Rebirth of Reason

Sense of Life

Smith, Marx, Nock: The Hyper-Focus on Economics
by Kyrel Zantonavitch

Historically, economist Karl Marx defeated economist Adam Smith. Marx's political, social, and economic ideals and theories proved to be stronger and better--to most critics--than Smith's. This was true in the hearts and minds of both the intellectuals and the masses.

Unless you want to argue that virtually all people are naturally stupid and wicked. One could here embrace a kind of religious/collectivist notion of Original Sin and ubiquitous depravity. This would involve what classical liberal Albert J. Nock called both intellectual "true humans" and "mass men" -- and one could then argue that this inherent flaw in humanity is why evil triumphed over good and falsity over truth lo these past two centuries.

But this is a truly dubious idea and approach. This permanent-condemnation-of-mankind business is an evidently heinous and mischievous belief system which seems to form a foundation from which socio-economic theorists and political philosophers can pretty much excuse and justify anything. Essentially any social atrocity can be rationalized away as an attempted "cure" for some collective inherent sin and natural human failing.

So it's very much better in almost every way to conclude that humanity is either intrinsically morally good or morally neutral. And thus the reason Marx triumphed over Smith -- and socialism over capitalism -- is that Marx's argumentation and logic was better and 'truer' than Smith's.

But how is that possible?

One of the most important reason for this dismal victory lies, in my judgment, with Adam Smith's vast overemphasis on economics in his political and societal theorizing. As he contemplated human behavior -- and the potential for, and benefits of, human freedom -- he grossly undervalued and ignored the personal and social aspect of the individual's life. He didn't realize how terribly much they impacted and constituted the individual's behavior. In Smith's various wide-ranging inter-disciplinary surveys -- such a the Theory of Moral Sentiments and The Wealth of Nations-- his heavy-handed focus on business, trade, and the acquisition of one's "daily bread" ended up creating a very distorted view of human life and society -- and consequently of many of his political ideals.

Almost a century later, Karl Marx embraced this error. Then he took it to its logical conclusion, namely, "dialectical materialism." This last theory ultimately saw all of human history, progress, life, and happiness as reducible to crude, unthinking, impersonal, economic activity.

In viewing all of human existence through the warped, unfun, funhouse mirror of economics, Marx amazingly concluded that war was mankind's natural state. He invented a silly and nonexistent "bourgeois" and "proletariat," put them in opposition to each other, and then claimed that they were constantly engaged in a "class war" from which only his ideas could finally bring peace. In the end, it's hard to know how to argue against this type of patent economic and sociological nonsense -- however historically triumphant.

Almost a century afterwards, Albert J. Nock -- the last of the political (and cultural) classical liberals -- mocked the absurdity of this Smithian and Marxist societal and cultural overview. He called such tomfoolery "economism -- the belief that all of life begins and ends with economic activity."

But it goes without saying that there's much more to life and society than just making and spending money. Even the lowly, non-intellectual Bible understands that "man does not live by bread alone."

And yet...it's easy to see how these various "classical" economic thinkers made their mistakes. Adam Smith's world was dominated by the rather malicious fatuosity of two to three centuries of "mercantilism." This simple-minded -- yet complex and contradictory theory -- held that, among other things, "A dollar of precious metal is worth more than a dollar of agricultural produce; a dollar of finished goods is worth more than a dollar of raw materials; a dollar of export profits is worth more than a dollar of import profits or domestic profits; etc." What's curious nowadays is that however blatantly false and evil this economic theory was -- people today mostly believe it.

Moreover, prior to Renaissance mercantilism, and starting with the Dark Ages, political 'thinkers' tended to believe in the inevitability and value of both monopolistic trade cartels and monopolistic labor guilds. Again, many people today still do!

So freedom-loving Adam Smith, even living at the height of mankind's glorious liberal era, had his work cut out for him. In this light, one could say that Smith basically fought both of the above collections of theories pretty hard and pretty well.

But he never took the next step, to vigorous and emphatic promotion of social freedom. He never much argued for such fundamental personal and social freedoms as those involving sex, drugs, gambling, divorce, abortion, obscenity, blasphemy, non-bigotry, artistic expression, and so forth. And he never much knew about or argued for the value of privacy -- nor for the virtue of political protection thereof.

All of the above is quite serious because human behavior really can be very usefully divided into the spheres of the social and the economic. All people, however gregarious or hermit-like, have a social life. And all people, however rich or poor, have an economic life. And this socio-economic participation and interaction is true even of the most independent and isolated.

In turn, at times, people love being socio-economically independent and isolated. This may be occasional but is very important. And this is the transcendent value of privacy. It's also a central and necessary component of our current Greek-Italian Renaissance-style individualism.

Because Adam Smith didn't effectively champion social freedom, he ultimately didn't effectively champion economic freedom either. This is because the two are so obviously, utterly intertwined. Their relationship -- from basic political theory to technical legal studies to overall individual behavior -- is profound and ineluctable. Ultimately, the two forms of human freedom are indivisible.

One of the sadder aspects of freedom-fighting today is the fact that Karl Marx was allowed to name and defame Adam Smith's political system. He gave it the odd, cold, vague, economics-based term "capitalism."

Another sad aspect is that even the best of the freedom fighters today -- the late 1900s libertarians and Objectivists -- continue to almost entirely embrace the bad and false "economism" of Smith and Marx.

And yet...Smith's economic theories are still pretty much pretty good. And history has largely washed clean most of the strange and bad aspects of the term "capitalism." And certainly current libertarians and Objectivists have raised the understanding and theory of economic freedom to a stunningly high zenith.

Still, political freedom-fighters today can do much better. We need to champion economic capitalism and social libertarianism. Better still, we should simply advocate a universal, limitless, political liberalism. This term encompasses everything in the economic and social realm. This Western, Enlightenment, classical ideal, concept, and word -- for all its seeming possible confusion nowadays with leftism and progressivism -- is absolutely clear in what it ultimately means. Pure liberalism in the political sense means pure socio-economic freedom. It means absolutely zero taxation and regulation of any social and economic activity. It means socio-economic volunteerism, free choice, free cooperation, and non-coercion to the point of infinity. Now that's a world and political belief system worth fighting for!

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