Monthly Archives: September 2013

Arts, Britain, Economic, History, Philosophy, Politics, Scotland, Society

Quantum Leaps: Adam Smith (1723-1790)…

‘UNINTENDED CONSEQUENCES OF INTENDED ACTION’

Scottish philosopher of morals, politics and economics, Adam Smith was a contemporary of the Empiricist, David Hume (1711-1776), and is very close to him in outlook and philosophic temperament. His lectures on ethics and logic were published under the title Theory of the Moral Sentiments but he is most famous for his work of political economics, The Wealth of Nations.

Favoured philosopher of Margaret Thatcher and darling of Conservative economists, Smith is famous for his views on private property, the free market economy and the doctrine that ‘unintended consequences of intended action’ will be to the benefit of society at large. The idea behind this most fortunate if true of principles is that in intentionally serving one’s interests one unintentionally serves the interests of society as a whole.

'The Wealth of Nations' is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought.

‘The Wealth of Nations’ is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought.

A simple example will illustrate the essence of Smith’s idea. Suppose that Jones, in seeking his own fortune, decides to set up and run his own business, manufacturing some common item of everyday need. In seeking to provide for his own fortune, Jones’ entrepreneurial enterprise has a number of unintentional benefits to others. First, he provides a livelihood for the people in his employ, thus benefiting them directly. Second, he makes more readily available some common item which previously had been more difficult or more expensive to obtain for his customers, thus easing one, if only minor, aspect of their lives. The forces of market economy ensure that these unintentional benefits occur, for if Jones’ workers could find more profitable employ elsewhere they would either cease to work for him or he would have to raise their salaries in order to secure a workforce. Likewise, if Jones’ product was available more readily or less expensively from some other source, Jones would either go out of business or be forced to lower his prices to a competitive rate. The model assumes the absence of a monopoly, both in the labour and economic markets.

The belief that ‘unintended consequences of intended action’ will be of benefit to society held great imaginative power over the industrial philanthropists of the 18th and 19th Centuries and provided the philosophical groundwork for the later ethical theories of Bentham and Mill. However, criticism is not hard to come by. It is surely a blinkered view, if comforting for the entrepreneurial capitalist, to suppose that pursuing one’s own self-interest constitutes a magnanimous and philanthropic act towards society at large. One has only to review the social history of industrial Britain, to witness the treacherous and exploitative working practices of the industrial age, the extreme poverty and degrading social conditions of the suffering working classes, to realise Smith’s idealistic model has far more serious ‘unintended’ consequences. What has largely brought an end to such conditions in the industrialised West is not a triumphant adherence to Smith’s principles in Western economics, but a shifting of the poverty and exploitative working practices from one part of the world to another. In other words, the living conditions of those in the West has improved to the detriment of other countries just insofar as the labour required to support Smith’s economic philosophy has been removed from Western societies and transferred to those of the Third World.

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Regardless of one’s political views on Smith, The Wealth of Nations is one of the most important and deservedly read works of economic and political philosophy in the history of Western thought. It needs to be read and understood by its detractors as much as it does by its supporters.

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Economic, Financial Markets, Government, Politics, Society, United States

Surprise at the Fed’s decision to maintain an economic stimulatory programme…

ECONOMIC RECOVERY

…The Federal Reserve maintains its quantitative easing programme, but the implications of a taper were felt around the world

The spectacle and irony of the world’s financial markets shooting upwards in response to reports that the global economy is in less than rude health than had been thought appears paradoxical.

The surprise decision this week by the Federal Reserve to maintain its monthly $85 billion quantitative easing programme – the process by which money is artificially printed – indicates that U.S. monetary policymakers are far from convinced by the incipient American recovery. Whilst Washington has reported a much improved unemployment rate of 7.3 per cent, that is still considered to be too high, and more needs to be done before the recovery can be deemed sustainable. The uncertainty of rate-setters on the Fed’s Open Market Committee is undeniable as evidenced through their downgraded growth forecasts up until the end of 2014. Yet, from baulking at the downbeat assessment, investors from Tokyo to London have remained in bullish mood.

Their relief is perhaps not entirely irrational. The implications of Ben Bernanke’s suggestion in June that the Federal Reserve would start ‘tapering’ its Q.E. programme and stimulatory bond-buying some time before the end of the year were felt around the world. Emerging economies, for instance, particularly in Asia, saw their currencies plummet as money was pulled out in favour of newly rising, and much safer, US markets. Nor was the developed world any more insulated. Even though the Fed has not yet done anything, just the prospect of a U.S. taper has sharply sent long-term interest rates upwards in anticipation.

