Adam Smith

I’m looking at one of the new £20 notes. It is very flashy. I mean that in the literal sense. There is a band of silver all down one side which flashes whenever it catches the light.

As you have no doubt already seen (unless you live outside the UK) there is a picture of Adam Smith on the reverse side, replacing the image of Elgar that used to be on the old notes. Also the words: “The division of labour in pin manufacturing (and the great increase in the quantity of work that results.”

Now what does that mean?

It is, of course, a quote from the great man himself, from his book, The Wealth of Nations, dated 1776.

Adam Smith is famous for having extolled the virtues of the free market. He is supposedly Gordon Brown’s favourite writer, hence – probably – his appearance on our English £20 note, despite the fact that he was Scottish.

There is also an institute named after him, an organisation which cheerfully promotes the privatisation of our public services. Margaret Thatcher was fond of quoting him.

Are we to read his presence on the back of one of our bank notes as a statement of policy then? Does this mean more free market economics under Gordon Brown?

As it happens, any actual reading of Adam Smith himself soon reveals the fact that he has been badly misrepresented.

He used the term “the free market” rather in the way that Ghandi referred to western civilisation, meaning he thought it would be a very good idea.

In fact Adam Smith showed that the free market didn’t exist. To quote:

“It cannot be very difficult to determine who have been the contrivers of this whole system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interest has been so carefully attended to.”

In other words, the so-called free market is based around the need of producers to accrue wealth, not the need of consumers to get a fair deal.

This is still the case. There is still no such thing as the free market. It is a system entirely rigged to serve the interests of certain groups with wealth enough to buy influence over government.

Or, to quote Adam Smith again: “The vile maxim of the masters of mankind, all for ourselves and none for other people.” Perhaps they should put that on the back of the £20 note.

The process can be summed up in the phrase: “privatisation of profit, socialisation of cost.”

In other words, it is we, the public who are expected to pay to clean up the mess that private enterprise makes. It is we who are expected to build roads, to arm, to train, to police, and to do all of the millions of jobs on which private enterprise depends. It is only after all of this has been done and paid for that the merchants of private power can take their customary profits.

What a joke! Adam Smith would be turning in his grave.