Freedom there is only formal and its illusion has for a function to make domination of those who own the capital and the means of production over those who own nothing invisible. Plus, the dramatic increase of inequalities and the concentration of wealth that takes place under our very eyes, the destruction of our environment and the endangerment of billions of people’s living conditions around the planet (including ours in the long run), crime and social violence as a result of economic exclusion, and the inexorable rise of unemployment, don’t look to me like the best outcomes one could wish for an economic system. To cope with these problems we need to discuss and take everyone into account – we need democracy. Capitalism doesn’t accept debate and questioning: its logic prevails, and that’s all. Insofar it is not compatible with democracy.

Fourth: marx agreed that free markets could exist within a non-capitalist collectively regulated system, this is true. But genuinely free markets are part of the logic of capitalism alone, and the disembedding of the economic system out of the rest of the society. Fact is, except for a short period of time (from the 50’s to the 70’s), capitalism always tended towards market deregulation (which is consistent with its inner logic, capital valorization at all cost). But even if we could have free markets without capitalism I still don’t see to what extent this would make it any better: free markets imply struggle for life and survival of the fittest, thus the domination of those who own something over those who own less. This is very darwinian but a very destructive way to build a society (as we can see all around us). They moreover see the human being as an abstract category with unlimited needs and unlimited perspectives of growth (they don’t take into account the natural and social world humans live in), and treat them only as objects and tools to valorize capital. Free markets pose a lot of ethical and material problems, this is why I think economy should remain political, i.e. politically discussable, and not abandoned to economists. Economy should be a means for society. Capitalist/free market economy has the opposite take on the problem: they see economy as an end and shape society as a means to that end.

Fifth: your last question isn’t easy, and I wish it was. For the time being there is no large scale alternative to capitalism that could substitute to it overnight, as capitalism colonized pretty much every space in the world and in society. However alternatives appear on a local level for a friendlier, more respectful, more human economy that takes care of the people and the environment. It all emerged out of discussions between people who suffered the negative consequences of the capitalist system’s domination over life, and who tried to figure out solutions. So here’s my answer: the alternative to capitalism is direct democracy, localism, and trust in our own capacity to shape our lives.


Thanks for a thoughtful reply. I'll go in order.

1. If Smith was about illustrating the arbitrariness of monarchy and thwarting the economic dominance of those who used it to their gain, that's a message I can get behind. I would just extend it to any other kind of illegitimate government besides monarchy as well. The aristocracy Smith fought is an inevitable result of any government which is empowered to give out economic favors or special privileges, and I fear the sort of far-reaching "democratic regulation of the economy" you endorse inevitably leads to that outcome. Far from serving some fabled "general interest," or "common good," questions about how to regulate the economy inevitably pit some people's interests against others - not just rich vs. poor, but things like farmers v. miners, or taxi drivers v. Uber drivers, or consumers v. employees, etc. The result is that even well-intentioned regulators are forced to choose winners and losers in arbitrary ways. If Smith did advocate unlimited democratic regulation of such matters, he inadvertently endorsed replacing one institution protecting powerful interests with another.

2. I think Libertarianism is remarkably consistent with classical liberalism, particularly John Locke. It's not a perfect fit, but it's the closest fit among modern ideologies for its emphasis on individual liberty. Also, the framework Locke put forth is indisputably the ideological underpinnings of the Declaration of Independence and the US constitution.

3. I think you mischaracterize libertarians by saying we "don't even bother" to say capitalism is compatible with democracy. I think it is compatible. Perhaps your conception of democracy is more expansive than mine. Democracy needn't, by definition, include expansive government powers; in a limited government like ours, there are restrictions on which things majorities may decide. But for those powers which the state does have, I like democracy as a means to decide how to wield them.

4. Colonialism is not a story of capitalist oppression - it is a story of state oppression. Huge swaths of Africa, Asia and South America were not devastated because white men came and offered them jobs or products; they were devastated because men with guns came and ENSLAVED them against their will, and used military might to divvy up the land amongst their governments using arbitrary boundaries that did not acknowledge or respect cultural divisions in those regions. That is the antithesis of everything libertarians believe, and you cannot pin the outcomes of that very un-libertarian behavior on libertarian economics. Since then, the well-being of these places has been inversely related with how large a role the state tried to take in guiding outcomes. When Mao Zedong tried to isolate China and create an economy based on centralized state planning, tens of millions of people starved to death. It was not until after his death and the ensuing switch to capitalism that global free trade and market liberalization allowed capitalism to come and save the day. When you say they were "forced to accept a model of development that profits us most and them least," you use a funny definition of the word "forced." But even if that's true, they've still profited more than at any other point in human history! The life of the average Chinese or Indian is not desirable relative to Western wealth, but it is vastly preferable to what it would have been 40 or even 15 years ago. Such rapid gains would not have been possible without free trade's enormous productive power, and I think you would be stubborn not to admit that benefit.

