Restoration of America: The Wealth of a Nation

AdamSmithAmericans have become the government’s greatest supporters. Conservatives portend to want the government to do something about the economy as much as liberals do. Perhaps when we see the government as the problem, it has become easier to see it as the solution. Granted a government that has overstepped its proper boundaries of authority has indeed become a problem, but the solution is not to sway that intrusion to support one party’s values over another, but to forbid the usurpation altogether.

Having a stable economy is one of the most necessary ingredients to ensure the wealth and strength of a nation. A free, industrious and productive people are tantamount to a stable economy. Adam Smith’s The Wealth of Nations is a comprehensive authority on the subject of national economics. Published in 1776, it became the bedrock philosophy of American economics. It became so, not because the Founders designed our economy after Smith’s philosophy, but because Smith meticulously envisioned a free market society before it ever existed.[1] Reading Smith, it is easy to believe he merely described a free market society as it was, instead of theorizing something yet to be born on a national scale. Thus, we look to Smith, not as a philosophy to impose, but to reimagine the vision of what is possible when a free and industrious people prosper.

MorningStar JournalThe Scottish moral philosopher advised on the role of government in conjunction with a free and burgeoning economy.  Smith writes, “Upon every account, therefore, the attention of government never was so unnecessarily employed as when directed to watch over the preservation or increase of the quantity of money in any country.[2] A free people are the engine that produces the economic stability of a nation. The engine is too massive a machine of industry to be monitored by any small entity of government. It requires the continual oil and energy of the entire community of all of its parts to maintain stability.

Anytime one part of the machine is given favor over another through unnatural
means, such as government involvement, it becomes off kilter. The other parts have to work harder than their fair share, and the strain affects the favored portion as detrimentally as the unfavored. Smith explains, “To hurt in any degree the interest of anyone order of citizens, for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects.[3]

For example, Smith writes, “But there is no country in which the whole annual produce is employed in maintaining the industrious. The idle everywhere consume a great part of it. . .[4] He defines the idle as the disabled, the foolish, the elderly, the children, and those necessary industries that do not increase national production. Those in the last category provide services for the community such as doctors, nurses, and lawyers, but are not considered producers. All of these become, in essence, supported by those who are producing. Government regulation that favors the idle over the producers will hamper production and harm the idle. Regulation that favors the producers over the non-producing valuable renderers of services will harm the needs of the producers in the process.

The Limits of Government

WealthofNationsMoreover, the government ought not to create jobs for the unemployed where society is not able to support the creation of said jobs. Smith argues, “No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain.”[5] If the engine of a nation’s economy is not operating at the level at which it can expand to employ more workers, no regulations will overcome that reality. In contrast, freedom, over time, will naturally lend itself to an increase of capital for healthy businesses, and will weed out the businesses that are not healthy.

Understanding the difficulty of assuming such a grandiose position as to rule and regulate economic affairs cautions a people towards such a one who would think himself capable of the task. Smith wrote this warning in 1776:

The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.[6]

Furthermore, Smith writes:

The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of society.[7]

The Government’s Job

The government does provide a valuable service to the national economy in three areas for which its authority is relegated. The first is in defending against foreign invasion by maintaining a regulated military. The second is protecting its citizenry from each other by maintaining a justice system. And lastly, to maintain the public works common to the needs of all citizenry such as roads, bridges, and canals. Each of these services requires a portion of the common produce of the nation which is acquired through taxation. Moreover, the object of a government supportive of a healthy national economy is to keep as much of the people’s capital in their own pockets as possible. In so doing, this increases the continued revenue drawn from taxation, as that capital is put to productive use by the people.[8]

A Free Market Economy

Adam Smith is an avid proponent of a free market economy. When each portion of the economy is working to produce in alignment with their own interest, the interests of the other portions are maintained. He writes, “All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other men, or order of men.”[9]

Even if the economic engine were to falter due to any of the numerous pressures being applied to it, a free, knowledgeable, and industrious people can reignite the economic engine. Those who did not build on a firm foundation would be in a more difficult situation than those who did. Thus, some will feel the jolt of the engine grinding to a stop and subsequently restarting more than others. We need not be victims of an economic shift, but a people who can position ourselves appropriately towards economic progress. Smith argues that if a society were to no longer have money to exchange for goods and services, that it would barter, “though with a good deal of inconveniency,”[10] until a trustworthy currency was reestablished.

Preparing for an Economic Shift

At whatever stage an economy may be at, the healthy thing to do is to increase the capital of the society through productive enterprise. Where capital is lacking, “parsimony, and not industry is the immediate cause of the increase of capital.”[11] Frugal saving of one’s money or goods is primary before sowing that accrued capital into a productive endeavor, which reaps a greater return. Industry can only produce more of something that already exists. It takes the five loaves of bread and makes them multiply to feed five thousand; it doesn’t make five loaves of bread appear out of thin air.

treemoney-300x203When we are positioned in a way that we are not consuming all of our capital, but creating capital through stewardship of our resources, we will be able to apply that knowledge regardless of our national circumstances. If we are ignorant of the system and our dependence upon it, we will feel our world has crashed instead of realizing that we are the gears of the economic system. Every person or group of people who are consuming or producing is of equal value in a free market society. When we each live lives that are appropriately balanced in terms of the way we manage our own affairs and our own businesses, we are contributing to the whole. In contrast, when we live recklessly in terms of finances, or in the way we do business, we contribute to the economic decline.

Refusing to Behave Like Victims

When we blame government, we absolve ourselves of our proper responsibility as we the people of these United States. We become the victims, and the government, whom we consider to be the perpetrator, steals not only our economic prowess, but our identity as responsible citizens. The stealing happens because we have seen ourselves as helpless victims petitioning an all-powerful entity to fix our problems, instead of being the problem-solvers. There are problems at the governmental level. We would have to be blind not to recognize that. But to hoist the entire system on the shoulders of an institution not designed to bear the burden is to further endanger the economic system.

The American people are designed to advance economic prosperity. To make a difference, we can learn how to be citizens that contribute to our national prosperity starting in our own homes, and then in the larger circles where we have influence. Owning the problem is the first step to becoming the solution. The national economy begins and ends with the people, and if it ends, it shall begin again with the people.

****This article was published in the November edition of the MorningStar Journal. 

[1] Smith, Roy C. Adam Smith and the Origins of American Enterprise, Truman Talley Books. New York, 2004

[2] Smith, Adam. The Wealth of Nations. Barnes & Noble. New York, 2004 (1776)  p. 285

[3] Ibid. p. 373

[4] Ibid. p. 44

[5] Ibid. p. 298

[6] Ibid. p. 300

[7] Ibid. p. 399

[8] Ibid. p. 419-420

[9] Ibid. p. 399

[10] Ibid. p. 285

[11] Ibid. p. 233

BacktotheFuturePlease check out my new eBook published by MorningStar Publications. Back to the Future: Rebuilding America’s Stability. It’s available on Amazon, Barnes & Noble, and Apple for their respective devices for $7.99. You can find a FREE Chapter on my website under the tab on the tool bar above. Click here to buy your copy on Amazon or here to find it for a different e reader. Thank you for your support.

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