Re-thinking money

I have recently started reading The wealth of nations by Adam Smith as I wish to read and interpret the words for myself, I hear him quoted everywhere these days but I wanted to read the whole body of work to understand it for myself. The reason for this is firstly the most obvious, that being interpretations can differ and secondly no one person can have all the answers therefore reading the whole book can give a better understanding of where he was on the right track and where he may of veered a little off, after all our understanding is limited by our experience and society is diverse making it impossible to fully know everything from every perspective (despite the amount of degrees one might hold, I hold none so that will be an entirely different perspective).

I am also at the same time reading the price of inequality by Joseph Stiglitz. I am not an academic by any stretch of the imagination I am trying to understand the world and the economy that runs it. The economy is everybody’s business as I titled my last poem with the first line being Economics is the air we breathe, followed by when all has been commoditized.

Now back to Adam Smith these are some interesting exerts that I have already come across;

“Money, says the proverb, makes money. When you have got a little, it is often easy to get more. The great difficulty is to get that little.”

Adam Smith (moral philosopher) Wealth of Nations, 1776

Note by me; The low paid wage earner will never obtain the privilege to amass this “little”. While their wage allows only meagre survival.

“It appears, accordingly, from the experience of all ages and nations, I believe, that the work done by the freeman comes cheaper in the end than that performed by slaves… The wear and tear of a slave, it has been said is at the expense of his master, but that of a free servant is at his own expense.”

Adam Smith (moral philosopher) Wealth of Nations, 1776

Note by me; It is easy to see how closely connected imperialism is to capitalism, labourers are just now a ‘wage slave’ instead; but the same impoverished outcomes prevail. When the surplus they produce is not shared out in a state of equality. It was just a rebranding by the old doctrine of a ruling class as elite.

“No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable. It is but equity, besides that they who feed clothe and lodge the whole body of the people should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged.”

Adam Smith (moral philosopher) Wealth of Nations, 1776

Note by me; When we trade globally we must consider the welfare of society in a global context. It is absurd to only extend decency to our own back yard when that backyard is maintained by the labour of our neighbour.

“In reality, high profits tend much more to raise the price of work, than high wages… the rise of wages operates in the same manner as simple interest… The rise of profit operates like compound interest”

Adam Smith (moral philosopher) Wealth of Nations, 1776

There does seem to be an underlying desire to see and encourage a decent society and for this he did seem to understand the need for equality in some part at least by the sharing out of the surplus provided by co-ordinated and cooperated labour forces.

But as I read Joseph Stiglitz I am referred to the invisible hand of self interest that Adam Smith thought would guide the economy to benefit all, it has not, perhaps as I heard Stiglitz say at a press conference because it doesn’t exist. Or maybe it’s because this invisible hand of self-interest was misinterpreted as meaning its okay to be selfish. Because when we take self-interest out of the context of morality, Adam Smith was a moral philosopher after all the meaning changes. For example if the business community took his meaning of the invisible hand as being the green light to pursue only self interest then they could justify almost any consequence of their brutality as being acceptable believing in the end their self interest will grow the economy and benefit all.

On the other side what if by self interest we look at it in conjunction with morals, for example if within a family unit the children are well cared for then it is much more likely that they will return this care to their aging parents. The self interest of the parent to provide both emotional and financial support to their children has guided them to produce children that will in turn provide support for them. This is better for all not only the family because this is the type of decency that makes the world a nice place to live. Families though do not function in isolation they are a small part of the bigger community they belong to and the communities are what then makes up societies. They all need each other to operate from the standpoint of self-interest in the sense that it is in the individual’s interest to act in a way that produces a decent society in which to live, no one is an island as the saying goes. If we take care of or neighbour then it is more likely that the favour will be returned at the very least the idea that this is the right thing to do is certainly fostered, which then leads to social convention improving the odds of it actually happening.

However when we complicate this self-interest with introducing money into the system it appears we start to look at money in the same way we should of looked at our neighbour and we begin to think it is money that can look after us. If money was the incentive needed to propel a self interest that would benefit all then no one would go hungry and everyone would have their own home. Instead we fight over a table of plenty.

We only ever need what we need, we can only eat a certain amount, live in one house at a time, drive one car at a time, wear so many clothes, the rest just becomes the excess of greed, valued for its monetary symbolism. When we introduce money into the equation we change the message of self interest into one of greed through the material status we give it, that encourages us to horde as much as we can. Then we fear losing it because we have put all our faith in money to provide rather than the good of humanity. Yes the baker as Adam Smith puts it does not bake to be benevolent but neither does he to be malevolent which means there is a natural instinct within humanity to work together and the natural consequence of this is that it can make it better for all when trade is fair. Money has not achieved the objective of creating a fair system by any measure.

It has managed to create greed, which is a form of madness. Money takes need and looks to profit from it, for more and more monetary gain. We surpass ‘need’ to ‘wants’ that are unneeded (only perceived from a position of status) and there the madness takes hold. It will be difficult if not impossible to ever raise a decent society if what we value is money to take care of us instead of our neighbour. It does not incentivise us to do better, to innovate, to create happy lives, it incentivises us to make a profit. As our own labour can only ever produce a limited amount of profit we then look to exploit the labour of others to increase our profit. When the objective of the game is to produce surplus for profit rather then surplus to fulfil need inevitably the game will be rigged by those with the money to buy the game. Which becomes a debt that must one day be repaid. For as much as doing good for your neighbour can travel full circle and be repaid to us so can the extreme of doing wrong by them come full circle and come back to bite us on the backside, so to speak.

Basically I am trying to explain that self-interest can be a good guiding invisible hand when we look at it from a moral stand point and take into account humanity as a whole. Perhaps this is more along the lines of what Adam Smith meant as a moral philosopher (I haven’t finished yet so I’m not completely sure). However maybe it was distorted to reflect the business objective to make a profit purely for money so we tell ourselves that self interest means it is acceptable to be selfish. Thus producing what we now have which is the deepening of inequality around the world as we push our neighbour down to make a dollar. When the value of life is reduced to money then life loses all value, as money has no real intrinsic value it is just a made up thing, life is what is real and valuable.

When the guiding hand of self interest is directed towards selfishness than no good outcome is ever achieved, when it is directed towards a recognition of being part of the collective than it benefits all, as the saying goes united we stand divided we fall. It is in my self interest to consider the collective interest.

Is it just me or does anyone else find that Adam Smith is broadly misrepresented?

Camille Barr

Camille Barr is an Australian poet, essayist & artist.