Adam Smith and American Property Rights

From The American Spectator:

As free trade and markets are increasingly vilified today by the political Left and Right alike, the ideas of Adam Smith, author of the famed Wealth of Nations and sometimes called the Father of Capitalism, are also tarnished.

It’s worth noting that many of the modern criticisms of markets — the most common being that they promote greed, inequality, and materialism — aren’t new. They are, in fact, criticisms that Smith himself anticipated and answered in his works. Looking especially to insights found in the book that made him famous in his lifetime, The Theory of Moral Sentiments (TMS), we can learn much about Smith’s concern about the social, moral, and political dangers of the excesses of markets today and the importance of personal virtue in preventing them.

“The profit motive fogs the thinking of free-market advocates,” critics claim. In allowing for unchecked pursuit of personal gain, a free-market system necessarily feeds greed — at the expense of the society’s vulnerable and the collective good. But Smith cautioned anyone who thought that solely pursuing profit would bring happiness. In TMS, Smith recounts a parable of the “poor man’s son,” who observes the comfort of a rich man’s son and spends his whole life striving and longing to become wealthy. When he finally does, he realizes that he’s just as dissatisfied as he was when he was poor. Smith uses this story to illustrate the importance of contentment with one’s current status and wealth and to caution against the delusion that any amount of money can buy happiness.

“Inequality is an inevitable product of capitalist activity,” is another increasingly common refrain, as growing income inequality is one of the key national issues of our day. When we read about billionaires spending over a billion dollars on a superyacht or $5 billion on a collection of rare cars, while over one in 10 American households experienced food insecurity in 2018, it’s not difficult to see why many become so upset about inequality.

Smith was very aware of the inequality markets would produce. In Wealth of Nations, he wrote, “For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many.” Smith also knew, however, that markets had great potential to lift entire cities and nations out of poverty — benefiting the wealthy, yes, but also the underprivileged. For Smith, inequality was worth the “universal opulence” that markets would produce, because the benefits of markets would “extend itself to the lowest ranks of the people.”

Keep reading, this is very good. Although I caution that trade is not free unless it is fair, which is a common misperception these days. Remember that Smith’s world ran on the gold standard, amongst other things, there was very little currency manipulation.

But the author’s point is, and must be, well taken, there is no proper understanding of Adam Smith without understanding The Theory of Moral Sentiments, which in fact, predates The Wealth of Nations.

But where did all this wealth we speak of (and it is an amazing story) come from? William Yeatman writing in The Federalist knows, and he shares it with us.

Within our constitutional framework, property rights have been relegated to second-class citizenship.

Take the Supreme Court’s double-standard on the Fifth Amendment’s prohibition against the government “taking” private property unless it’s for “public use.” For alleged infringements of other guarantees in the Bill of Rights, the Court “strictly” scrutinizes government action. But with the Fifth Amendment’s property protections, the Court allows legislatures to interpret their own constitutional boundaries. If “only” property rights are at stake, then the fox may guard the henhouse.

And yet:

Erler is a professor of political philosophy, so it’s unsurprising this book’s foremost contribution is its discussion of the vital role property rights played in the Framers’ constitutional vision. Tracing an arc of political thought from Aristotle through Locke on to the Declaration of Independence, Erler argues that the Founding Fathers put an inherently American gloss on pre-existing conceptions of property – one that merged natural rights and moral obligation into a synthesis they called “the pursuit of happiness.”

For the Founders, the right to property was the “comprehensive right that included all other rights.” In this spirit, the Supreme Court in 1795 averred that “the right of acquiring and possessing property, and having it protected, is one of the natural, inherent and unalienable rights of man.”

Keep reading this one too. The founders were correct. The right to property includes all the others. Do you have the right to own a Bible? a Gun? a House to keep them (and yourself) in? This is the basic question of the right to property. It is the right to be whatever you are, and the more it is corroded, the more we are creatures not of God, but of the state.

Keep it in mind, as we continue on.

About Neo
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5 Responses to Adam Smith and American Property Rights

  1. audremyers says:

    “Keep it in mind, as we continue on.”

    When I read this, the opening intro to the Twilight Zone popped into my head – ‘The sign post up ahead …

    I’m seriously concerned that this presidential election may, indeed, take us to the destination of the Twilight Zone. The twilight of the ‘light upon the hill’, the twilight of all that is good and right and has been established by the Pilgrims and the Founding Fathers and the hard work of immigrants from the around the world that helped the country grow and the twilight of the progress we made with civil rights because of the supported ideology of ‘identity politics’. The twilight of the America I know and love, the America that is in my DNA as well as my heart.

    Liked by 1 person

    • NEO says:

      I suspect we all are, but that is really a call for all of us to work harder. As I was putting this together, I was listening to Trump in India, it was fun to see another country who actually seem to get it. Hope there, and a lot of the progress for all of us depends on whether we do the right thing this fall.

      Like

  2. the unit says:

    Well, I read how money got started years ago. Instead of trading a couple of chickens for a cord of firewood or something.
    Currency manipulation is more difficult to explain. Here’s my 2 cents:

    🙂

    Liked by 1 person

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