When Liberalism Destroys Liberty
Today's all-pervading liberalist or neo-liberalist theory claims to find its roots and legitimation in the works of Adam Smith, especiallyThe Wealth of Nations written in 1767, and the concept of free will regulated by the invisible hand of the market. But Smith's philosophy was in fact the exact opposite of this interpretation. Liberalism is currently seen as an end ‒ not as a means as conceived by Smith ‒ and contributes to create an economic model based entirely on an exasperated technicism and dominant financial bias that has broken completely with this science's moral and social roots.
To really comprehend Smith's theory we have to see it against the historical backdrop of his time and with a comprehensive view of his works, starting fromThe Theory of Moral Sentimentsdating from 1759, so beforeThe Wealth of Nations was written and which is fundamental to understand the concepts expressed in the latter. From a cultural standpoint the 1700s in which Adam Smith lived was a revolutionary century, primed by the 1600s when the trial of Galileo and Newton's insights led to the independence of science as opposed to that unity of life and thought determined by religion.
The 18th century was the Age of Enlightenment, when speculative ideas asserted people's freedom in terms of self-realization, the role of reason and principle of rationality, although not absolute but subject to a superior moral order. Kant would later write a criticism of pure reason and paved the way to German realism and historical materialism. Towards the end of the century the American and French revolutions proclaimed the universal rights of mankind – liberty, equality and fraternity ‒ as being the absolute ends, far removed from egoistic and exclusive personal interests. Smith, the enlightened Scotsman, and David Hume agreed on the "sympathy principle's" role as the regulator of human relations and the ability to see things from someone else's point of view. Free will was vital, but while individual choices pursue personal interests they must submit to collective interests. As Smith observed, a baker sells bread in pursuance of a personal interest but he must also take into account the needs of those who buy it ‒ today we might call this a form of 'cooperative competition'. It was quite clear to him and his contemporaries that moral limits were unsurpassable and that social equilibrium could only be achieved by mediating between the egoism and altruism that define moral conscience and ends. These were issues he had tackled both at the outset of his studies and when teaching moral philosophy.
In the following century – the 1800s ‒ the rational culture and exact sciences gained the upper hand, and as Pascal said, "l'esprit de geometrie" prevailed over "l'esprit de finesse" and intuition progressively gave way to reason. So the social sympathy principle was replaced by that of personal utility.
Truth was only what could be seen, touched and measured, and the positive sciences that interpret truth themselves became incontrovertible truths. What had initially been instrumental knowledge achieved the status of moral knowledge and the 'mirage of rationality' carried the day. An illusion that for science is even more dangerous than ignorance.
Economics suffered this genetic mutation too. From social and moral science it was elevated to a positive, exact science capable of dictating the rules of life. Instead of people making money to live, they live to make money and so the means becomes the end. Many centuries before Aristotle coined the term chrematistics to indicate this ‒ the accumulation of wealth is a dehumanizing activity, he said, with in mind the mythical King Midas. When the aim becomes to maximize individual interests, liberalism becomes the end, exactly the opposite of Smith's concept. The law of the strongest asserts itself and illicit conduct also becomes normalized, factors that contribute to establishing a perpetually conflictual and individualistic society. The 'side effects' of achieving such an end are inequality, unemployment, poverty, liberty, moral decay. Human society has a failing, it finds it difficult to grasp limits ‒ points of no return ‒ beyond which these side effects become primary and sooner or later precipitate into the fatal calamities of class differences and war.
Today we have a form of liberalism that taken as an end destroys liberty. Once more we are faced with a cultural absolutism that seemed to have been defeated by the painful experiences of the past century but that now, deceptively, again rears its ugly head.
Economics must be reconciled with its nature as a moral and social science, "we need a new paradigm because much more is at stake than the credibility of the profession or policy makers that use its ideas, what is at stake is the stability and prosperity of our economies" (Stiglitz, Il Sole24Ore, 2010) and, I would add, our societies.