In the Wealth of Nations Adam Smith outlines a commercial society: When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging… the produce of his own labour… for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society. The last sentence of the…
Editor’s Note: This excellent post by Hans Eicholz on the need for the Scots to recover their former capitalist and free society enthusiasms if they are to govern themselves is worthy of re-consideration today.
What does it take to secure an independent, self-governing nation? Arguably it takes a self-governing citizenry. And what does that mean? Generally speaking, it means a citizenry composed of persons capable of independent thought and action—capable of sustaining themselves through much of the thick and thin of life through their own voluntary efforts in civil society.
A modern welfare state works directly against that capacity by encouraging ties of hierarchical dependence on political authorities. The modern fallacy is to believe that majority voting is sufficient to prevent the abuse of power; anyone familiar with the workings of government cannot seriously entertain that idea.
The wild increase in laws and more importantly, administrative agency rules, does not translate into the rule of law, but into the selective enforcement of special programs by those entrusted to administer them. That sort of re-feudalization of the economy and society was well understood by Mancur Olson years ago in his book, The Rise and Decline of Nations. But Olson was really only further developing the critique of mercantilism first put forward by Adam Smith.
Policy makers and economists of various stripes have had a field day since the onset of the last financial crisis blaming the downturn on market failures and proclaiming new regulatory fixes. Never mind that most of the mainstream either did not anticipate the collapse or had even preached perpetual boom, they were brimming with solutions. That fact has set a few members of the economics profession on edge and in one case, has inspired an important new contribution to thinking about markets. What is the right way of conceiving the relation of public policy and law to economics?