The ideal economy is one that is both profitable and civilised
Today marks the birthday of Adam Smith (16 June 1723) who was one of the greatest thinkers in the history of economics. He promoted the idea of a free-market economy suggesting it as the route to the healthiest and most stable society. In The Wealth of Nations (1776) he said that if everyone pursues their own interest, they will be guided by ‘an invisible hand’ to act in a way that will benefit society and provide economic stability.
“The great secret of education is to direct vanity to proper objects”. Adam Smith
Smith is a much maligned figure especially because of his belief in the idea of ‘trickle down economics’, nevertheless, his writings are hugely relevant because he thought long and hard about how to make a capitalist economy more humane and more meaningful and the result would be happier nations and happier people. He doesn’t always get the press he deserves for his insight.
His influence on the modern corporate world cannot be forgotten because it was he who recommended that jobs be split into individual areas of expertise, encouraging people to specialise and to trade their needs and talents. He lived through the early stages of what we now refer to as consumer capitalism and approved of it too. More importantly, he recognised that people have higher needs apart from earning money, the need for education and self-understanding, for beautiful surrounding and fulfilling social lives.
But one of the most fascinating things I found out about Adam Smith (according to the “School of Life book “Great Thinkers’) was that he fundamentally understood what the rich really want – and it’s not just more money, but honour and respect; therefore governments should work out what is the best way to do this in order to ensure everyone benefits.
Smith said, “The rich accumulate money not because they are materially greedy but because they are emotionally needy. They do so primarily in order to be liked and approved of.” Nowhere is this more evident than in the Trump Administration where the most senior positions in the American government are held by billionaires. This has a double whammy effect, no only do they have enormous power and influence, they will be the main beneficiaries of new proposals for tax reform, e.g. scrapping the estate tax for those who assets exceed 5.5 million dollars.
Can you think of anyone this may apply to and not just those in public life, but friends, family, neighbours and colleagues?