Podcast: Adam Smith discussed on EconTalk
Amazing interview on EconTalk Podcast this week, discussing Adam Smith's Wealth of Nations, here is a transcript
Adam Smith said in Wealth of Nations that commerce/free trade is what brought the feudal ages out of depravity.
By depravity he means, serfs had zero rights, they were owned by lords, they needed permission to work and marry, they were forced to fight in battles for the lord.
He says commerce prevents depravity because, in commercial society, we're constantly dealing with other people. Your success depends on your reputation, so you have to, on the whole, behave admirably. So commerce plays a positive role in happiness and morality.
(Below I am quoting a secondary source summarizing Smith - an EconTalk podcast interview)
the increase in commerce and standard of living and commercial life, in Europe in particular, led to libertyDENNNIS RASMUSSEN: You do--in commercial society you are constantly dealing with other people. You need--and so, your success rests on your reputation, among relative equals. And how do you gain a good reputation? By behaving admirably, on the whole. And so he does think, at least for the 'middling' classes, as he calls them, or the middling ranks, he does think--he says quite explicitly in The Theory of Moral Sentiments, honesty really is the best policy for them. So, I think commerce does--it might not make us the most noble, benevolent people in the world, but it does prevent a lot of depravity, he thinks. So that commerce does, I think with regard to morality if not happiness, play in general a positive role, for Smith.during the kind of middle ages there's this feudal system where you have these great landowners who exercise basically complete authority over the peasants or serfs who work their land. The King's power isn't really strong enough to reach into their estates, so they can do whatever they want. So, Smith runs through--and just shows that the miserable condition of these serfs. They are unable to--they are kind of bought and sold with the land. They can't move freely. They have to work at whatever occupation their lord tells them to do. They have to get their lord's permission in order to get married, if to follow their lord into battle whenever they are told to do so.Right, the importation of luxuries--does in the feudal system. So that once you get a commercial society, yes, an employee might want to please his or her employer in order to keep their job. But, you know, you are very unlikely to surrender your rights to your employer--follow them into battle whenever they want to do so. Right? So the kind of--the interdependence of the market allows this personal freedom, personal independence that you just didn't get in those previous eras of human history. So, this is his[?] story of life, the causal[?] runs that way--why it's commerce that led to liberty and security. With the advent of commercial society.
Smith also discusses morality
DENNIS RASMUSSEN: ... There's a famous passage about the ambitious poor man's son who wastes his whole life trying to attain what he thinks is the supreme happiness of the rich, and then later in life he looks back and says, 'I wasted my life trying to get these things that wouldn't have made me happy anyway.' I don't know that Smith thinks that activity of commerce is also corrosive of morality. ...RUSS ROBERTS: ... You give a nice example of how it keeps you up at night, because you are worried your business might not make it, or whatever it is. But it's more than that, right? Smith also warned that it'll corrupt your morals if you pursue money or fame or power too aggressively: you'll find yourself doing things that you'll later regret. Not just that you've wasted your time pursuing money, but you'll do things that will be dishonorable. And I've always thought that part of that came from Smith's time. Entrepreneurship was quite limited. He could not have romanticized an entrepreneur much. There weren't--inventors, yes, maybe, but not what we would call an entrepreneur today. And a lot of the people that he saw grasping for fame and power and wealth were people in nobility, who were--I think he talks about them being engaged in intrigue and the court, to try to get their star advanced. And that, I think, he viewed with a lot of negativity.