Wednesday, April 06, 2011

Book Review (#4 of 2011) Wealth of Nations overview

You can use the wealthofnations tag to find my reviews of each of the five books of The Wealth of Nations separately. These are my overall concluding thoughts:

While I disagree with some of Murray Rothbard's scathing critique of Smith and WoN, he does make a valid point when he says:
For, in one way, the Wealth of Nations is like the Bible; it is possible to derive varying and contradictory interpretations from various – or even the same – parts of the book. Furthermore, the very vagueness and obscurity of a work can provide a happy hunting ground for intellectuals, students and followers.

It's easy for people to pick and choose Smith quotes to back up particular ideological positions. For example, you can find passages where Smith advocates progressive income taxes, stricter bank regulation and interest rate ceilings, government-sponsored education, and some restrictions on free trade-- a non-laissez faire prescription. He also seems quite the religious skeptic at times, where at other times he praises piety and the Presbyterian church.

But there are many places where Smith is just being pragmatic in his prescriptions. If you're going to have a progressive income tax, here's the best way to do it, etc.

But mostly Smith espouses his view of individual liberty pretty clearly. The government should allow individuals to freely choose their businesses, prices, trading partners, etc. because that will lead to the most efficient and just outcome for society.

Rothbard's (and Schumpeter's) critique of Smith is over his obsession with gains from the division of labor and his classification of people into "productive" and "unproductive" categories. I understand this, to a point. I think Smith does a good job extending the gains from divisions of labor into international trade, whereas Rothbard does not. Smith shows that division of labor is limited by the scope of the market, and the greater the amount of international trade the greater the scope.

Overall, I think Smith is simply making a lot of observations of society around him and of history and trying to weave it into a coherent framework within his own philosophy of personal liberty. He takes pains to repeat important points again and again.

Maybe he missed the Industrial Revolution happening around him. Maybe he plagiarized examples like his famous pin factory from encyclopedias. But the book was already 900 pages, right? What more needs to be said?

4 stars out of 5.

No comments: