Adam Smith railed against mercantilism, the rule of the merchants, as a fundamental threat to the operation of free markets. Photo / Supplied
Opinion
Adam Smith, the Enlightenment thinker who invented the idea of the free market, was an incisive economic commentator. It is interesting to imagine him as a columnist for the Herald.
On the idea of a living wage, for example, Smith wrote: "No society can surely be flourishing and happy, of
which the greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should be themselves tolerably well fed, cloathed and lodged." (The Wealth of Nations I, Chapter VIII).
Of price-fixing (by supermarkets, say, or banks), he remarked: "Our merchants complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people." (I, Chapter IX).
On governments dealing with merchants (Warner Brothers, say, or Sky City, or the Trans-Pacific Partnership), Smith commented: "The proposal of any new law or regulation which comes from this order, ought always to be listened to with great precaution. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." (I, Chapter XI).
On tax avoidance: "The rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion." (V, Chapter II).
