Adam Smith and Neo-Liberalism

When we speak of “liberal economics” and the economic and social philosophy of competitive egoism (or competitive self-interest) it is usually in reference to the father of liberal economic theory, Adam Smith (1723 – 1790). In some ways, it makes sense to say that since “the death of God”, we are no longer “the children of God” so much as the sons and daughters of Adam Smith. Smith is remembered for two major and hugely influential works: The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776).

I’m far from being completely conversant in these two tomes, but am conversant enough to realise that neo-liberalism, which purports to be a return to pre-Keynesian classical liberal economics of the Adam Smith variety, is actually its complete contradiction, and that those who claim Adam Smith as their precursor, precedent and model are actually deceiving themselves and others. Smith, undoubtedly, would be turning in his grave at the association of his name with neo-liberalism.  It’s become an inversion of what Adam Smith actually taught. Like so many other social and cultural trends of Late Modernity, it represents reversal and inversion in a self-negating, self-contradictory, self-devouring dynamic — a nihilistic trend undermining and subverting its own foundational values and principles. An Era now negating and annuling itself.

My interest here is not in defending some sort of “purity” of Adam Smith’s economic theory against the corruptions of contemporary neo-liberalism so much as illustrating this self-negating dynamic called “end of history”.  Smith’s worldview is Newtonian, and as such, relevant for his time but largely irrelevant for ours. It seems strange that William Blake would rage against Newton, Locke, Hume, and Bacon and yet never mention Adam Smith (at least, not to my recollection). Blake, nonetheless, attacked everything that Smith represented in the Age of Newton — Deism, atomism, egoism, Natural Reason, and Natural Religion as all belonging to “Single Vision” and the false god “Urizen”.

And although Blake is often lumped in with the whole Romantic Movement, I consider that a mistake. Blake was already “transmodern” (or post-modern) before anyone thought of the term. He not only prefigures and foreshadows Nietzsche, but also goes well beyond Nietzsche in his anticipation of the New Age and the transhuman, which only comes into its fullest expression and representation in the cultural philosophy of Jean Gebser four generations after Blake (this rule of four being highly significant).

So, it’s a real head-scratcher when some humanists attempt to sketch out some kind of an affinity between Adam Smith and William Blake.

There’s really no question but that the First World War represents this incipient inversion and self-annulment of the Modern Era and its reversal of fortune — the onset of Nietzsche’s “two centuries of nihilism”. What is today called “post-modern” or “post-Enlightenment” begins then.

For one thing, just as much as the separation of Church and State was necessary, Smith also recognised the necessity of a separation of business and politics, the separation of the business or financial interest and the social interest. This separation has collapsed with neo-liberalism, resulting in a corporatocracy or plutocracy (if not a kleptocracy) much as Smith feared. The ensuing confusion and conflation of the financial with the political is a fundamental negation of Smith’s philosophy, recognised today as “dark money”. As Rosenstock-Huessy also recognised, in his economic tract called The Multiformity of Man, “A manager who would think of himself as a leader would be a fascist”. That now appears to have become the fate of the Late Modern Era.

This is, without too much doubt, the chiefest falsification of neo-liberalism in its pretensions to claim Smith as its precedent and authority, and the chief symptom of its own self-negating dynamic which became formalised in Milton Friedman and Friedrich Hayek, the darlings of Ronald Reagan and Margaret Thatcher respectively.

Nonetheless, as the seed-germ of the post-Enlightenment was planted by Descartes himself, so the seed-germ of the post-liberal was also implied in Smith’s own philosophy — the factor or element or implicit polarity that would come eventually to dominate and effect this “enantiodromia” or ironic reversal. It’s the very thing that Blake denounced and feared as “single vision”. It’s the same reason, or factor, that leads Gebser to distinguish between “reason” and “rationality”, rationality being the sick or “deficient” aspect of the mental consciousness structure. And it’s for very similar reasons that Nietzsche anticipated that the historical triumph of liberal institutions would simultaneously be their downfall, which became final then with Fukuyama’s “end of history”.

This reversal, which we call “enantiodromia” — reversal at the extremity — is only another way to identifying the karmic law at work, the law of action and reaction. Gebser doesn’t use the term “enantiodromia” for this, but speaks rather of the “metabolic” or metabolistic reversal. So, it you’re reading Gebser’s Ever-Present Origin, and you come across his reference to the “metabolic”, you can pretty much substitute “enantiodromia” or dynamic reversal at the extremity (although, in Gebser’s terms, it’s when the negative or self-negating or “death-pole” of a dynamic begins to assert itself over the positive or “life-pole”, which, in Freud’s terms, correspond to thanatos and eros poles of the psyche). These factors or influences are equally present in the economic and moral philosophy of Adam Smith, as well, and account for why “enantiodromia” happens at all.

