Ed Miliband has Disraeli on board; now it’s time for Adam Smith

Last year in his speech to the Labour conference in Manchester, Ed Miliband laid claim to rebuilding Britain as One Nation. The Labour leader cited as his inspiration a former Conservative prime minister, Benjamin Disraeli, who spoke about One Nation Conservatism in Manchester’s Free Trade Hall. Reflecting the spirit of the times, this is now a luxury hotel.

Ed Miliband has understood that the economic recovery is not recognised by many voters, that the rising tide is only helping the have-yachts. The squeezed middle, as well as the low paid, are feeling increasingly insecure, and are at the mercy of corporate cartels running many of our public services. There is a rich seam of discontent to mine.

So now it is time for Miliband to go further. He can reclaim the economist Adam Smith to the progressive cause. Adam Smith, who was born in Scotland in 1723, is usually considered to be the founding father of right-wing free market economics and is best known for two works; The Wealth of Nations and The Theory of Moral Sentiments.

There is a strong argument that the right have stolen Adam Smith’s identity. An increasing number of thinkers believe that Smith was not just a radical critic of the establishment of his day. Smith believed that economic policy should be secondary to moral and ethical concerns such as equality.

In the UK, the Adam Smith Institute is reliably one of the most outrageous think tanks, an outrider of Thatcherism before it was invented. The Adam Smith Institute proposed the poll tax, privatisation of the Royal Mail and of the Forestry Commission. As president of the Adam Smith Institute, Madsen Pirie, said, ‘we propose things which people regards as being on the edge of lunacy’.

Quite.

Adam Smith was certainly not anti-capitalist, but he did have a through mistrust of capitalists. In The Wealth of Nations he stated that, ‘whenever possible they will collude to corner the market, to raise prices, and to deceive the public’.

This, of course, is exactly what Ed Miliband argued in his speech in Brighton in September. The energy giants act as a cartel and are fleecing the public. Other public services run by the private sector – the water industry and the railways spring to mind – are run to maximise shareholder value rather than benefit users.

When he was chancellor, Gordon Brown attempted to place Smith’s work in the progressive tradition. And Oxford author Iain MacLean of Adam Smith, Radical and Egalitarian: An Interpretation for the 21st Century, suggests that, if we take Adam Smith’s work as a whole, he can only be classed as an egalitarian and leftwing philosopher.

An unequal society is not a happy one and ultimately, will not be successful. In The Wealth of Nations, Adam Smith said, ‘No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable’.

Ed Miliband is making the unequivocal case for public investment. New homes, better hospitals and improved transport links all must be developed to wean the economy away from a reliance on consumer debt and soaring house prices to pay for goods manufactured overseas. Miliband can be sure that Smith would have supported this, too.

Smith believed in ‘maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals’.

As the government continues to sell off and privatise the public services that even Margaret Thatcher thought the Adam Smith were too mad to propose selling off, we really do need a new way of thinking.

Challenging times need big ideas and Miliband is succeeding in getting a bolder, more progressive message across. It is now time for Ed Miliband to welcome Adam Smith back as a man on the left.

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Rob Williams works in public affairs and as a journalist

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Comments: 3...

  1. On November 23, 2013 at 10:44 am Anonymous responded with... #

    I was always taught that the key assumption underpinning market theory was “ceteris paribus” – other things being equal. Markets cannot work when “things” are anything but “equal.” Good markets may be more Socialist than anyone, especially the Adam Smith Institute, ever thought!

  2. On November 23, 2013 at 10:55 am Martinay responded with... #

    In an academic debate on the moral turpitude of Tory and LibDem neo-classical economics, it is perfectly reasonable, as Rob Williams does, to contrast their dogma with the observations of classical economists like Adam Smith.

    After all, Smith writes that “…all for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” (The Wealth of Nations Book 3, Chapter 4 – go to Wikipedia).

    By contrast, neo-classical economic dogma claims that ONLY by being “all for ourselves” can there be anything for other people. This is the “trickle-down” theory popularised by Reagan and Thatcher.

    But will a popular debate on Adam Smith have nearly as much purchase as Miliband’s capture of Disraeli’s One Nation idea? Rob does not address this question.

    On the other hand, the underlying point that Rob is raising seems to me to be critical to the One Nation Labour project. This point is that there is a crying need to break the spell of neo-liberalism (i.e. of neo-classical economics and its associated politics).

    This requires the One Nation Labour project to
    1. Demonstrate that the neo-liberal emperors have no ideological clothes. Their theories have failed. The theories are wrong. The emperors therefore have no plan that can serve the public good.
    2. Undertake a root and branch review of party policy to cleanse it of neo-liberal nonsense. In my own area of policy interest (research and innovation), we have not even started on this (Liam Byrne take note). Policy on research needs to break totally with the “Research Excellence Framework” which measures institutions through individuals. Policy on innovation boils down to elitism + neo-classical tax breaks (that are abused) + outmoded Intellectual Property rules from an age before Big Science.
    3. Develop a One Nation political economics that recognises the reality of our economic structure (with 3 major classes of ownership – private, public and mutual) and that .promotes a politics that reverses the hollowing out of our economy (e.g. destroying our productive capacities and capabilities). Work on this has started – but it remains a long way from being popularised.

  3. On November 24, 2013 at 11:07 am Richas responded with... #

    Adam Smith is also the first person I have read who recognised the concept of relative poverty, which he discusses in Wealth of Nations in comparing the English Working Class with the poor of Africa.

    His example was a linen shirt seen as a basic need for any “respectable working man” here but as an unimaginable luxury for some others overseas.

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