Today, a bright Scot looks to natural law for an
economic model. The University of Houston's College
of Engineering presents this series about the
machines that make our civilization run, and the
people whose ingenuity created them.
Much more than the signing
of our Declaration of Independence took place in
1776. Europe was being turned upside down by
revolutionary forces as surely as America was. And
1776 was the year
Adam Smith published An Inquiry into the
Nature and Causes of the Wealth of Nations
-- the book that defined modern capitalism.
Smith was born in 1723. In 1764, while he was
lecturing at the University of Glasgow and writing
on economics, a wealthy patron offered him a
journey that changed his life: he took Smith to
France as his son's tutor. There Smith met the
would-be creators of a new economic system.
One important school of French thinking was focused
on agriculture and called physiocracy. Physiocrats
said that economics is ruled by natural law. French
thinkers had also bandied the words laissez
faire, which can be read, "Let nature have
her lead."
Physiocracy echoed ideas of philosopher David Hume,
who had mentored Smith. The French experience
energized Smith, and he began work on the
Wealth of Nations. Up to now, each
country had tried to specify its own economy in
terms of an inflow of gold and raw materials, and
the outflow of manufactured goods. Now Smith wrote
about the "invisible hand" of natural processes
that guides the flow of goods and sets prices.
Economics is a feedback process among nations. Try
to override that hand and you're in trouble,
because nations' economies are interwoven. Smith
had given laissez faire its full
modern meaning.
When Smith's book came out, he faced some bad
reactions. He'd denied the rationalists' linear
logic of cause and effect. Smith saw that a single
cause could have multiple effects. An effect might
be born of many causes. Smith had violated
something very near the core of rationalist
thinking. They called him an atheist.
But luck was with Smith. England's industrial
revolution let her leap ahead of the old trade
balances. His heretical notions about free trade
were suddenly useful. If goods and services flow as
nature would have them flow, Britannia would come
out on top. Within a generation, Smith's theory was
official English policy.
So his ideas about enlightened self-interest
thundered into the 19th century like a great
steamroller. Self-interest didn't stay enlightened,
of course. The engines of greed bent laissez
faire until forces of socialism rose to
oppose it.
But today we see a great extension of Smith's ideas
in the economics of nature itself. For Earth is a
great feedback system. Not only are nations bound
to one another by the commerce of their goods. All
living species are also bound to one another by
feedback processes in the natural commerce of
Earth's resources.
When Adam Smith died in 1790, people discovered
something that wonderfully underscored his beliefs.
Smith, it seems, had been giving away his own
wealth -- in completely secret acts of charity.
I'm John Lienhard, at the University of Houston,
where we're interested in the way inventive minds
work.
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