There are two lessons to be taken here. First, for all the new-found economic optimism, whatever green shoots there are (either here or elsewhere in the world), remain about as fragile as they can be. And secondly, the route from where we are now back to (unstimulated) pre-crisis normality will be an uneven and bumpy journey.

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Arts, Books, History, Society, Spain

Book Review: ‘The Life and Death of the Spanish Republic’…

SPANISH CIVIL WAR

Following the bombing of a London warehouse in 1940 during the Blitz, copies of a book awaiting distribution of Henry Buckley’s eyewitness account of the Spanish civil war nearly never saw the light of day. A handful, however, did survive, and this posthumous publication of The Life and Death of the Spanish Republic should go some way to establishing his reputation as one of the finest foreign journalists to write on Spain.

Buckley died in 1972, but was the Daily Telegraph’s foreign correspondent in Madrid from 1929. For a decade he furiously filed dispatches from all corners of the country as its young democracy sparked, and eventually ignited and burst into full-scale civil war. With Spain’s current economic crisis in the forefront of global news, it would be fascinating to see what a reporter of Henry Buckley’s stature would have made of its present predicament.

Following a posting in Berlin, Buckley arrived in Madrid to find Spain about to be ripped apart by its own unresolved social and economic tensions. Through countless meetings and conversations with politicians, generals and workers he paints and depicts a vivid portrait of a country where ‘the mass of the people were solid in their desire to fight for their independence and for the future of the Republic as opposed to feudalism’, even though the military superiority of General Franco was to crush the country’s first experience of democracy.

In 1940, Daily Telegraph correspondent Henry Buckley published his eyewitness account of his experiences reporting form the Spanish civil war. The copies of the book, stored in a warehouse in London, were destroyed during the Blitz and only a handful of copies of his unique chronicle were saved.

In 1940, Daily Telegraph correspondent Henry Buckley published his eyewitness account of his experiences reporting form the Spanish civil war. The copies of the book, stored in a warehouse in London, were destroyed during the Blitz and only a handful of copies of his unique chronicle were saved.

Buckley’s reportage is not only of significance and great historical value, but is a model for foreign correspondents to follow. He offers passion and detailed knowledge on several leading political figures of the Republic, many of whom he knew personally, but who remain deeply controversial to this day in a Spain still struggling with the legacy of the civil war. In his collation, for instance, Buckley recalls with energy and vigour his conversations with José Antonio Primo de Rivera, the charismatic young leader of the fascist Falange movement. Whilst he is highly critical of the thugs hired by the young lawyer and parliamentarian, Buckley refers to him as ‘one of the nicest people in Madrid’, and makes narrative on the revolutionary leader’s ‘charming’ English accent.

Henry Buckley’s greatest quality as a correspondent is his sensitivity to both the human suffering and the broader significance of the conflict – his accounts are rich in colour and historical detail, as well as portraying a deeply personal tone.  As a pious and devout Christian, coupled with being a reporter for a British broadsheet newspaper, he faced multiple internal conflicts. He is clearly dismayed by the position taken by the Church, and angered by British and French non-intervention, as Franco’s better armed and organised troops gain advantage over the internationally isolated Republic. Buckley notes how the outcome of the war ‘depended almost entirely on Paris and London’, and how foreign-based financiers backed Franco over the Republic with their credit.

Journaling events with honesty and humility, often in chaotic circumstances, he openly admits when he cannot verify things, but rigorously doing so when he can. The chronicled entry concerning the vastly exaggerated Nationalist claims about the number of dead in Madrid ahead of the fall of the capital is a pointed example.

Prior to his eventual escape over the Pyrenees with the defeated Republican forces in 1939, Buckley wearily noted how democracy’s fight against the forces of Franco appeared doomed from the outset, gloomily writing that the Republic’s disadvantages were in ’everything but manpower so overwhelming that it was inadequate to try and regard it as an equal struggle’.

The Spanish civil war is a subject that has been widely covered in the last 50 years, but Buckley’s work is a rare account which generates much excitement. Its re-emergence is a reminder – to both the specialist and general reader alike – that the best frontline reporting endures long after the final shot has been fired.

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