Smith, Carlyle, and Mumford (and me)

“Leave the world alone; it can manage itself.” No, this is not a cry heard from the floor of St. Stephens during Carlyle’s day; it’s the mantra of the Laissez Faire Club of our day. The idea is the legacy of Adam Smith, or rather, the perceived legacy, because Smith never would have said those words. Smith understood that the irresponsible actions of a few could endanger the welfare of the many. As he wrote in Wealth of Nations,

Such regulations may, no doubt, be considered as in some respect a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments.

Thus Smith never intended for laissez faire as an absolute doctrine. His purpose was to liberate the market from over three centuries of stifling mercantilist policies. This was a reasonable goal in Smith’s day, but, as Carlyle recognizes in this week’s excerpt from Past and Present, the “principle of Let alone (Carlyle’s emphasis) is no longer possible” in Europe, least of all in England. Yet the upper class sees the doctrine as a license for “misgovernment” and “no-government,” while the lower class goes hungry and starves.

The Sage of Chelsea, however, had few words of encouragement for the Chartists. The movement believed that the path to improved working conditions lay through the electorate; hence, the six-point charter and its call for procedural reforms like universal suffrage (for men) and a secret ballot. Yet Carlyle dismisses democracy as a zero sum game. The only thing it accomplishes is the replacement of one group of incompetent leaders for another. Throughout history, he argues, the meaningful “work was done” not by “loud voting and debating of many, but by wise ordering and insight of a few.” To Carlyle the most important right is the “right of the ignorant man to be guided by the wiser.” The fact that you can’t fool all of the people all of the time may have been reason enough for President Lincoln to have faith in democracy, but his contemporary across the pond wanted a higher batting average.

Writing with the benefit of nearly 100 years of insight, Mumford’s rhetoric lacks the power of Carlyle’s, but it shows a more sophisticated understanding of the dynamics of capitalism. Mumford understands that those who reap the greatest benefits under a laissez faire economy will, if left to their own devices, engage in trade practices that deny opportunity that they had to others. Mumford saw this process at work in America under the Homestead Act. Although the act doled out 160-acre tracts to one and all, “gross social inequalities” awaited the next generation of farmers, in the form of land monopolies and inherited fortunes. Thus to keep the playing field even government must pass laws and monitor the market, otherwise political equality is a hollow concept.

During the decade that Mumford wrote, the U.S. government under FDR enacted many reforms designed to redress the excesses that led to the Great Depression. The result was  three postwar decades of unparalleled prosperity where income gains were widely shared across the population, notwithstanding blacks and women. But during the last three decades nearly all the gains have accrued to the very rich, so much so that today one percent of Americans own 42 percent of the wealth, up from 22 percent in 1980. Although America’s institutions are as democratic as ever, it’s common knowledge—except maybe to the blokes who watch Fox News—that big money has hijacked the American political system.