- Adam Smith's Equality and the Pursuit of Happiness by John E. Hill
I thought that I knew Adam Smith. Apparently not! "The political economy of the USA today is based on a laissez-faire interpretation of his Wealth of Nations," which, according to John E. Hill, "grossly distorts Smith's ideas." Furthermore, "correctly interpreting" (and implementing) Smith's thought would lead to greater happiness in all capitalistic political economic systems" (vii). The general slant of this book is that gross misinterpretations of Smith's theory of market capitalism have been used to justify the destruction of the moral standards on which market capitalism depends. In other words, market capitalism requires a moral infrastructure or foundation, which has been eroded by Smith's recent interpreters.
Smith advocated not only liberty but also justice and equality. His position did not shift between his Theory of Moral Sentiments and Wealth of Nations. He knew that a person's behavior is often motivated by self-interest, but also that self-interest is frequently tempered by sociability. Smith would have no use [End Page 92] for Volkswagen's skirting of pollution rules or for the financial shenanigans that resulted in the Great Recession.
Of interest is the author's inclusion in the introduction of the results of recent psychological and sociological studies of happiness. Smith, like many in the eighteenth century, wanted to increase everyone's happiness. Furthermore, happiness depends on promoting the happiness of other people, not on the exclusive self-interest Smith is often misunderstood as promoting. Hill's contention is that many people do not understand that the market is more productive when it is just. This would require a larger role for government.
Chapter 2 "is an argument for an egalitarian and just market economy to replace the laissez-faire capitalism that controls and weakens the USA today" (22). Hill made a survey of books and internet sources, from both ends of the political spectrum. About 70 percent of them incorrectly connected Smith and laissez-faire.
The famous quotation that we expect our dinner not from the benevolence of the butcher and the baker is dangerous when taken, as Smith did not, as a license to separate self-interest from concern about harm done to others. Indeed there are over forty examples in Smith's book of selfish behavior being inimical to society. Smith advocated an active role for government in the market to promote justice. But Smith urged not only government regulation to preserve fair markets; he also urged moral integrity. As Hill writes: "As a thought experiment, apply this integrity principle to financial institutions before the Great Recession. … Did they make every effort to avoid harm to those buying their fancy derivatives? Were they concerned about the impact on other stakeholders, such as workers, society, and future generations?" (43). The modern-day advocates of Smith would be surprised at the types of government involvement in the economy he urged: defense, public works (including infrastructure), education, and even religious instruction.
Chapter 3 focuses on applying Smith's ideas to the USA today. He was attempting to lay his proposals on a foundation of a scientific study of society with continual observation and readjustment of policies based on outcomes. This means that, to apply his ideas today, we need evidence-based research that leads to proposed solutions and is based on best practices anywhere in the world.
In chapter 4, Hill argues that Smith was not advocating absolute equality of wealth—a utopian fantasy—but rather equality of opportunity. He advocated higher wages and government programs to mitigate the deadening effects of repetitive work, and he opposed regressive taxation, such as road taxes. Although not opposed to wealth, he was very critical of concentrated wealth. [End Page 93] As he put it: "The affluence of the few supposes the indigence of the many" (75). He derided "the mean rapacity, the monopolizing spirit of merchants and manufacturers" (75). Hill cites shrinking unions, dominance of the finance sector, obscene executive pay, trickle-down tax...