A rising tide lifts all boats.
“What improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
- Adam Smith
Adam Smith was born in 1723 and is sometimes known as 'The Father of Economics'' or ''The Father of Capitalism." He exerted enormous influence before he died in 1790 especially in the 19th and early 20th centuries.
America’s Founders were greatly affected by his insights, implementing many of his ideas into their government. This might be because in 1776 Smith had prophecied that Britain would lose and the resulting nation would become one of the greatest powers in the world. Smiths book "The Wealth of Nations" became required reading among men and women of ideas in the newly founded U.S.
Why were smiths ideas so revolutionary?
During the previous 300 years, Western Europe was dominated by an economic system known as “mercantilism.” This system gave slight improvements in life and liberty over the feudalism that came before but was still restrictive to enterprise and treated individuals as pawns of the state. Much of the population was treated as little more than indentured servants.
Mercantilist thinkers believed that the world’s wealth looked like a pie chart, if you wanted more then someone else must have less. This gave rise to endless conflicts between nations and the colonialism that spread the world over.
Mercantilists had little in the way of sympathy. They also lacked an understanding of self-interest, the profit motive, or the operation of prices. They wanted governments to consolidate control in the "worthy few", the few who had earned that honour through the hard work of being born to the right social class.
In 1759 Smith published The Theory of Moral Sentiments. This book discussed how human morality depends on sympathy between the individual and other members of society. He did not base his ideas on a special "moral sense" as Shaftesbury and Hutcheson had done, or on utility as Hume had done, but instead on empathy. Empathy of course being the capacity to recognise feelings that are being experienced by another being.
These ideas would later prove the basis for his future ideas that changed economics and government around the world.
Shortly after taking a job as a personal tutor in 1764 he landed in Geneva and met with the philosopher Voltaire. He later ended up in Paris where he met Benjamin Franklin and discovered the Physiocracy school founded by François Quesnay. These meetings further influenced his future theories.
In 1776, two things were happening; The American rebellion and the beginning stages of industrialization. These two events would further complicate things for national economies. At that time most employers believed that to get the poor classes to work, their wages had to be low, just enough to keep them from starving but not enough to see real improvement. They believed desperation was the best motivator.
Smith saw that repetitive factory jobs caused workers minds to get lazy, saying they became "as stupid and ignorant as it is possible for a human being to become." He advocated for all classes, even the poorest, to benefit from education and the profits of their labour. After all, he did say "No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable."
Smith believed there was little difference in potential between the poor and the rich and that it was only the social conditions that held the poor in ignorance. This was a radical thought at that time.
He called for taxes to be paid by all according to their ability and those taxes to go towards services that would level the field between the rich and the poor. He believed nothing improved a situation more than ownership and saw taxes as that ownership rather than a penalty. If you paid taxes you owned a piece of the good it created.
Next time you are thinking I don't have kids why should my taxes go towards schools or my insurance is fine why should I help with others, or my tax dollars shouldn't help those who in my eyes won't help themselves... Just remember -
"No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable."
- Jason Brown