LECTURE NOTES: Adam Smith
It is really too bad I do not get to teach this stuff regularly...
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….Last of all, Adam Smith minimizes the importance of economic inequality by claiming that there is little or nothing to be done about it. Human nature is such that people will seek to create, and then to obey, those whom they will call their superiors. It is the view expressed by Calvera in the movie The Magnificent Seven. Chico asks Calvera:
And the people of the village? What about them?
Calvera responds:
I leave that to you. Can men of our profession worry about that? If God did not want them to be sheared, he would not have made them sheep!
As Adam Smith puts it in his Theory of Moral Sentiments:
A stranger to human nature, who saw the indifference of men about the misery of their inferiors, and the regret and indignation which they feel for the misfortunes and sufferings of those above them, would be apt to imagine, that pain must be more agonizing, and the convulsions of death more terrible to persons of higher rank, than they are to those of meaner stations. Upon this disposition... is founded the distinction of ranks, and the order of society. Our obsequiousness to our superiors more frequently arises from our admiration for the advantages of their situation, than from any private expectations of benefit from their goodwill.... We desire to serve them for their own sake, without any recompense but the vanity or the honour of obliging them...
To attempt to eliminate inequality is, for Smith in this cynical mode, like trying to bail out the sea: make society equal, and people will find somebody to look up to, and then figure out a way to give their money away to the rich.
So that is Adam Smith: worry about prosperity and wealth, yes; trust the (properly managed) “system of natural liberty”, yes; worry about poverty and want, yes; worry about inequality, not so much.
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