Adam Smith and Capitalism for Beginners
One of the books the Scottish philosopher Adam Smith wrote, The Wealth of Nations, theorizes about the nature of capitalism. The word “Capitalism” derives from the word capital, itself deriving from the Latin word caput, meaning head. In capitalism, money takes the place of cattle as the unit of movable wealth, and that wealth’s use and circulation through acts of exchange are privately determined by individuals, not the government. Adam Smith defended this way of organizing human affairs, not just on pragmatic terms, but on moral ones, upending millennia of religion-based admonitions that one should aver selfishness. In Smith’s view, pursuing one’s interests to the general indifference of what happens to strangers is actually central to national prosperity. “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it”. From a regard to his own interest the making of bows and arrows grows to be his chief business, and he becomes a sort of armourer. Smith’s famous example is that of pin manufacturing: “One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head” and so on. Smith counts eighteen distinct jobs associated with pin making in the eighteenth century, and they required at least ten laborers to carry them out. How does a nation’s wealth accumulate? Smith’s answer: by successful individuals herding or hoarding of capital and then risking it on new ventures. “As soon as stock has accumulated in the hands of particular persons,” writes Smith, “Some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by sale of their work, or by what their labor adds to the value of the materials.” Ventured capital, placed into circulation in the economy, is therefore good for many: money is made by the suppliers of materials; the employees hired to assist the new enterprise; those charging rent for office, store-front, or factory space; and-if the project proves profitable-the investor “Who hazards his stock” in the “Adventure.” This constant hazarding of “Livestock” or “Stock” by those around whom it has herded or accumulated is, of course, subject to competition, which is another stimulus to expanding the wealth of nations: “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men”. If a government, by centralized planning, tried to set the course of economic activity, Smith is quite sure it would fail to accomplish all that capitalism accomplishes organically via the “Invisible hand”. Through, for example, competition and the constant measuring of profit and loss, capitalism naturally finds good directions for society to organize its energies around and so relieves the government of having to manage the economy: “The sovereign [the king] is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, …” In other words, distributed markets are smarter than any central planner. If capitalism is the answer to expanding the wealth of nations, what is government’s role in society? Smith sees a number of strictly circumscribed jobs: “Protecting the society from the violence and invasion of other independent societies”; protecting “Every member of society from the injustice or oppression of every other members of it”; maintaining a predictable court system for “Exact administration of justice”; maintaining public institutions and public works, such as public roads; “Supporting institutions for education and religious instruction”; predictable and non-onerous taxation, affecting “The pockets of people as little as possible”; and temperance in deficit spending. This is Smith’s theory and vision for a merchant-oriented society, where every person “Lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly called a commercial society”.
Critical Theory, the Critique of Enlightenment Reason, and the Problem of Freedom
Critical Theory, The Critique of Enlightenment Reason and the Problem of Freedom Abstract: The critique of Enlightenment reason put forth in Adorno and Horkheimer‟s book Dialectic of Enlightenment, remains one of the most important critiques of modernity and Enlightenment rationality of the 20th century. Words: 7,711 1 Critical Theory, The Critique of Enlightenment Reason and the Problem of Freedom Introduction In modernity, the concept of rationality presents us with an ineluctable problem, one that is almost identical to the problem of freedom itself. One of the hallmarks of critical theory is its critique of Enlightenment rationality and its “Unmasking” of what passes in modernity for reason and of freedom as ideological and false. At the same time, the sooner we see that the story of cultural modernity told in Dialectic of Enlightenment is misled by the conception of reason Adorno and Horkheimer were working with, the easier it will be to salvage the concept of enlightenment reason and the idea of freedom from the wreckage of intellectual history. As Douglas Kellner has pointed out, “[i]t is not clear whether Horkheimer and Adorno intended to carry out an immanent critique of enlightenment thought or break with enlightenment rationality altogether. Although it is not all that plausible to argue that critical theory has been hampered by the critique of reason and the Enlightenment put forth in Dialectic of Enlightenment, it did open a path for a dismissal of enlightenment thought and the possibility of an elective affinity 5 between conservative political trends and “Radical” intellectual ideas, most evident in the work of postmodernists that share their skepticism of enlightenment rationality. In other words, it is not in the continuing critique of the Enlightenment and of reason more broadly that modern Critical theory needs to be concerned with, but the realization that any critique is always situated within a tradition and that this tradition is firmly rooted in the Enlightenment and the discourse of enlightenment ideas and ideals that has continued for more than two centuries. More specifically, the link between reason and freedom is such that the intellectual path chosen by Dialectic of Enlightenment locks critical theory away from the political domain of freedom unless it goes back to the ideas of enlightenment reason. What will be attempted here is therefore not a reconstruction, but a critique of Dialectic of Enlightenment‟s critique of the Enlightenment and enlightenment reason in an attempt to liberate the Enlightenment from the various interpretations that the Adorno and Horkheimer set in motion and set the stage for a restoration of the positive elements of a critical theory of society. I will talk more about this below, but for now, the critique of enlightenment reason posited in the DE needs to be seen as largely one-sided and, in itself, totalitarian in the sense that it reduces the complexity of enlightenment thought to its instrumental manifestations and does not see its liberating and critical dimensions. 13 12 The positive moments of the Enlightenment are therefore blocked from view by the radical critique of enlightenment reason. The Problem of Freedom The dialectic of enlightenment rationality is therefore the story of how the Enlightenment itself is incapable of producing the domain of freedom. With respect to the second aspect of freedom articulated above, their critique of enlightenment reason seals off the realm of social freedom in the sense that it is unrealizable within the confines of industrial society. As Zoltán Tar has argued “The anti-mathematical bent of critical theory does not have much in common with real Marxism; its roots lie basically in the traditions of various German anti-science intellectual currents.”16 This is also the prime root of their critique of the Enlightenment as well, but how can this also be seen as a problematic between critical theory and Hegelian Marxism? Horkheimer and Adorno, like Lukács and the tradition of German sociology in the 19th century, are essentially neo-Kantians, not Hegelian Marxists. The critique of enlightenment reason begun in DE has allowed left critical thought to become reactionary against the Enlightenment and the constructive, positive elements that is has to offer.