5. You say "Democracy is freedom, namely the freedom of deciding individually and collectively about our future." First, take out the word "individually," because democracy is not about individual decisions, only collective ones. What you're left with is "democracy is the freedom of deciding collectively about our future." But in practice, collective decisions only mean that other people decide for you. No meaningful vote in human history has ever been decided by 1 vote, which means that in practice, "democracy is the freedom to have other people decide about your future." That's not my definition of freedom. Freedom means more to me than the right to throw your drop in a bucket. Democracy may be many things - it may be good, it may be tolerable, it may be necessary, it may be the best and fairest form of government we know of - but it sure as hell isn't freedom.

6. "Capitalism is serfdom to the quest of ever more money, regardless of everything else, like the loss of individual autonomy." Part of the problem in these debates is that we don't clarify our terms from the beginning, and wind up talking past one another as a result. If that's how you define it, I don't like capitalism. I do NOT encourage people to seek ever more money. There are more important things. I also value individual autonomy very highly; in fact, protecting it is the whole purpose of my focus on the rights of the individual, instead of the collective. This confusion is why I prefer the term free markets. All I really support is the Non Aggression Principle, which says that everyone should be free to do as they like to the extent that it does not infringe upon the rights of others. Don't be violent - that's it!

Even if you believe the set of policies I endorse will inevitably lead to serfdom, you can't just presuppose that into the definition of the word. Other equally informed people come to different conclusions, and in fact Hayek's most famous book - The Road to Serfdom - argues your policies are what leads to that outcome.

7. Your last paragraph lists more issues - dramatic inequality, destruction of the environment, low living conditions, crime/violence, unemployment - than we have time to debate. Obviously I don't like these things either. I agree addressing them requires discussion, which is precisely why we're geeking out in this conversation haha. All debates boil down to two sides who think their "logic prevails," so I don't get what you mean by us not accepting it. You think your logic prevails too, right? (I'd actually argue I'm more accepting of debate than most Frenchmen, given the whole Charlie Hebdo fiasco, but that might be a touchy subject!)

8. You write, "free markets imply struggle for life and survival of the fittest, thus the domination of those who own something over those who own less. This is very darwinian but a very destructive way to build a society." These are not conditions which markets build into society by choice - they permanent, inherent, unalterable features of any society, which markets merely adapt to and try to solve. There has ALWAYS been a "struggle for life," here on earth, long before capitalism came around. There has always been differing levels of power - what you call "domination of some over others" - long before capitalism came around. The first lesson in Economics 101 teaches us why: scarcity. Unfortunately, there isn't enough of anything for everyone to have as much of it as they would like, and this puts us in a natural state of competition with one another from the get go. Markets are just about how to make the best of this bad situation by ensuring that these scarce resources are allocated in the most efficient and peaceful way possible. True social Darwinism would be just a free for all wherein anybody can kill or steal from anyone else, and the last one standing wins. Libertarians oppose this by identifying and defending individual rights which no person or group is allowed to violate; not by introducing competition as a solution, but by recognizing the inevitability of competition, and creating fair, universally applicable rules by which it is to take place.

9. "Economy should be a means for society. Capitalist/free market economy has the opposite take on the problem: they see economy as an end and shape society as a means to that end." - No we don't. To libertarians, economy is not the end - liberty is the end. Peace is the end. Production, and the prosperity it creates, is just a convenient byproduct of liberty.

10. "The alternative to capitalism is direct democracy, localism, and trust in our own capacity to shape our lives." To me those are three separate things haha. Direct democracy is bad for so long as conditions of widespread political ignorance persist (which they do). Localism is bad because it needlessly forfeits the enormous benefits in human quality of life which are afforded by cooperating with people who live far away from us (ie, global trade, economies of scale, etc.) The last bit - trust in our own capacity to shape our lives - is awesome! Cheers to that, my friend.

1 comment:

  1. Great discussion. Oh, and Chomsky is just flat wrong in his interpretation of Adam Smith. I like Chomsky, but he's just wrong about Smith.