And, of course, you may recognise in that the basic meaning of the Tai Chi symbol, the mutually implicate and co-presence of the light and dark principles or yin and yang principles,

Tai KiBasically, the karmic law, and enantiodromia, state the same basic rule: at the extremity of its possibilities, a dynamic “metabolistically” reverts into its opposite, negating itself, which we call “nihilism”, or what Gebser calls “deficient mode”. This is the case with what Gebser calls “the mental-rational” consciousness. The “mental” is the effective or positive aspect of reason, which has undergone a reversal into its deficient mode of expression — rationality and rationalisation or “technocratic rationality”. It’s another way of saying “decadence” or “degeneracy”. This factor was already implicit as a potentiality in the Enlightenment, and consequently also in Adam Smith’s philosophy. It was just a matter of time before it would overtake and assert itself as cynicism and as “cynical reason“.

For that reason, it’s not just in Adam Smith that we have to look for the flaw that has resulted in all the contemporary undesirable outcomes — perverse outcome, unintended consequence, revenge effect, blowback, or ironic reversal — of the Age of Reason, but in the consciousness structure that itself produced Descartes, Adam Smith, Newton, etc — the consciousness structure that Blake calls “Urizen” or “Single Vision & Newtons sleep”, and which Gebser calls “mental-rational”. And when we examine it carefully enough, we find that the flaw has to do with a misunderstanding of time and the meaning of time — a flaw that occurs in Smith’s philosophy as well.

That’s the flaw that we’ll scrutinise in the next few posts.



4 responses to “Adam Smith and Neo-Liberalism”

  1. Scott Preston says :

    Some of you may have heard of “The Leap Manifesto”, a blueprint for a new politics and economics in Canada that is dividing Canada’s party of the left, The New Democratic Party.



    The Manifesto has attracted its share of vitriol from the political establishment and the mainstream press, who condemn it as “absurd” or “unworkable” or “unrealistic” and so on, or as something that will consign the NDP to the perpetual wilderness and hinterland of politics.

    Well, it’s of some interest to note that all of that attended Adam Smith’s “Wealth of Nations”, too. It was greeted with much the same mockery, derision and disbelief in its time by equally conservative interests and guardians of the old order as being the “natural order of things” that Smith’s proposals were bound to upset. And yet eventually it became so much “the common sense” that even to question it came to be seen as insanity.

  2. Scott Preston says :

    There’s another aspect, I might mention, in which neo-liberalism represents a discontinuity with the premises of Adam Smith’s liberal economics, and that is the issue of the “casino economy” — profits from interest, speculation, gambling, inheritance or other forms of “unearned income” which have no connection with the “meritocratic” regime that Smith visualised. So, in those terms also, neo-liberalism is a completely different creature than Smith envisioned. And if George Monbiot wonders why it has become “nameless” or why the term “neo-liberalism” has apparently suddenly disappeared from the current discourse, it could well be because it’s an embarrasment, no longer possible to hide the fact that contemporary casino and predatory capitalism has no relation to Adam Smith’s economic theories at all, despite the pretense.

    The privileges of unmerited and unearned income, and the loss of the wall between business and government, money and politics — two major issues in which Smith’s liberal economics is negated by neo-liberalism.

  3. Scott Preston says :

    While I’m at it, I might mention a third major negation of neo-liberalism — free trade. Smith was a free trader, to be sure, since he saw free trade as undercutting the business conspiracies (monopolies, trusts, cartels) that he considered “conspiracies against the public” by businessmen.

    The irony of neo-liberal free trade agreements, though — which undermines the liberal principle of “self-determination” (remember that? Nobody mentions it anymore as a “right”) — are that these “conspiracies against the public” are now built right into free trade agreements as “investor rights” or investor protection clauses, allowing private corporate interests to overrule local self-determination where these might impinge on investor rights or profit-taking. In effect, these “conspiracies against the public” that Adam Smith sought to dissolve, are now built right into the free trade agreements themselves as “corporate bills of rights”, making free trade merely a matter of free for some, but new constraints for others.

  4. abdulmonem says :

    I was googling Adam Smith and Blake,only to find a blog called the humanities seminar notes to address the connection and to talk about how peoples misread the thinkers over the ages and to find a statement made by John Mark Reynolds that point to the real human problem ,it goes, Without morality on the individual level, no laws, contracts,or rules will help our society. Bad human will always find a way to cheat. We need honest people to govern otherwise the human dilemma will continue till the reversal law strikes.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: