Chomsky On Adam Smith

"What we would call capitalism he despised"

By Noam Chomsky

Excerpted from Class Warfare - 1995

May 04, 2009 "Information Clearing House" -- David Barsamian: One of the heroes of the current right-wing revival... is Adam Smith. You've done some pretty impressive research on Smith that has excavated... a lot of information that's not coming out. You've often quoted him describing the "vile maxim of the masters of mankind: all for ourselves and nothing for other people."

Noam Chomsky: I didn't do any research at all on Smith. I just read him. There's no research. Just read it. He's pre-capitalist, a figure of the Enlightenment. What we would call capitalism he despised. People read snippets of Adam Smith, the few phrases they teach in school. Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent division of labor from proceeding to its limits.

He did give an argument for markets, but the argument was that under conditions of perfect liberty, markets will lead to perfect equality. That's the argument for them, because he thought that equality of condition (not just opportunity) is what you should be aiming at. It goes on and on. He gave a devastating critique of what we would call North-South policies. He was talking about England and India. He bitterly condemned the British experiments they were carrying out which were devastating India.

He also made remarks which ought to be truisms about the way states work. He pointed out that its totally senseless to talk about a nation and what we would nowadays call "national interests." He simply observed in passing, because it's so obvious, that in England, which is what he's discussing -- and it was the most democratic society of the day -- the principal architects of policy are the "merchants and manufacturers," and they make certain that their own interests are, in his words, "most peculiarly attended to," no matter what the effect on others, including the people of England who, he argued, suffered from their policies. He didn't have the data to prove it at the time, but he was probably right.

This truism was, a century later, called class analysis, but you don't have to go to Marx to find it. It's very explicit in Adam Smith. It's so obvious that any ten-year-old can see it. So he didn't make a big point of it. He just mentioned it. But that's correct. If you read through his work, he's intelligent. He's a person who was from the Enlightenment. His driving motives were the assumption that people were guided by sympathy and feelings of solidarity and the need for control of their own work, much like other Enlightenment and early Romantic thinkers. He's part of that period, the Scottish Enlightenment.

The version of him that's given today is just ridiculous. But I didn't have to any research to find this out. All you have to do is read. If you're literate, you'll find it out. I did do a little research in the way it's treated, and that's interesting. For example, the University of Chicago, the great bastion of free market economics, etc., etc., published a bicentennial edition of the hero, a scholarly edition with all the footnotes and the introduction by a Nobel Prize winner, George Stigler, a huge index, a real scholarly edition. That's the one I used. It's the best edition. The scholarly framework was very interesting, including Stigler's introduction. It's likely he never opened The Wealth of Nations. Just about everything he said about the book was completely false. I went through a bunch of examples in writing about it, in Year 501 and elsewhere.

But even more interesting in some ways was the index. Adam Smith is very well known for his advocacy of division of labor. Take a look at "division of labor" in the index and there are lots and lots of things listed. But there's one missing, namely his denunciation of division of labor, the one I just cited. That's somehow missing from the index. It goes on like this. I wouldn't call this research because it's ten minutes' work, but if you look at the scholarship, then it's interesting.

I want to be clear about this. There is good Smith scholarship. If you look at the serious Smith scholarship, nothing I'm saying is any surprise to anyone. How could it be? You open the book and you read it and it's staring you right in the face. On the other hand if you look at the myth of Adam Smith, which is the only one we get, the discrepancy between that and the reality is enormous.

This is true of classical liberalism in general. The founders of classical liberalism, people like Adam Smith and Wilhelm von Humboldt, who is one of the great exponents of classical liberalism, and who inspired John Stuart Mill -- they were what we would call libertarian socialists, at least that ïs the way I read them. For example, Humboldt, like Smith, says, Consider a craftsman who builds some beautiful thing. Humboldt says if he does it under external coercion, like pay, for wages, we may admire what he does but we despise what he is. On the other hand, if he does it out of his own free, creative expression of himself, under free will, not under external coercion of wage labor, then we also admire what he is because he's a human being. He said any decent socioeconomic system will be based on the assumption that people have the freedom to inquire and create -- since that's the fundamental nature of humans -- in free association with others, but certainly not under the kinds of external constraints that came to be called capitalism.

It's the same when you read Jefferson. He lived a half century later, so he saw state capitalism developing, and he despised it, of course. He said it's going to lead to a form of absolutism worse than the one we defended ourselves against. In fact, if you run through this whole period you see a very clear, sharp critique of what we would later call capitalism and certainly of the twentieth century version of it, which is designed to destroy individual, even entrepreneurial capitalism.

There's a side current here which is rarely looked at but which is also quite fascinating. That's the working class literature of the nineteenth century. They didn't read Adam Smith and Wilhelm von Humboldt, but they're saying the same things. Read journals put out by the people called the "factory girls of Lowell," young women in the factories, mechanics, and other working people who were running their own newspapers. It's the same kind of critique. There was a real battle fought by working people in England and the U.S. to defend themselves against what they called the degradation and oppression and violence of the industrial capitalist system, which was not only dehumanizing them but was even radically reducing their intellectual level. So, you go back to the mid-nineteenth century and these so-called "factory girls," young girls working in the Lowell [Massachusetts] mills, were reading serious contemporary literature. They recognized that the point of the system was to turn them into tools who would be manipulated, degraded, kicked around, and so on. And they fought against it bitterly for a long period. That's the history of the rise of capitalism.

The other part of the story is the development of corporations, which is an interesting story in itself. Adam Smith didn't say much about them, but he did criticize the early stages of them. Jefferson lived long enough to see the beginnings, and he was very strongly opposed to them. But the development of corporations really took place in the early twentieth century and very late in the nineteenth century. Originally, corporations existed as a public service. People would get together to build a bridge and they would be incorporated for that purpose by the state. They built the bridge and that's it. They were supposed to have a public interest function. Well into the 1870s, states were removing corporate charters. They were granted by the state. They didn't have any other authority. They were fictions. They were removing corporate charters because they weren't serving a public function. But then you get into the period of the trusts and various efforts to consolidate power that were beginning to be made in the late nineteenth century. It's interesting to look at the literature. The courts didn't really accept it. There were some hints about it. It wasn't until the early twentieth century that courts and lawyers designed a new socioeconomic system. It was never done by legislation. It was done mostly by courts and lawyers and the power they could exercise over individual states. New Jersey was the first state to offer corporations any right they wanted. Of course, all the capital in the country suddenly started to flow to New Jersey, for obvious reasons. Then the other states had to do the same thing just to defend themselves or be wiped out. It's kind of a small-scale globalization. Then the courts and the corporate lawyers came along and created a whole new body of doctrine which gave corporations authority and power that they never had before. If you look at the background of it, it's the same background that led to fascism and Bolshevism. A lot of it was supported by people called progressives, for these reasons: They said, individual rights are gone. We are in a period of corporatization of power, consolidation of power, centralization. That's supposed to be good if you're a progressive, like a Marxist-Leninist. Out of that same background came three major things: fascism, Bolshevism, and corporate tyranny. They all grew out of the same more or less Hegelian roots. It's fairly recent. We think of corporations as immutable, but they were designed. It was a conscious design which worked as Adam Smith said: the principal architects of policy consolidate state power and use it for their interests. It was certainly not popular will. It's basically court decisions and lawyers' decisions, which created a form of private tyranny which is now more massive in many ways than even state tyranny was. These are major parts of modern twentieth century history. The classical liberals would be horrified. They didn't even imagine this. But the smaller things that they saw, they were already horrified about. This would have totally scandalized Adam Smith or Jefferson or anyone like that....

David Barsamian: ....You're very patient with people, particularly people who ask the most inane kinds of questions. Is this something you've cultivated?

Noam Chomsky: First of all, I'm usually fuming inside, so what you see on the outside isn't necessarily what's inside. But as far as questions, the only thing I ever get irritated about is elite intellectuals, the stuff they do I do find irritating. I shouldn't. I should expect it. But I do find it irritating. But on the other hand, what you're describing as inane questions usually strike me as perfectly honest questions. People have no reason to believe anything other than what they're saying. If you think about where the questioner is coming from, what the person has been exposed to, that's a very rational and intelligent question. It may sound inane from some other point of view, but it's not at all inane from within the framework in which it's being raised. It's usually quite reasonable. So there's nothing to be irritated about.

You may be sorry about the conditions in which the questions arise. The thing to do is to try to help them get out of their intellectual confinement, which is not just accidental, as I mentioned. There are huge efforts that do go into making people, to borrow Adam Smith's phrase, "as stupid and ignorant as it is possible for a human being to be." A lot of the educational system is designed for that, if you think about it, it's designed for obedience and passivity. From childhood, a lot of it is designed to prevent people from being independent and creative. If you're independent-minded in school, you're probably going to get into trouble very early on. That's not the trait that's being preferred or cultivated. When people live through all this stuff, plus corporate propaganda, plus television, plus the press and the whole mass, the deluge of ideological distortion that goes on, they ask questions that from another point of view are completely reasonable....

David Barsamian: At the Mellon lecture that you gave in Chicago... you focused primarily on the ideas of John Dewey and Bertrand Russell [regarding education]...

