Anonymous asked in Social ScienceEconomics · 7 years ago

How are the theories of Adam Smith and John Maynard Keynes seen in our present American Free Enterprise System?

1 Answer

  • 7 years ago
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    Depends by whom.

    Adam Smith has been adopted as the patron saint of Capitalism, even though he was no such thing. After all, he wrote:

    "Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer." - The Wealth Of Nations, Book IV Chapter VIII, v. ii, p. 660, para. 49.

    "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices" - The Wealth Of Nations, Book IV Chapter VIII, p. 145, para. c27.

    "To widen the market and to narrow the competition, is always the interest of the dealers…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. 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 oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." - The Wealth Of Nations, Book I, Chapter XI, Conclusion of the Chapter, p.267, para. 10.

    "If [justice] is removed, the great, the immense fabric of human society, that fabric which to raise and support seems in this world if I may say so has the peculiar and darling care of Nature, must in a moment crumble into atoms." - The Theory Of Moral Sentiments, Part II Section II Chapter III, p. 86, para.4.

    "The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company."


    As for Keynes, the right-wing has embraced a caricature of what he wrote too.

    As the the "American Free Enterprise System" it doesn't exist and never existed. The government has been a major force in the economy from the very beginning, and it has been good for the economy:

    - building infrastructure

    - subsidizing the railroads

    - protecting American industry from competition

    - helping to provide education for all and not just the rich


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