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Affluent Christian Investor | October 21, 2017

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The Real Adam Smith Vs. the Fake Adam Smith

Sketch of Adam Smith (circa 1800)

Free to Choose Media, the people who brought Milton Friedman into public prominence through the PBS documentary series Free to Choose, have recently released a free version of their documentary series, The Real Adam Smith, along with free DIY screening kits. The series on which the enterprise was built helped create a global free-market revolution. But that revolution was at best incomplete and at worst distorted by a misunderstanding. That misunderstanding is that capitalism has nothing to do with morality, and may even depend on the vice of selfishness. This has been a useful cudgel by which the Left has been able to morally discredit the intellectual roots of the free-enterprise system. One of the most effective anti-capitalism films ever made, Wall Street, popularized the notion that capitalism depends on the (anti) ethical premise that ‘greed is good’. Adam Smith is typically called forth as chief witness for the prosecution in proving that capitalism is guilty of promoting greed.

In some sense, The Real Adam Smith is the cinematic rebuttal to Wall Street for which the world has been waiting.

According to Bob Chitester, under whose leadership the film was produced, the message which it was created to promote is that “Adam Smith was not a laissez-faire, Darwinian capitalist.” By this, Bob means that Smith was an upholder of morality and what Bob calls “a positive ethic.” This occurs because Smith’s modern detractors (and far too many even of his promoters) focus exclusively on Smith’s economic treatise, popularly known as The Wealth of Nations, and ignore the book that he personally considered to be more important, The Theory of Moral SentimentsMoral Sentiments was Smith’s first major work, his first book published, and the book which made his fortune and his career. Its importance is demonstrated by the fact that after Wealth was published and became a bestseller, Smith, with no more need for fame nor fortune, returned to his first love and thoroughly re-wrote Moral Sentiments with 50% of the revised work consisting of new material.

Smith was first and foremost a scholar of what was once called Moral Philosophy (and currently is called nothing at all). According to Chitester, the message of Adam Smith is that “Capitalism is dependent upon, and therefore nurtures, honesty and benevolence.”

So, what of the famous quote?

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it.

(Library of Economics and Liberty)

And what of the almost-as-famous quote?

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.

(Library of Economics and Liberty)

What we should not make of them is endorsements for selfishness. They are, instead, realistic assessments of human nature: In the modern philosophical parlance they are positive, not normative, declarations. To observe that people pursue self-interest is no more an endorsement than to observe that people tend to pursue laziness or gluttony is an endorsement of those moral ends. Smith almost certainly got the idea from Mandeville’s Fable of the Bees, but conspicuously did not repeat Mandeville’s subversive word choice that extols ‘vice’ as desirable and that the virtues “blest with content and honesty” led to apathy and destroyed “publick benefits”. Smith never said that virtue undermined the economy, which implies he intentionally reworked Mandeville’s thesis.

Instead, we see in Smith an assertion of ‘the invisible hand’ of Providence, in which we (to quote Moral Sentiments) ‘cooperate with the deity’ for the good of mankind. The miracle of the market is not that greed is good, but that the design of the system is such that even greed can be turned to effect the good of others.

For evidence, let’s look not to words, but to cold, hard cash. Adam Smith was a wealthy man, and instead of consuming that wealth during his lifetime, he cared well for his dependent mother and then left his fortune to charity at the end, the bulk of it to the poor.

As Chitester said, Smith “walked the walk and not just talked the talk.”

The film proves the point over and over again, Adam Smith is not Gordon Gekko in frills. I don’t think I’ve seen any better way, other than reading Smith directly, to correct the record about Smith, and by extension about the economic system which depends on what Smith called ‘the system of natural liberties’.

Who is this film for? I’ve thought about that quite a bit. Lord knows, the message of economic liberty is needed in public schools. But I suspect that there is room to grow in the autodidact world (and if you don’t know the word, but just looked it up to learn for yourself what it means, then you already know you are one). That’s how I stumbled across the material. I also think that homeschoolers would really benefit from exposure to the network’s educational material, especially The Real Adam Smith.

But here’s a dark horse (or is it sheep?) candidate for the best outlet for this material: church study groups. As Father Sirico has pointed out, the church economic discussion tends to start with redistribution of already created wealth in the same way that the church budget starts with the decision about how to distribute already created wealth which appears in the offering plate. Mainline churches could really use this as a counter-balance to the sort of thing which comes out of denominational headquarters. Evangelical mega-churches could use this to counter millennial drift to the left.

So, I advise, do yourself a favor, and in true Smithian fashion, you will end up doing the world a favor, too: Watch the film; watch it with somebody else; share it on social media; suggest it to churches, synagogues, and any of the other little platoons where education so often gets done.

I sat across a Skype line recently with Bob Chitester and discussed The Real Adam Smith and also a newer film from the network about the amazing transformation of New Zealand from socialism and degradation into freedom and productivity. Trailblazers: The New Zealand Story is also now free to the public.

Enjoy this edited audio of my conversation with Chitester.

I should also note that Chitester has recently retired as the CEO of Free to Choose Network and now sits as a member of the board. In my opinion he is not only the greatest libertarian/conservative documentary maker of my lifetime (so far), but also the greatest documentarian of any ideological stripe of our time.

 

 

Originally published on Forbes.

Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.

Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.

Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.

Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.

Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.

Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.

Jerry lives in Pennsylvania with his wife, Susan, and the youngest five of their seven children.

 

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