Noam Chomsky: ... These were highly libertarian ideas. Dewey himself comes straight from the American mainstream. People who read what he actually said would now consider him some far-out anti-American lunatic or something. He was expressing mainstream thinking before the ideological system had so grotesquely distorted the tradition. By now, it's unrecognizable. For example, not only did he agree with the whole Enlightenment tradition that, as he put it, "the goal of production is to produce free people," -- "free men," he said, but that's many years ago. That's the goal of production, not to produce commodities. He was a major theorist of democracy. There were many different, conflicting strands of democratic theory, but the one I'm talking about held that democracy requires dissolution of private power. He said as long as there is private control over the economic system, talk about democracy is a joke. Repeating basically Adam Smith, Dewey said, Politics is the shadow that big business casts over society. He said attenuating the shadow doesn't do much. Reforms are still going to leave it tyrannical. Basically, a classical liberal view. His main point was that you can't even talk about democracy until you have democratic control of industry, commerce, banking, everything. That means control by the people who work in the institutions, and the communities.

These are standard libertarian socialist and anarchist ideas which go straight back to the Enlightenment, an outgrowth of the views of the kind that we were talking about before from classical liberalism. Dewey represented these in the modern period, as did Bertrand Russell, from another tradition, but again with roots in the Enlightenment. These were two of the major, if not the two major thinkers, of the twentieth century, whose ideas are about as well known as the real Adam Smith. Which is a sign of how efficient the educational system has been, and the propaganda system, in simply destroying even our awareness of our own immediate intellectual background.

David Barsamian: In that same Mellon lecture, you paraphrased Russell on education. You said that he promoted the idea that education is not to be viewed as something like filling a vessel with water, but rather assisting a flower to grow in its own way...

Noam Chomsky: That's an eighteenth century idea. I don't know if Russell knew about it or reinvented it, but you read that as standard in early Enlightenment literature. That's the image that was used... Humboldt, the founder of classical liberalism, his view was that education is a matter of laying out a string along which the child will develop, but in its own way. You may do some guiding. That's what serious education would be from kindergarten up through graduate school. You do get it in advanced science, because there's no other way to do it.

But most of the educational system is quite different. Mass education was designed to turn independent farmers into docile, passive tools of production. That was its primary purpose. And don't think people didn't know it. They knew it and they fought against it. There was a lot of resistance to mass education for exactly that reason. It was also understood by the elites. Emerson once said something about how we're educating them to keep them from our throats. If you don't educate them, what we call "education," they're going to take control -- "they" being what Alexander Hamilton called the "great beast," namely the people. The anti-democratic thrust of opinion in what are called democratic societies is really ferocious. And for good reason. Because the freer the society gets, the more dangerous the great beast becomes and the more you have to be careful to cage it somehow.

On the other hand, there are exceptions, and Dewey and Russell are among those exceptions. But they are completely marginalized and unknown, although everybody sings praises to them, as they do to Adam Smith. What they actually said would be considered intolerable in the autocratic climate of dominant opinion. The totalitarian element of it is quite striking. The very fact that the concept "anti-American" can exist -- forget the way it's used -- exhibits a totalitarian streak that's pretty dramatic. That concept, anti-Americanism -- the only real counterpart to it in the modern world is anti-Sovietism. In the Soviet Union, the worst crime was to be anti-Soviet. That's the hallmark of a totalitarian society, to have concepts like anti-Sovietism or anti-Americanism. Here it's considered quite natural. Books on anti-Americanism, by people who are basically Stalinist clones, are highly respected. That's true of Anglo-American societies, which are strikingly the more democratic societies. I think there's a correlation there...As freedom grows, the need to coerce and control opinion also grows if you want to prevent the great beast from doing something with its freedom....

... Sam Bowles and Herb Gintis, two economists, in their work on the American educational system some years back... pointed out that the educational system is divided into fragments. The part that's directed toward working people and the general population is indeed designed to impose obedience. But the education for elites can't quite do that. It has to allow creativity and independence. Otherwise they won't be able to do their job of making money. You find the same thing in the press. That's why I read the Wall Street Journal and the Financial Times and Business Week. They just have to tell the truth. That's a contradiction in the mainstream press, too. Take, say, the New York Times or the Washington Post. They have dual functions and they're contradictory. One function is to subdue the great beast. But another function is to let their audience, which is an elite audience, gain a tolerably realistic picture of what's going on in the world. Otherwise, they won't be able to satisfy their own needs. That's a contradiction that runs right through the educational system as well. It's totally independent of another factor, namely just professional integrity, which a lot of people have: honesty, no matter what the external constraints are. That leads to various complexities. If you really look at the details of how the newspapers work, you find these contradictions and problems playing themselves out in complicated ways....

This interview was excerpted from Class Warfare, 1995