Help to understand 2nd part of YouTube video Noam Chomsky on Adam Smith & free trade, cross border interactions!

Reply

The Texas Trigger replied on Tue, Oct 23 2012 7:38 AM

rated by 0 users

Suggested by Malachi

Chomsky, in his old age, is not being very clear here, and he usually isn't, at least not in the videos of him of him and the emails responses I've received from him over the past ten years or so. I'll give him a break, since he has got to be at least 99 years old by now.

But, to your question:

In the video, Chomsky attempts to denigrate capitalism by attacking Adam Smith, being that he is the most celebrated and well-known economists among your average conservative. He makes the claim that, while Adam Smith believed in the power of markets to some degree, he also believed that they would grind man down to total ignorance and brutishness. Ok, let's take all this one part at a time, 

First, Smith's work wasn't really ground-breaking or original at all in his time; he merely popularized some economic concepts that had already been well established by much greater economic Intellects than he ever was. If anything, he set economic progress back to some degree, if only slightly. He actually subscribed to the labor theory of value that Marx would later adopt, but Pierre de Jean Olivi had already thoroughly disproved way back in the thirteenth century; something Menger would eventually bring back to popularity again in the 19th century with his establishment of the Austrian school. Rothbard wrote this amazing book on the history or economic thought, and I suggest you read it.

I don't normally write off an author or a work before I have gotten the chance to read it all for myself, especially one as famous as Smith's, but I only have so much time to read, so we all must discriminate. On top of that, what I have read f Smith's never much impressed me, and I know there is some tall tale bullshit in there, so I never saw a very good reason to read his works exhaustively. There are much better modern day economists, such as Rothbard, mises, and Murphy that are more than worth reading ahead of Smith. There are also a plethora of smith's contemporaries as well as those who predate him that are much better reads, for instance, the works of Aristotle and Democritus to go way back, and what of the work being done in France and Spain by Richard Cantillon and much later on Bastiat. How about Smith's teacher, Hutcheson? 

In either case, all that said, I do admit I am speaking from some ignorance here. Basically, it wouldn't surprise me that much if Smith had wrote a lot of the things Chomsky is saying he did. Chomsky is usually pretty honest, and I am willing to be he has read the entire thing, and I would also bet he is right that 99.99999% of the conservatives who quote and use Smith's ideas in debate have never actually read a single page of Wealth of Nations. The man may be old, but he is also quite intelligent and that is an observation that doesn't take a whole lot of brainpower to conclude. 

But either way, as I just said, who cares if Smith was a hack? It doesn't disprove the positive affect's of capitalism, right? Its a Moot Point. Smith was a second class economist when compared to a Mises or a Bastiat.

Now to the meat of your question: I think where you get lost (and I was also just a little bit) is where he starts going into trade between England and the States, right? Ok, so here, Chomsky is making an amateur mistake; the same one that Marx made, as well as many people do today, when he conflates capitalism with mercantilism. Its a bait and switch because the criticisms that Marx, Chomsky, and allegedly Smith have identified within England's economic system are valid. The problem is they blame capitalism, but capitalism is no where to be found. And to this, Chomsky goes on and on about how bad NAFTA is and how it is not really trade. He is right, it isn't free trade, but again mercantilism. However, Chomsky decides that because NAFTA is a "free trade agreement" then it is a free-market construct. For most, I would expect this kind of amateur analysis, but Chomsky should know better. NAFTA is about as free trade as a harlot is STD-free.

As for the whole invisible hand stuff, I have no idea what he is talking about. Maybe the term is misunderstood. Meh...I was never a huge fan of it anyway. I think it comes off as some sort of mysticism, like saying that God is the one the commands the economy. It was never that great of a metaphor in all honesty. He can have it. 

For more, see here.